Battling the Ukrainian Wheat Crisis: Why Global Food Supply Is Ripe for Change

When it comes to supply chains, wars are traditionally disruptive, often diverting or complicating the flow of goods from one place to another – particularly through warring regions. On a global scale, this means price spikes, lower availability of wheat-based products, and pressure on food producers across the world – namely in the US, Middle East, and North African regions. The Ukrainian wheat crisis has revealed the fragility of global food supply, causing suppliers and producers to question the broken business model.

While wars haven’t historically destabilised the supply of entire food types and can be resolved, the Ukrainian wheat crisis is one threat among many that are causing global food insecurity. A host of building threats – including those that could themselves spark additional geopolitical struggles – exacerbate the risk. Food supply chains are being disrupted and destabilised by climate change and subsequent weather instability, leading to sustained long-term impacts reducing soil fertility, water quality and availability, and greater use for chemical fertilisers and pesticides. All of this reduces biodiversity and the natural system’s ability to regenerate itself, all exacerbated by the ubiquitous use of a large-scale monoculture approach to farming significantly reducing the strength of the system through low biodiversity Add these factors on top of the uncertainty caused by war, and the volatility of food supply chains is laid bare.

The way we design food systems is ripe for change – and it starts with smarter supply chain management, localised approaches, and a commitment to circularity.

Organisations and governments can get smarter about food supply chain management through greater integration and use of predictive technologies that map changing demand, assess the impact on different parts of the system, and help producers and suppliers dynamically optimise efficiency in the chain.

Greater knowledge of how complex natural systems work and using this data to develop digital twins, for example, to replicate real-world farming systems and supply chains to inform operational models to show the probable impacts of change. New agri-tech techniques can serve up insights about crop yield and quality, using artificial intelligence to scan satellite images. With this knowledge, it is possible to find solutions to supply risks before they become issues.

There’s understandable inertia in large-scale global food supply systems. Keeping things in a steady and “boringly beautiful” state protects the system and the outputs it creates. However, it is built on huge-scale inputs and outputs of very few products and assumes that input and output potential are unlimited. As the system scales further, it becomes more and more unstable as it dictates larger scale reduction in biodiversity, and eventually, the system cannot be sustained. The wheat crisis is a case in point, caused by the heavy reliance on grain from one place that, in this case, is disrupted by war. When all of your bread is in one basket, one localised event can have devastating consequences on regions that heavily rely on a specific country for a particular product. Breaking the behemoth down into a modular-based system that is inherently more diverse will encourage more regional supply, helping to mitigate such threats.

The closer the source of supply to markets, the shorter the supply chain. Reducing the number of links in the food supply chain will help withstand adverse impacts and limit the domino effect of disruption, boosting resilience and supporting consistent access to food.

A local approach is also better for the planet and communities as it generates opportunities for more people and connects the economic activity it generates more directly to the regions that grow the food. There’s less impact on the environment such as reduced carbon footprint from heavy transportation, and consumers have a more direct line of sight to where their food comes from which aligns with more informed demand signals. Reducing the journey from soil to shelf serves a business benefit, too, as using fewer processes such as post-harvest shelf-life extension that often involves the use of chemicals and pesticides could deliver a significant cost and carbon saving.

Circularity is an approach that seeks to extend the lifecycle, value, and potential of materials for as long as possible through reuse and recycling. Re-examining global food system design through a circularity lens could transform the response to supply chain disruption.

Circularity is a fundamental principle of regenerative agriculture that recognises that systems require multiple natural inputs to be both flexible and resilient. Regenerative agriculture is geared towards diversity and variety and encompasses a number of techniques. Agroforestry, for example, uses trees within the farming process to support crop diversity, boost water retention, act as windbreaks, and improve the soil’s microbiome and inherent fertility. All of this increases farms’ ability to recover from extreme and unpredictable weather patterns. More diversity reduces incidences and impacts of diseases and increases resilience to disruption.

Recapturing waste is central to regenerative agriculture. PA Consulting’s research into effective waste valorisation – the conversion of waste into value – explores how waste (including food waste) can be reclaimed and recycled for adjacent products or processes, or even as an edible ingredient. The key is understanding the opportunity and embedding the processes and technologies to achieve it. This involves reorganising value chains and activating ecosystem partners. Addressing the food waste dilemma will ease the impact of disruption while saving carbon and costs; wasted food costs the global economy $936 billion each year, and up to 10% of global greenhouse gas emissions are associated with food waste.

Disruption in the global food supply chain is not new. But the scale at which the Ukrainian wheat crisis has impacted world markets shows the importance of reconfiguring our current, vulnerable system. The good news is that with disruption come opportunities; and we have the knowledge and the experience to create this new, sustainable system, through smarter supply chains, localised approaches, and a commitment to circularity. Overall, as we transition to a more regenerative approach to food production, the farm and supply of the future will look different from today as it will be based on different principles such as circularity. It is well worth articulating that vision to accelerate opportunities and avoid threats through this change.

Tags: crisis, demand, supply chain, global food insecurity, Ukraine, price, US, wheat, Middle East, North Africa