The Global Food Supply Chain in Flux

Current models are unsustainable, but new innovations offer promise.


In early February, the U.S. Department of Agriculture (USDA) released a report on climate change and agriculture that painted an ominous picture of what food production in the future would look like due to the effects of greenhouse gas emissions. The agency’s report, Climate Change and Agriculture in the United States: Effects and Adaptation, was unrelenting.

“Climate change poses unprecedented challenges to U.S. agriculture because of the sensitivity of agriculture productivity and costs to changing climate conditions,” warned the USDA, and there’s not one region of the globe that can escape what’s coming.

 

New stressors on the planet, plants and livestock

On the weather front the U.S. and other countries are facing rising temperatures, variable precipitation and water shortages, more frequent and extreme weather events, such as drought, and changing levels of CO2 and solar radiation in the atmosphere. According to the USDA, “About 80 percent of agricultural land experienced drought in 2012, which made the 2012 drought more extensive than any since the 1950s.” Major field crops in the Midwest, particularly corn and soybeans, were destroyed or damaged. In response, food prices began rising in late 2012, and consumers are expected to feel the full brunt throughout 2013.

Meanwhile, the impact on plants and livestock will be manifold. Environmental changes will adversely affect the health and productivity of livestock, while agricultural goods will suffer from a proliferation of disease, weeds and pests. Negative changes to the soil and water, fertilization and pollination will also occur. Moreover, the rate at which greenhouse gases are being emitted means the pace and effects of climate change are growing exponentially.

Simply put, our highly fragile and complex ecosystem and the plant and animal life it supports is at serious risk.

Coincidentally, just days before the release of the USDA’s report, the New England Fisheries Management Council voted in favor of cutting cod quotas for the Gulf of Maine by 77 percent, essentially wiping out a generations-old way of life for thousands of New England fishermen and those employed in related industries.

“The impact will be severe,” admitted John Bullard, the regional administrator of the National Oceanic and Atmospheric Administration, in an interview with CNN. “It wasn’t easy, but it was necessary,” he explained.

 

Cultural, social and dietary changes

Imports and exports of agricultural commodities and food products are growing not only in the U.S., but emerging middle classes in the developing world are stretching food supply chains—including shipments of fresh fruits and vegetables, meat, poultry and seafood, and all types of processed food products—further every day.

At the same time, well-known restaurant chains and brands are making their way into every corner of the world. M.H. Alshaya Company, based in Kuwait, has 70 brands in its portfolio that it is aggressively positioning throughout the Middle East and other regions. To put it mildly, chains such as Starbucks, IHOP, and Cheesecake Factory are red hot overseas, according to a recent Fortune magazine article. For instance, three of P.F. Chang’s top 10 restaurants are in the Middle East and other chains are seeing similar enthusiasm throughout the region.

Cheesecake Factory CEO David Overton, famous for his exacting standards, signed a deal with Alshaya in 2011 to open 22 restaurants in the region over a five-year period. The Cheesecake Factory is an interesting case study on several levels. Although Middle Easterners are clearly attracted to the chain for its reputation in providing patrons with a consistent dining experience from the service to the actual food, strict Islamic dietary laws relating to halal guidelines require many dishes to undergo minor to moderate adjustments. In addition, many of the ingredients for the restaurant’s dishes are imported from the U.S., and anything that misses the boat or plane, or gets held up in customs, results in changes to the menu, which the Cheesecake Factory tries hard to avoid.

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