Climate change and the future of food supply chain

Climate change risks will also catalyse the transition of farms to cleaner energy systems. Photo: Rajib Dhar.

In today's world, disruptions due to climate change are increasingly probable in business and society, which includes food security. According to one estimate, the world's population is rising and will likely reach 9 billion in another decade, with the population of Bangladesh touching 195 million. This will increase the demand for food worldwide, while farmers will struggle to keep up with the same due to adverse changes in the climate, which will inadvertently affect crop yields.

The organised farming sector will also be subjected to manage its greenhouse gas emissions in alignment with the overall industrial pledges and national commitments. 

In 2020, the agricultural sector is estimated to have emitted 16 gigatonnes of greenhouse gases—ie, about 32% of the global emissions. If food production keeps up with the rate of population growth, such emissions are likely to increase significantly in the next few decades.

Additionally, there are widespread problems with food security worldwide, with many individuals having limited or no access to the required food and nutrition every day. 

According to an analysis published by the United Nations' World Food Programme, more than 16 million people in Bangladesh face acute food insecurity. The same analysis also ranked Bangladesh as the seventh country in the countries most affected by climate-related disasters. Therefore, the food supply chain will play an important role in the future of Bangladesh and other countries across the globe in terms of how people receive food and nutrition.

Such a situation creates an opportunity and the need for a massive transformation of the food supply chain. Climate change risks must be managed by deploying effective regenerative agricultural practices. These will include managing soil health and ensuring the efficient use of water for irrigation. 

According to the United Nations, the topsoil of a land area equivalent to a soccer field gets eroded every five seconds. Conservation of biological ecosystems and strategic use of land will be able to address such issues that require immediate attention.

Climate change risks will also catalyse the transition of farms to cleaner energy systems. Sustainable farming and wider adoption of renewable energy will help in reducing costs, thus improving efficiency and potentially opening new revenue streams for many farms. 

For example, farms with surplus energy generated through wind and solar energy harvesting will be able to sell it to the geographically collocated electrical grid system or produce a transportable energy source – such as green hydrogen.

Another important issue that hinders global food security is food loss and waste. A significant amount of food gets wasted or lost in the global food supply chain from the point of production to the point of consumption. There are multiple factors contributing to this phenomenon, including disparate involvement of stakeholders and under-investment in technology. 

Moreover, other disparities exist on multiple fronts – while food waste at the consumer's end is observed mostly in the developed countries of the world, developing countries suffer losses during transportation and distribution due to the unavailability of appropriate infrastructure such as refrigeration systems.

The food supply chain of the future is likely to address food loss during transportation and distribution through more vertical integration. Many food processing businesses will likely integrate themselves more tightly with their input sources, which include farms. 

Such businesses are more likely to undertake operational management responsibilities directly through contractual arrangements or via acquisition of ownership. In other words, there will be more emphasis on improving end-to-end transparency. 

At the same time, FarmTech innovations meaning the technology deployed for farming, will be advancing at a rapid pace. Convergent technologies like sensors, satellite imagery, drones and artificial intelligence are already transforming this space radically. Precision farming with the use of such technologies has proliferated worldwide, resulting in significant savings in water resources and controlling pesticide use. 

Newer farming techniques, such as vertical farming, are gaining prominence to help produce leafy green vegetables with more efficient usage of space in a three-dimensional manner. Such newer farming techniques are going to increase productivity while enabling sustainability and managing climate change risks.

The future of the global food supply chain is going to witness significant collaboration among the ecosystem participants. Such collaborations are expected to enhance the value for each stakeholder through reinvention and transformation of the existing business models. Additionally, environmental stewardship and economic viability are likely to improve in order to make the future food supply chain more robust and resilient.

Arijit Chakraborti is a partner with PwC. The views expressed here are his own.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.