The ripple effect of the food crisis: With challenge comes opportunity
The world is in the grip of a crisis which risks placing millions into food poverty.
Shortages and soaring prices caused by war, the pandemic, crippling energy costs, and supply chain pressures have created a perfect storm which has raised the very real spectre of famine in many parts of the developing world.
Even western nations, which have not known such shortages and price rises for a generation are seeing the impact. The crisis is causing a domino effect which is prompting civil unrest and geopolitical instability in many parts of the globe.
But with the crisis comes the opportunity to address the deep-rooted fault lines in the wider agricultural sector. A mix of new and traditional ways of doing things combined with modern technology could not only prove the solution to the immediate crisis but address many of the more deep-rooted issues and increase long-term food security.
Origins of the current crisis
Ukraine is not known as the breadbasket of Europe for nothing. It is a major producer of corn, barley and sunflower oil, as well as the world’s sixth-largest exporter of wheat. In addition, the wider Ukraine-Russia region also exports 65% of the world’s sunflower. The strategic situation has meant 20 million tonnes of grain is currently unable to leave Ukrainian ports.
Sanctions placed on Russia have also added fuel to the fire, as it was the exporter not only of wheat but many of the chemicals used to produce fertiliser used by the global agriculture industry.
But while the war may have lit the touch paper, other slow-burning factors have also been to blame.
The pandemic not only crippled food production around the globe during lockdowns, the pressures it created on supply chains when demand rebounded led to a bottleneck from which those supply chains have still not recovered. Extreme weather has also had an impact along with rising energy costs and inflationary pressures.
The impact is being felt in Western nations, having been termed the ‘cost of living crisis in the UK. US President Joe Biden has vowed to bring down prices for Americans, but in many developing nations, the pressures are potentially existential.
The World Food Programme estimates about 49 million people face emergency levels of hunger, pushing 20 million people in sub-Saharan Africa into starvation.
Shortages and rising costs have had an impact on political stability, helping to prompt riots in Sri Lanka and the fall from power of Pakistani Prime Minister Imran Khan.
In addition to a lack of food itself, there has also been a shortage in what farmers rely on to grow that food – fertiliser. Accounting for 30% of a farmer’s average outgoings it is unquestionably their most valuable resource.
The sanctions placed by the West on Russia and Belarus have had a severe impact on production. Russia itself usually exports in the region of 20% of the world’s nitrogen fertilisers, while Belarus exports 40% of the world’s potassium, both of which are used in fertiliser production.
The post-pandemic rebound in manufacturing has also fuelled the need for more of the chemicals used for fertiliser production. This has resulted in prices soaring a massive 78% higher than they were last year.
Innovative farming - embracing the old and new
They say necessity is the mother of invention, and that has certainly been the case in the way some farmers have responded to the crisis.
In the USA for example, with corn prices surging, many farmers switched to soybeans instead. Soybeans don’t require as much fertiliser and a survey released earlier this year showed farmers intended to plant 91 million acres of them this year – a rise of 4%.
It is not just what they are producing either, but how they are producing them. High fertiliser prices led to a surge in demand for manure as farmers returned to more traditional ways of getting nutrients to crops.
These changes have led to a surge in demand and interest in different ways of farming. One such method is agroecology. A type of sustainable farming which includes techniques like crop diversification, the use of natural fertilisers, rainwater harvesting, and producing crops via methods which help protect the natural environment.
Permaculture is based around the philosophy of building a regenerative ecosystem like those found in the natural world. Just as an untouched ecosystem replenishes itself by finding a balance with wildlife and plants, so, in theory, does a permaculture farm. Its advocates describe it as 'working with nature, not against it'.
Hydroponics harnesses water instead of soil to grow plants. This works by feeding the plants with mineral nutrient salts which are dissolved in water. The bonus is that it can be undertaken in an enclosed environment, or in an environment where soil is scarce or unavailable.
The term aquaponics is lesser-known but involves the symbiosis of plants with fish and other aquatic creatures. The plants are fed the fish’s discharge or waste which enables them to grow. They then clean the water which provides a cleaner environment for the fish.
Precision farming focuses on the near real-time measurement and observation of growing crops. This data allows farmers to more closely respond to what crops need as they develop and results in a more controlled and measured use of resources It can involve tech such as IoT, drones and analytics to help increase crop yields and reduce production costs as well as labour costs. All of these can help increase profitability and reduce the impact on the environment.
Vertical farming is often found in cities and towns and involves the growing of crops, usually indoors, in stacks. The farmer can control the environment from temperature to water and light and multiple crops can be grown even when space is at a premium.
Changing trends in agribusiness
The food crisis and the need to innovate brings with it the requirement for investment in new methods of doing things. It also provides opportunities to help tackle other crises which are closely related, such as climate change and sustainability.
Returning to more traditional methods of farming which find a better balance with nature can have a positive impact on ecosystems, reducing the need for artificial chemicals due to the increased focus on more natural methods.
Many sustainable farming methods also extoll a lifestyle too, which aims to replace what is removed from the land and find a level of equilibrium with nature which may not have always been present in previous eras of intensive farming.
And it is not just the agriculture sector which is changing, but those consuming the food too. Ever-more mindful of the carbon footprint of food, consumers are changing some of their eating habits to focus on locally produced food, often food which is organic. Millennials are also placing more of a focus on natural goods which are nutritious, with food that is unsullied by any form of chemical being increasingly highly prized.
Technological innovation will also be key to solving the current crisis, with investors focussing their efforts on AgTech companies, along with food tech and BioSolutions.
Last year was a record year for AgTech, with nearly $5 billion invested in the sector, a massive increase on the $3.3 billion invested in 2020. Major deals included $430 million investment in California-based Pivot Bio, which looks to take nitrogen from the air and make it available for plants. There was also a deal involving Chicago company Nature’s Fynd, which develops a nutritional vegan protein from a microbe. It received $350m of investment to develop its technology further.
It is clear that even when the initial crisis ends, we are moving into a new era for the food industry with a changed mindset among producers and consumers alike. Food security, nutrition, sustainability and a need to embed new methods within a wider commitment to the environment are redrawing the entire sector.
A future fit for purpose
While the current plight of the global food sector is undoubtedly bleak, there is hope that new methods combined with old, new technology and - more importantly - a united desire to solve the problem, will lead to a new era of focus on food security and sustainability.
The pandemic and the war in Europe have proven how precarious many aspects of our globalised world were and are, particularly the supply chain and now food production. It is a warning the world should not ignore. Building more sustainable farming methods which are more robust and better able to withstand future shocks is now more important than ever.
The desire for wider sustainability will also see the renewable energy sector play a part in the future food economy, as producers and consumers come to value an integrated approach to the environment where the production methods are eco-friendly as well as sustainable. Solar and wind will be more widely embraced.
HLB’s experienced agriculture and food experts can help advise businesses on the way forward for the agricultural sector and help you pursue sustainable business growth.