Reimagining Resilience: Why sustainable value chains are the key to food security
Agricultural value chains are fundamental to human societies. Besides providing us with essential food, they are an important source of economic growth and support the livelihoods of millions of farmers and workers. Like many other systems, however, their resilience is entirely dependent on the sum of their parts. If one or more of the parts – production, processing, distribution and consumption – are compromised, the entire system is disrupted.
Right now, the delicate balance that keeps global food supply secure is under more pressure than ever before. Extreme weather events such as floods and droughts are creating volatile conditions for growers, which in turn drive fluctuations in price and reduced supply. Geopolitical tensions, escalating tariffs and labour shortages all contribute to disruptions in agricultural inputs and trade.
Agricultural supply chains have also long been linked to poor working conditions, unfair value distribution, and low incomes, as well as significant environmental degradation and deforestation which further exacerbates the effects of climate change. According to the OECD, food production (including pre-production and post-production activities) accounts for 21-37% of human-induced greenhouse gas emissions. Smallholder farmers produce around a third of the world's food, and yet many remain trapped in crushing poverty, often earning less than US$ 2.15 a day.
The prevailing market system no longer makes economic sense either. Due to the increasing pressures mentioned, global agricultural productivity has been in a steep decline in the last decades. Climate-related heatwaves are estimated to cause net economic losses of between $3.75 and $24.7 trillion by 2060.
At the same time, shrinking global trade and turning to domestic supply is not the simple solution to food supply instability it seems. Most countries are highly dependent on others to secure the supply of food for their citizens, and a rerouting would mean a complete overhaul of diets. With global food demand set to increase by 35% to 56% by mid-century, it is abundantly clear that we will need more production and cooperation to face the coming challenge.
So what can be done?
Security of supply goes hand-in-hand with resilience. It requires a fundamental shift in the ways that market systems function, so that they can weather instability without simultaneously causing further harm. And it requires every actor along the value chain – from governments to buyers, financers and producers - to be engaged in the process.
It should not be surprising that insecure livelihoods for value chain actors contribute to reduced productivity, yet many farmers and workers still do not have enough money to afford their basic needs and that of their families. By investing in these value chain actors, to ensure that farmers and workers receive a living income or wage, buyers can contribute to the long-term economic resilience and social stability for those communities, and ultimately, their business success.
Simultaneously, instable commodity trade markets brought on by political, economic and increasing climate shocks mean that global and local companies need to rethink where they secure their supply from. By de-commodifying commodities and heading straight to the source – i.e. signing long-term commitments with suppliers and investing in environmentally sustainable sourcing areas - buyers and farmers alike have a much greater stake in deciding the future supply of their products.
Supporting local food system development in producing countries similarly helps guarantee both local and international supply by building the capacity of small and medium enterprises (SMEs) and smallholder farmers to produce and deliver consistent volume and meet supplier requirements. These capacity supports include technical assistance and removing barriers to financial access to help scale their businesses, as well as integrating climate-smart agricultural practices such as regenerative agriculture. By bolstering the capacity of local food systems, governments and businesses can reduce import reliance and meet the needs of their growing populations without sacrificing existing trade.
These are just some of the solutions being implemented and tested throughout global value chains as a response to a fragile market system that will not withstand increasing pressure. Global companies that deal in commodities know that they need to rethink where and how they secure supply amidst rapidly changing environments. Governments are recognising that their food security relies on robust local food systems as well as trade partnerships. Consequently, both entities must also invest in partners along the entire value chain, starting with farmers and communities.
Sustainable agricultural value chains can only be built by tackling the systemic issues that weaken each part, so that the whole becomes stronger than before. The future security of global food supply depends on it.
