Fruit and vegetable department in a grocery store in top view
Created: 23.05.2018
Category: Blog posts

How secure is the supply of agricultural commodities?

Kathrin Ankele and Judith Winterstein

Customers in developed countries are used to shelfs full of fruit and vegetables, and a huge variety of local, regional and international products. They expect all-the-year availability not only of predominantly tropical/subtropical permanent crops like bananas, but also of domestic seasonal crops as tomatoes, strawberries, and apples. This poses a major challenge to retailers and producers worldwide. In order to provide fruit and vegetables all-the-year in huge amounts of constant quality, an industrialized agricultural system with monocultural cropping is prevailing. This particularly applies to conventional agriculture, frequently leading to negative ecological and social impacts.

Ecological and social impacts

Those negative impacts comprise enhanced pest pressure, exceeding water usage and pollution, soil degradation and the decline of biodiversity. The control of pests and diseases is carried out with a constant, often excessive application pf pesticides, which comes along with ecological as well as social and health risks. Industrialized agriculture contributes especially with its land consumption also to the expulsion of smallholders. Furthermore, export oriented monocultural cultivation not only endangers food security in developing countries, but might also lead to rural depopulation, when e.g. only seasonal harvesters are needed. Combined with low market prices, big agricultural operations are therefore facing difficulties to find workers for the mostly low rewarded harvest work. These relationships can be observed in the worldwide coffee and cocoa cultivation, among others, partially also in Europe, e.g. in the asparagus or wine cultivation in Germany.

Direct and indirect supply risks

The described social and ecological impacts of industrialized agriculture represent direct and indirect supply risks. Directs risk as water scarcity or pest pressure might lead to crop losses and therefore shortages in supply. Indirect risks for international retailers or producers comprise e.g. loss of reputation due to bad working conditions or child labour, which might lead to supply bottlenecks as well. Impacts of climate change will intensify supply bottlenecks in future, when e.g. extreme weather events as droughts, hurricanes or floods lead to crop losses and depopulation of rural areas. The drought in South Africa, one of the leading internal exporters of agricultural products, is a recent example. The consequences of this drought on the agricultural sector and the supply of international retailers are still not fully clear, neither in terms of crop losses nor in terms of economic damage.

Innovative cultivation concept

Coming back to the initial question: the supply of agricultural commodities is already today partially at risk and one can expect that the situation will get worse. Consequently, there is an urgent need for innovative cultivation concepts and accompanying capacity building to strengthen the resilience of agricultural production. Resilience comprises enhanced resistance of the agricultural system, e.g. against climate change, but also preservation and development of rural areas.

Starting point risk analyses

First of all, retailers and producers must become aware of their supply risks. Fur this purpose, risk analyses can be used which differentiate supply risks by crop and country. The early bird catches the worm, as the saying goes, or even better, the first (movers) will remain first. It is in the fundamental interest of retailers and producers to actively support the dissemination of such innovative cultivation concepts. This is the best way to make sure that they can also in the long run provide their customers with a broad variety of products in a manner that protects and preserves natural livelihoods and ensures fair working conditions.

Information about our consulting services on sustainable supply chains can be found here