Food raw materials: Planning scenarios realistically

Slowing Inflation: Procurement contra Food crisis

Since Russia invaded Ukraine, the world has been predicting – and dreading – a food crisis in the Global South, since the two sides in the war are the primary grain suppliers to the African continent. But even in prosperous Western countries, shortages coupled with rising prices for energy and staple foods like grains and vegetable oil are driving inflation upward. It is becoming clear that global commodity flows for food are undergoing permanent change. Buyers need to plan for a long period of increased volatility and gaps in availability. On the other hand, however, this does not necessarily mean simply accepting new price requests.

According to the World Food Programme, the number of people without enough food has risen continuously since2018 – and the war in Ukraine has only exacerbated thisproblem. Last year, prices for staple foods had already risen by around 30%, driven primarily by higher energy and transport costs. Since January this year, these figures have already risen by over 20%. Although starvation mainly affects people living in poverty-stricken crisis and conflict regions around the world – referred to as the Global South – shortages also occur in Europe. British charity The Food Foundation, for example, recently reported that around 14% of households in England ate smaller meals than usual or skipped meals.

 

European supermarkets and discounters are increasingly seeing customers switch to cheaper own label brands and drop more expensive food – such as dairy products and beef in Germany – from their shopping lists completely. Cheaper foods, in turn, are missing from the food banks, which are seeing unprecedented demand.

Although other countries are interested in filling the gaps – Argentina and India, for example, have announced that they are cultivating more sunflowers and will be able to export more oil to Europe in the future – that will only alleviate the issue in the medium term. India had also indicated its intention to export significantly more wheat this year and that it planned to increase
grain exports in the long-term. However, the heatwave that hit India and Pakistan in the spring and – according to initial estimates – destroyed around 25% of the harvest, halting these plans for the time being. Given the government’s worries that it would not be able to feed its own population, it has put a stop to exports.

Detailed contents in the magazine issue:

  • Grain and Vegetable Oils at Record Prices
  • Three Types of Grain Feed the World
  • Acute Shortages Today – Long-Term Insecurity Tomorrow?
  • Buyers Fighting for Supply Security
  • Closer Working Relationships Between Businesses and Suppliers
  • Realistic Scenario Planning
  • Conclusion & recommendations for action

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Authors

Paul Mohr

is Managing Director of INVERTO’s Cologne office and a food industry expert. He advises clients predominantly from retail, the the retail, food and consumer goods sectors.

contact@inverto.com

Katharina Erfort

is a Senior Project Manager at INVERTO in London and supports clients from the retail and food industry. Sustainable procurement is one of her particular interests.

katharina.erfort@inverto.com