For food and agribusiness companies, commodity sourcing is an increasingly challenging business function. Traditional procurement strategies for managing agricultural supply risks are becoming less effective in managing supply volatility in an era of climate change and increasingly erratic weather patterns. Widespread groundwater depletion and soil erosion are further compromising agricultural productivity and increasing procurement costs. In short, secure access to a reliable and low-cost agricultural supply base is increasingly in jeopardy. Campaign groups are shining a light on questionable and illegal practices in supply chains, including deforestation and the use of forced labor, creating risks to brand equity and reputation, particularly for processed food, beverage and retail players.
Many food and beverage companies are finding ways to help growers shift to practices that build healthy soils, conserve water supplies, respect the rights of workers and support biodiversity. Some are offering technical assistance and incentives, either directly to growers in their supply chains or through intermediaries, such as agribusiness retailers or input suppliers. Others are developing practices and policies that improve farm communities and protect the rights of workers, or are working collaboratively through pre-competitive multi-stakeholder initiatives, such as the Consumer Goods Forum or Field to Market.
Agriculture’s environmental and social challenges are felt at every stage of food production, typically affecting farmers first, and then rippling across the supply chain to impact traders, distributors, processors and retailers. The challenges are all interrelated, and understanding them requires a system-wide view.