WEF: Making the US$9tn Global Food Supply Chain Sustainable

The US$9tn global food industry produces significant and growing carbon emissions.

But it is not something that can be cut down or shut down – it literally keeps us all alive.

There is a delicate balancing act for all stakeholders, as they attempt to cut greenhouse gas emissions without compromising food supply or value.

World Economic Forum is among the organisations trying to find answers. Two of its experts have produced a research report.

Complex, adversarial and multi-tiered

It is authored by Adegboyega Oyedijo, Assistant Professor of Supply Chain Management, Baylor University, Texas, and Temidayo Akenroye, Associate Professor of Supply Chain & Analytics, University of Missouri-St. Louis.

They do not pull any punches when outlining the difficulty of decarbonising the food industry’s supply chains.

The report says: “The food supply chains that deliver goods from the farm to our plates are notoriously complex.

“They involve many upstream, midstream and downstream actors at different tiers, all of whom are responsible for supplying and transforming key raw materials, commodities and various items into finished products.”

They say that increasing global sourcing and outsourcing has added to the problems, because of the cooperative or “adversarial” relationships between firms.

The pair go on to add that many food companies find the quest for sustainability is not always good for their bottom line.

“Critically, many food companies struggle to integrate the concept of sustainability into the management of their supply chains in order to gain a competitive advantage.

“To become more sustainable, firms now need to consider how they operate as part of an extensive multi-tiered supply network with multiple supply and demand links, reverse loops, multi-way interactions and exchanges with numerous actors and non-linear dynamics — all of which can impact economic, social and environmental performance indicators.”

What is stopping sustainability?

As in most industries, the vast majority of emissions for a business come from their upstream and downstream supply and value chains.

These Scope 3 emissions are persistently problematic, as the report explains, saying: “The impact of second-, third- and fourth-tier suppliers on sustainability performance and practice is a subject of mounting concern.

“Suppliers upstream or sub-suppliers in countries with weaker regulations are frequently accused as the source of supply chain sustainability-related concerns.

“These upstream suppliers also have characteristics that make it difficult for lead firms to manage sustainability — they might have inadequate information about them, for example, or lack sufficient influence over them.”

Its adds that there are a number of factors hampering the implementation of sustainable practices:

• A lack of visibility beyond first-tier suppliers
• A lack of trust among actors
• The complexity of managing inter-firm relationships
• The risks associated with managing extended supply networks that involve many stakeholders and broader performance objectives
• Power imbalances and power dependencies, typically skewed towards large retail buyers.

Meanwhile, the diversity of product types, including fresh and processed foods, produces issues including “seasonality, variability in quality and quantity and shelf-life constraints”.

The list of potential problems does not end. It also includes:

• Food shortages
• Pre- and post-harvest losses
• Unsustainable land-water-energy use
• Food waste
• Food fraud
• Climate change issues
• Forced labour
• Unethical trading practices.

Multi-tier food supply chains = multiple chances to fail

The report points out that becoming more sustainable has financial and non-financial costs.

It says: “Adhering to sustainability standards requires systemic changes. For example, for certain products to meet sustainability standards, firms may need to eliminate certain resources, materials or ways of working.”

They add that multi-tier supply chain partners can have “knowledge gaps”, while “complex interconnectivity in the multi-tier food supply chain can hinder the transfer of knowledge about sustainability and its implementation”.

Poor sustainability infrastructure is also a factor, along with the “apparent impracticality of certain organic farming methods, such as crop rotation and producing cover crops.

“Farmers have limited agency to use these methods. For instance, research in Kenya reveals that smallholder coffee growers cannot practise crop rotation because of regulations governing land use and ownership, which limit the varieties of crops that may be grown on rented farms.”

The recipe for greater sustainability

The authors are realistic, not defeatist. They have come up with five key ways to drive sustainability in food supply chains.

1 – Multi-tier collaboration and partnership

The report says: “This allows all partners to share ideas that have both collective and individual implications. Such plans may include mutual agreements on how to jointly address the sustainability interests and needs of all parties.”

2 – Diffusion of sustainable innovation along the food chain

“Sustainability-oriented innovation is needed at every stage of the supply chain, from raw materials to the point of delivery.

“This can include, for example, food quality, reducing emissions from livestock, improved soil management, farming techniques and overall changes in the way food is produced and distributed.”

3 – Supply chain mapping

The report’s authors say it is important to have a “comprehensive awareness of the sustainability impacts of a firm's supply chain activities at each stage”, adding: “It is vital to conduct a thorough mapping and understanding of each upstream, midstream and downstream actor, identifying the key sustainability issues they face and prioritising efforts to address them individually.”

4 – Sustainability performance measurement

This includes elements such as a code of conduct or practice, as well as inquiries into how specific activities such as food production or labour conditions meet sustainable standards.

5 – Capacity building on sustainability

The report says: “Developing training and capacity-building programmes that specifically address sustainability issues from an environmental, economic and social perspective is crucial in addressing sustainability challenges.

“Such programmes can improve the perception of sustainability not only at the firm level but also at the individual level, leading to behavioural changes throughout the supply network.”

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