In today’s climate-changing world, extreme weather events happening far away are influencing the cost of everything around us – from plane tickets to clothing to the price of a meal.
Consider olive oil and chocolate. Severe droughts in the Mediterranean have drastically reduced Spain’s olive harvest, causing prices to rise significantly in June for American consumers. Similarly, the price of some chocolate bars, such as Cadbury’s Freddo, has already increased this year in Australia, with similar price hikes expected in the U.S. markets. This is primarily due to extreme weather impacting cocoa farmers in Ghana and Ivory Coast.
Such climate disasters in major wheat-producing countries like Argentina have also affected essential food products like breakfast cereal, pasta, and bread. The price of wheat and wheat-based food products has experienced some of its biggest surges since 2021. The reason? Drought hit wheat production in Argentina in 2021 and again in 2023, creating panic in global wheat supply chains already strained by the Russia-Ukraine crisis. Food companies reacted to this instability by preemptively raising consumer prices.
Wheat price spikes might mean an extra dollar for pasta for someone like me, an Indian American living in California. But for my cousins back in India, food inflation means cutting back on other necessities, like buying new textbooks. Growing up in rural India in a large family, we often faced similar challenges. When food prices rose, my siblings and I had to buy used textbooks at the start of the school year. A similar pattern plays out for many others, who switch to canned fruits and vegetables instead of fresh ones due to rising food prices.
Our planet is locked into several decades of climate change, regardless of our current efforts to mitigate it. As an entrepreneur working to make food and agriculture supply chains more resilient to climate change, I realize we need a fundamental shift in our approach to supply chains to ensure affordable and accessible food for everyone.
Food supply chains are among the most critical in the world, and they face some of the biggest climate change-related threats, like extreme weather, rising temperatures, and water scarcity. These factors negatively impact crop yield and quality, ultimately affecting food security. But while climate change significantly contributes to this problem, other events like wars exacerbate it. As a result, many governments resort to protectionist measures to safeguard their interests. However, this often leads to a domino effect that worsens the very issue they are trying to avoid – price surges across food supply chains disproportionately impacting lower and middle-income consumers, including farmers who often spend more on food for their families than they make from farming.
In theory, policies like nearshoring (relocating supply chains to neighboring countries like Mexico), friendshoring (relocating supply chains to allied nations like India), and “America First” seem helpful for semiconductor supply chains. But they don’t work for food supply chains. You can’t grow wheat in Minneapolis, and bananas can’t grow in Canada. Even if countries manage to diversify their food supply chains with friendly nations, it doesn’t necessarily mean that supply chains on both sides won’t be impacted simultaneously by climate events.
Instead, we need a radical rethink of how we build resilience in food supply chains. So far, all approaches to climate adaptation have been country or company-specific. But this global challenge requires a global solution: a collective, cooperative effort, proactive rather than reactive, from governments and companies on an international supply chain level to build resilience in the face of climate change.
One such global initiative could be the launch of supply chain climate adaptation plans (S-CAPs). These plans, similar to national climate adaptation plans, would be led by multilateral organizations—WTO or World Bank in collaboration with governments—and private sector companies in the food, agrochemical, and transportation sectors. They would begin by identifying vulnerable global food supply chains, focusing on essential foods like wheat and rice. They would then map out areas prone to climate risks, critical transport routes, and important farming regions. Finally, they would develop strategies and identify projects to reduce these risks, such as creating climate-resistant seeds, diversifying transport methods, investing in technology to detect hazards, and growing crops in safer areas.
An effort like this would require funding—a combination of international funding and companies’ contributions to support assessments, R&D, and implementation. In fact, unlike initiatives for cutting carbon emissions, driven mainly by reputational and regulatory concerns, initiatives to protect our food supply chains could have a higher return on investment in the short-to-medium term. For instance, Ethiopia’s investment in drought-resistant crops and water management has resulted in a return of $2 to $4 for every $1 spent.
An international agreement might not sound like the most exciting climate change solution, but it can help keep food stocked and prices low for everyday consumers.
When the COVID-19 crisis hit, the world came together and went from having no knowledge of the virus to developing and deploying 5 billion vaccines within 18 months. We can certainly replicate that for the food crisis. But a collaborative mindset, rather than an America-first isolationist mindset, is critical to succeed.
