May 27th, 2022
4 mins
Due to soaring commodity prices and deteriorating supply chain conditions created by the war in Ukraine, the output growth of UK food and drink manufacturers fell to an eight-month low in March. It’s now becoming very clear just how the war in Ukraine is impacting the supply chain.
It has been estimated that Ukrainian farmers haven’t been able to harvest approximately 20%-30% of their crops and their capacity to plant next years season is limited with a number of constraints. The farmers also have the challenge that agriculture supply chains are complicated to start with as there is only a limited number of windows for planting and harvesting crops. They now also have to consider the fact that processing facilities in Ukraine are closed and the backlog of grain that is yet to be processed will only get bigger. Even if the grain could be processed, it would be stuck within the region due to internal logistics and infrastructure being destroyed, making it harder to transport.
Ling Sin Fai Lam, director of environment, social and governance and sustainability at Shore Capital claimed that the global supply of commodities, such as wheat that are typically transported via the Black Sea using ships, are now going to face further challenges as well. Vessels that are bound for the Black Sea will face an increase in insurance premiums, putting further pressure on prices for the commodity.
Due to the impact climate change is having on our planet, such a rising temperatures, water shortages, wind and fires, the way we farm across the world is changing, which is affecting our supply chain and how we feed our population.
For a more sustainable production, we need to be looking at ways to improve yield, reduce reliance on fertilisers, look at moving to alternative proteins and diversifying grains. However, one of the biggest factors we need to consider is reducing food waste at a household level.
The impact of the war in Ukraine on the food and drink industry has coincided with a 6.7% rise in inflation, the largest since 2011. Karen Betts, Chief executive of the Food and Drink Federation, explained that because Ukraine and Russia were important suppliers of commodities, such as wheat and food oils, as well as energy and fertiliser, the current war has made the supply chain situation much worse.
