UK food industry must adapt to commodity shortages, report

By Linda Rano

- Last updated on GMT

Related tags: Food, Supply and demand, Agriculture

The independent research organisation Chatham House has launched a
project to examine how the UK can best secure its food supply in
the face of global food production shortages.

One thing seems clear to the project's authors: "Britainas a society will need to make the right policy choices if it is to secure the kind of food supply that best supports its interests​". Global food production is under pressure to meet existing supply requirements while demands are set to grow. Europe may escape the worst effects but "it is likely to experience changes and British food and drink industries will need to adapt​". The report warns that food and drink companies might "need to change their mind-set to focus on longer-term supply relationships and more sustainable behaviours - implying a move away from short-term, exclusively profit-led goal​." For the project's first report, UK Food Supply - Storm Clouds on the Horizon​, the authors canvassed the opinions of twenty-two professionals in the wheat and dairy supply industries and other experts. Particular factors that are likely to affect the UK food supply chain were identified as increased global demand for commodities, uncertain global supply, and constraints on the availability of land, water and energy resources. With respect to global demand, the world's population is expected to exceed nine billion by 2050. The Food and Agriculture Organization (FAO) predicts that food demand will have grown by 55 per cent between 1998 and 2030. The increased use of bio-fuels will also make demands on crops. Global food production has doubled over the last 25 years but for wheat, rice and whole milk the trend is levelling off or falling. The shorter term balance between supply and demand has also been affected by such events as droughts. The consensus is that the area of land cultivated globally is not likely to increase much in the shorter term. Water shortages, particularly in Asia, are another threat to increasing the production of agricultural commodities to meet increased demand. The report states that since 1980 the rate of new oil discoveries has not kept pace with the growth in demand. Rising oil prices have impacted on fertiliser production. The report says there is a consensus that commodity prices will remain high over the medium term partly because of the predicted demand / supply imbalance. It speculates that the EU maybe forced into acceptance of supply-boosting GM commodities. Some 85 per cent of the project participants interviewed said they believed that a "different food supply dynamic is in prospect".​ Many saw a switch in the UK to a "sellers/producers' market…caused by enduring constraints on supply and even a perceived potential for supply shortages". ​ This first report concludes that in the longer term global supply may not be able to meet demand unless there is sustainable management of global resources, with constraints on the supply of land, water and oil demanding particular attention. For the UK any imbalance is likely to be felt through further inflationary effects and increased competition to secure global supplies. These preliminary findings will form the basis for the next stage of Chatham House's Food Supply Project.

Related topics: Market Trends

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