Soaring food prices have reignited concerns about global food security, with rice, the staple diet of billions across Asia, and cocoa, a vital export for African economies, both hitting record highs.
In Japan, rising rice prices helped topple a prime minister; in South-East Asia, households are struggling to afford their most basic food; and in West Africa, farmers are grappling with high export prices that don’t translate to higher incomes.
‘Many of these risks are interconnected and amplify each other’
The recent swings in rice and cocoa markets have exposed the fragility of global food systems and how climate, geopolitical and trade risks intertwine to intensify price shocks in one region and ripple across economies and supply chains.
‘Many of these risks are interconnected and amplify each other, such as geopolitical tensions and associated trade sanctions, climate change and more regular and severe impacts on crop production and yields,’ says Luke Withers, UK head of food, agriculture and beverage at Lockton Companies.
Sudden shocks
The Food and Agriculture Organization’s All Rice Price Index in September recorded around 100.9 points (reflecting a pullback after earlier spikes), but the path to that number was jagged and regionally uneven, with households in parts of South and South-East Asia experiencing sharp local price increases.
Cocoa tells a different but related story. After a sharp contraction in output – World Bank analysis estimates global production fell by roughly 14% in the 2023-24 season – prices spiked as steady demand met tightening supplies.
Simon Davis at sustainability consultants Anthesis Group says a mix of sudden shocks such as extreme weather, crop-disease outbreaks and land-use conflict coupled with longer term vulnerabilities have a material impact on productivity.
‘We are continuing to see a reset in how countries are thinking about food resilience’
When these challenges are not adequately mitigated, ‘this can lead to significant drops in export volumes and extreme price volatility’, he says.
Trade disruption
This volatility has been exacerbated by disruption to global trade patterns caused by the Covid-19 pandemic followed by the war in Ukraine. For instance, from 2023-24 India – the world’s largest rice exporter – imposed restrictions that pushed buyers to compete for available supplies.
‘Geopolitical risks have brought a serious impact on the whole global food supply, and it shows how vulnerable we are and how concentrated our food supply is,’ Malachy Mitchell, managing director of agribusiness consultants Farrelly Mitchell, says.
Meanwhile in Asia Pacific, US President Donald Trump’s tariffs are reshaping the relationship between the US and mainland China, says Ian Proudfoot, head of agribusiness for KPMG in New Zealand. ‘We are continuing to see a reset in terms of how countries are thinking about their domestic food resilience and how they are interacting on an international market,’ Proudfoot says. ‘That is continuing to put pressure on prices and create instability in food price markets.’
A recent report by KPMG, Reimagining Global Food System Resilience, suggests that every organisation should think about how their products and technology may be able to help create a more resilient system.
‘There are all sorts of opportunities that could change the food system’
‘The report’s call to action is think about the role of food in your business; don’t be passive,’ Proudfoot says.
Benefits of automation
The cost of labour globally has gone up dramatically for food businesses while availability has decreased. That has changed the economics around automation in terms of robotics, use of drones, adoption of AI and new assisted breeding technologies.
Because the food system globally has been a slow adopter of digital technology, it has very limited legacy. Therefore, the ability to adopt new technology is less constrained than in other sectors.
‘It is not just about how you do your yield planning; there are all sorts of opportunities that could change the food system,’ Proudfoot says.
For instance, regenerative agriculture practices that support climate adaptation and mitigation, ecosystem regeneration, improved worker and farm livelihoods, and overall value-chain resilience are ‘pivotal in managing price volatility and shocks’, Davis notes.
‘We are seeing a greater appetite for strategic partnerships or joint ventures’
‘Guiding principles need to consider how farmers can improve soil, water and climate resilience, promote biodiversity and improve productivity and profitability.’
Mixed tactics
Similarly, fast-moving consumer goods and food companies are increasingly proactive in managing climate and agricultural risks, says Vanessa Matthijssen, Deloitte’s Asia-Pacific consumer industry lead.
Organisations are, she says, deploying a mix of short-term tactics and long-term strategic initiatives across their operations and supply chains, investing in AI and digital transformation, including enterprise resource planning, as well as establishing partnerships upstream and investing in more resilient and climate-smart farming practices. Multi-region sourcing strategies, particularly for fresh produce, are also becoming more prevalent, Matthijssen notes.
‘Lean manufacturing, supply-chain visibility and trade-spend analytics are key areas of focus. In addition, we are seeing a greater appetite for strategic partnerships or joint ventures with key suppliers for shared investment and secured supply,’ she says.
Proudfoot predicts that by 2026 and 2027 some innovations will start to impact on the yields that can be produced and therefore ‘start to bring the imbalances back into balance’.
But while there is optimism that technology and innovation can provide solutions, this remains uncertain, especially as the global economy undergoes a fundamental realignment. ‘These changes signal a long-term transformation in how businesses will need to manage volatility,’ says Withers.
‘Many of the current pressures reflect a structural shift rather than a short-term disruption. Climate impacts are already being felt and, in many cases, are irreversible in the near term – even with strong mitigation efforts.’
