Britain is not about to run out of food. However, we are seeing the start of a significant change, namely what it takes and what it costs to keep supermarket shelves full. Those of us living in the UK know that our infrastructure and food system has been designed around the near certainty that our climate is wetter and colder than many of the countries that we trade with.
That assumption is now being tested. Met Office projections suggest that average summer temperatures could be up to 5.4°C hotter in the UK by 2070 under a high-emissions scenario. Whilst this is noteworthy for UK producers, challenges faced elsewhere in the world, and in particular the strengthening El Nino conditions, continue to disrupt conditions across other parts of the world. Global challenges stress the global system.
Food supplies in flux
Extreme weather events add to the long list of pressures UK farmers face, which include narrowing margins, volatile costs and labour challenges. This summer’s heatwaves have already impacted current production and expectations for future harvests, with the Energy & Climate Intelligence Unit (ECIU) now estimating that the UK’s next cereals and oilseeds harvest could be the smallest since detailed records began in 1984. Other key crops that form the backbone of the UK food supply chain have also been affected.
Wheat and barley are essential inputs into livestock feed, meaning poor harvests can increase production costs across poultry, pork, dairy and beef supply chains, which can get passed on to consumers. Fresh produce is already showing signs of strain, with UK growers reporting reductions in broccoli, cauliflower, pea and lettuce yields. Further afield, drought-stricken pastureland is increasing feed costs and tightening cattle supply in the US, pushing up global beef prices.
This latter challenge is a good example of how interconnected food supply chains and markets can impact domestic availability and pricing. In Europe, southern nations are now regularly seeing temperatures in excess of 40°C, forcing them to rethink their own production capabilities. Further afield, we have seen disruption to Ukrainian grain supply, Indian rice, Japanese Matcha, to name but a few. The result? Frequently shrinkflation and imitation, but most always higher prices. Richer nations tend to win on supply, while consumers lose on price.
Our Global Supply Chain Resilience Outlook asked CEOs of major companies for their thoughts on global markets and disruption. We found that 51% of global CEOs believe their businesses could not maintain operations beyond three weeks if a major supply chain shock occurred . But is this what these climate incidents are? Shocks. At what point do we admit that they are now structural? UK CEOs also reported that climate is a greater business concern (27%) than geopolitical tensions (19%), tariffs (21%), AI (16%) or sustainability regulation (17%).
This highlights the need for a rethink when it comes to production and supply. For food businesses, it is becoming increasingly important to understand exposure: not simply knowing who supplies a product, but where it is grown, what water and climate risks sit behind it, what alternative origins exist and how quickly volumes can realistically be moved.
Global sourcing strategies
Whilst disruption to food supply chains is nothing new, and heatwaves are affecting both current harvests and the UK’s ability to maintain future food production, we have seen little immediate danger of shortages for UK consumers. UK supermarkets are exceptionally resilient and have built sophisticated global sourcing networks capable of switching supply between regions and countries when disruptions occur.
For decades, geographic diversification has been a key resilience strategy within the food industry. This year, British buyers have sourced more than the norm from Spain, the Netherlands and other markets to bridge gaps as the domestic harvest disappoints. However, climate change is now testing that model.
Whilst the availability of food is set to remain relatively stable over the coming weeks, long term, businesses may need to rethink their safety nets. With the same climatic pressures affecting several important sourcing regions at once, alternative supply becomes scarcer and more expensive. As this moves from abnormal to the new normal, the challenge becomes structural. Global sourcing strategies, traditionally the source of resilience, are facing the challenge of correlated exposure.
Rather than creating an immediate food security crisis, climate change is more likely to increase volatility across the UK food supply chain. Supermarkets will continue to source globally and maintain availability, but doing so may require longer supply routes, greater sourcing flexibility and higher procurement costs.
For UK consumers, that means shelves may not be empty, but they may see changes in price, provenance and seasonality. All of which could, in the mid to long term, change what we buy, where we buy it and what we pay for it. Temporary changes may become more permanent trends.
Elevated risk requires elevated resilience
Future resilience to short-term supply shocks will require broader supplier networks, additional growing locations and greater use of climate-resilient crop varieties to reduce dependency on individual geographies.
But simply adding new suppliers is not going to be enough. Food manufacturers and retailers will need to think in terms of multi-origin sourcing, alternative crop varieties, forward contracting, greater flexibility around product specifications and longer-term agreements with strategic growers or deeper integration with strategic partners.
At the same time, successive years of extreme weather can impact soil condition, water availability and farmers’ ability to establish future crops, which is why the longer-term issue of agricultural resilience requires a more diverse risk management strategy.
The ECIU has highlighted that repeated cycles of drought, heatwaves and extreme rainfall risk creating a “climate doom loop”, where poor harvests reduce farmers’ ability to invest in future productivity improvements . This is dangerous; weaker yields for producers will result in less freedom to invest in innovations like irrigation or soil improvement, leaving them even more exposed. In this way, those that treat climate change as temporary, or wait for the impact of extreme weather patterns to become clearer may find themselves reacting to higher costs, supply constraints and disruption, rather than designing for them now.
Resilience needs to be shared across the supply chain with better forecasting and closer collaboration between retailers, manufacturers and producers. This may mean a change in mindset for procurement; the most resilient supply chain is unlikely to be the lowest cost. So, what is the acceptable cost of resilience?
Putting resilience into practice
To complement the diversification of sourcing and supply networks, businesses can employ a number of strategies to boost resilience. One strategy is better forecasting and demand planning, as extreme weather increasingly drives rapid changes in both supply and consumer demand. Retailers that combine weather forecasting, AI-driven demand sensing and agile procurement strategies will be better placed to mitigate shortages, minimise waste and capture demand shifts as consumer purchasing patterns change.
Another strategy is to boost investment in agricultural water infrastructure. Water is rapidly becoming the critical constraint for UK food production, with the National Farmers’ Union (NFU) recently calling for greater investment in reservoirs, irrigation systems and on-farm water storage . Retailers and manufacturers may need to re-evaluate their relationships with producers.
Will it be enough to have traditional buyer/seller relationships, or is there a need to build tighter, more collaborative partnerships; with longer contracts, co-investment, joint forecasting and planning?
While there is increasingly less certainty around what each season will deliver, the future of UK food is unlikely to be defined by empty supermarket shelves. Instead, it will be defined by the effort, ingenuity and cost to keep them full. That will require an industry specific way of thinking about resilience and supply. Not simply more suppliers, but different origins, deeper relationships, co-investment and a willingness to invest in designing for, not just react to disruption.
By Simon Geale, Executive Vice President at Proxima
- Sourcing & Procurement