Webinar Recap: Adapting to the New Normal in the Agricultural Supply Chain

Major Changes in the Agricultural Supply Chain

Over the past few years, the global agricultural supply chain has been exposed to extremely vulnerable disruptions. The following are some of the main factors that have and could continue to create agricultural supply chain interruptions:

Covid 19 - Irreversible Changes to Supply Chains

Covid 19 had a critical impact on global trade and is still shaping global agricultural markets. Nearly everything from fertilizer for fields and feed ingredients for livestock to harvesting fresh produce has been impacted by disruptions in the supply chain.

Increased Effects of Climate and Environmental Factors

Adverse weather is now more than ever affecting the agricultural supply chain. Climate change leads to more frequent extreme weather events, and plant and animal disease outbreaks.

Changing Geopolitical Landscapes

The geopolitical landscape is ever-changing, making it impossible to predict. Several events that could shape 2023 were detailed in the Webinar, such as the Russia-Ukraine conflict and unrest in Latin America.

Logistics - Port Closures, Bottlenecks

The ocean freight contract market experienced a price drop of 5.6% in November. For the third consecutive month, rates have lowered, marking the most significant decline since 2019. Orders from Chinese manufacturers will fall by as much as 40% from their current standing.

Rising Costs in the Whole Supply Chain Financial Risks

On top of the trade disruptions and increased commodity prices, caused by the post-Covid recovery, global factors led to even higher prices of inputs and energy. As a result, food inflation soared and trade was further disrupted.

Energy Costs and Labor Shortages

In November 2022 monthly report, input prices such as oil and fertilizers have reversed their downward trend in October/November, putting more pressure on Agri commodities. Higher feed, fertilizer, and energy prices and a weaker US dollar might indicate a possible inflection point for global Agri commodity prices.

What are the Strategies to Optimize the Supply Chain?

Suppliers - Boosting Resilience

Suppliers can use digital tools in order to boost the resilience of agricultural supply chains. Also, digital tools bring focus on creating more intelligent supply chains and quick adaptation to changing demands.

Buyers - Efficiency

In general, the profitability of the supply chain could be improved drastically via better delivery performance and increased information availability, reduction of inventory-carrying and transportation costs, the removal of indirect and direct labor costs, and the increase of sales and sales margins.

Redesign Supply Chain Strategies

Eliminate all ‘time delays’ in goods and information flows from the supply chain; by better planning and better use of IT and improved logistics:

• Exchange ‘information’

• Remove one or more intermediate ‘echelons’ in the supply chain

• Improve the ‘decision rules’ at each stage of the supply chain.

Innovation in Agricultural Techniques

Implementation of new technologies, like planting improved crop varieties, zero tillage, and direct seeding, can help farmers to be climate-resilient. Farm automation helps link agricultural machines, computer systems, electronics, chemicals, and other sensors, which provides valuable data to improve operation and decision-making and ultimately, reduce human input and error.

Digitalisation - Trading Platforms

Digital platforms, like Tridge, supports provide support from research to ordering and enable buyers to source their food and agriculture items at reasonable prices. On Tridge, vendors can also diversify their sales channels and find buyers (at the proper time) for perishable foods.

Government Support

Governments can help in the following areas: unblock and de-risk Black Sea logistic routes, reduce trade restrictions and release buffer stocks; to rebalance global supply, individual countries need to increase the supply of grain traded on the world market and provide financial aid to the most impacted areas and populations

Prospects for Agricultural Supply Chains

The new normal is here to stay in 2023. Supply chains are complex and even a single issue that goes wrong can impact the rest of the process. Several issues that can impact the supply chain in 2023 were discussed further, such as South American weather patterns, Chinese demand, Black Sea Grain flows, and Central bank policies.

Panel Discussion:

Regarding the flow of agricultural commodities, what will be the logistic trend for 2023?

According to Dario, the agricultural industry is subject to various factors such as weather, political and economic conditions, consumer trends, and demand. However, some trends like the increased use of technology to improve traceability, transparency, and efficiency in supply chain management have been observed

According to Kush agricultural output will determine the success of 2023, driven by increased demand. Consumers have high expectations, but on the other side, the diminished purchasing power of consumers is pressuring stocks. Improved logistics will be the next trend and future in this industry, like digitization or automation of businesses and logistics processes through networking devices.

Are there preventive measures for buyers/suppliers in order to keep the supply chain stable?

According to Kush, the supply chain is a family of well-lit coordinated information flows, which involves structured relationships between the major key players. Private players that enter the supply chain could improve efficiency as in the case of India. the government supports private markets and contract farming in direct marketing. Big data and algorithm-based data collection should be included in risk management.

Dario mentioned that there are several preventive measures that buyers and suppliers can take in order to keep the supply chain stable: diversify suppliers and sources, develop long-term partnerships, conduct regular supplier evaluations, and use digital tools to improve visibility and traceability.

Can digitalization simplify transactions, documentation, and communication in the modern global supply chain?

According to Dario digitalization can simplify transactions, documentation, and communication in the modern global value chain. Additionally, the use of digital technologies can facilitate real-time monitoring and analytics, which can help companies to make more informed decisions and respond more quickly to changes in the market. He went on to discuss some of the tools available in the digitalization process.

According to Kush real-time data is a fundamental need o to track and trace transactions. With the API integrations, the shipping line companies will ensure transparency in the complete flow of information because every piece of information is precious for the supply chain. Kush went on to give practical examples of data and communication tools that can facilitate transactions more efficiently.

A question from the audience was posted to the speakers in the Q&A session

How can developing countries digitalize agricultural supply chains?

Bojan, Dario, and Kush were in agreement that infrastructure, government support, and education are the key elements of implementing and improving digital supply chains in developing countries.

Click here to view the recording of the webinar, or click here to view the slides.