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Saturday 20 August 2022

Perspectives: Global food supply impacts and the consequences for NZ

4th August 2022 By Contributor | | @foodtickernz

The gaps in New Zealand’s food innovation system need to be plugged, writes Te Puna Whakaaronui Fit for a Better World.

NZ is at an inflection point, says Te Puna Whakaaronui in an update to its April Global Food System report.

Global food system pressures are converging and amplifying economic vulnerability.

The macro drivers of change include geopolitical tensions, climate change, technology change and changes in consumer demand, and they continue to accelerate and increase stress beyond the global food system.

The result is greater and more widespread economic uncertainty, especially for low and middle-income countries, due to rising food prices, rising energy prices, and tougher financial conditions, with climate change exacerbating the problem.

Many of the poorest countries are facing some very tough decisions and their worsening economic
situation cannot help but impact domestic populations.

When we look at the broad trends, we see cascading effects:

• the impact of inflation and monetary policy is dampening demand for higher value foods and removing poorer people’s ability to buy or access essential foods; commodity prices peaked in the Northern
Hemisphere in mid-June.

• there will be ongoing shortages of “staple foods” – grains, oils, fruits and vegetables – as climate change, war and weakened distribution networks combine to exert sustained pressure on food security and prices over the longer term.

• globally, we should see some price relief in the short term due to eroding purchasing power and a subsequent drop in demand across non-essential product categories. We will also see those governments in developed countries, able to provide food price relief, alleviate some pressure. In low to middle income countries, who are in a more precarious economic condition, hunger and famine represent a real risk in the short-medium term.

• over the next six to twelve months, we should expect to see price increases in some staple foods as the Northern Hemisphere’s reduced crop volume comes to market and winter takes hold. Tradeoffs will need to be made between energy for heating and energy used in food production, added to which ongoing
climate impacts will continue to stress parts of the food system.

• Russia has agreed to unblock grain exports from Black Sea ports, which should allow for last season’s crops (tens of millions of tonnes of grain) to be exported from Ukraine. This could alleviate some of the most immediate and acute shortages in a few Middle Eastern and African countries. However, uncertainty remains over if, and when, the grain exports will reach their destinations. While war and other pressures continue, this singular agreement does not materially improve the medium to long term outlook for the global food system.

In summary, food shortages, high food and energy prices and tough financial conditions will increasingly impact on the ability of low and middle-income economies to cope; the knock-on effects of civil unrest and political instability will become widespread and acute.

Co-ordination and global free trade of foods will be essential to minimise deprivation. The United Nations should consider moving now to secure food supplies and move them into the regions most at risk. The writing is on the wall, nations that can act should do so now before the need is overwhelming.

Will anything change for New Zealand?

Te Puna Whakaaronui stated in its April 2022 Global Food System report that the mid-to-longer term domestic impacts of global food system stress would include more supply-chain vulnerability, increased import and production input costs, as well as more pressure on households and national food

Since April, New Zealand’s annual inflation hit a 32-year high of 7.3% in the June 2022 quarter on the back of higher food, fuel and housing cost. The cost of labour and fertiliser inputs have also been driving higher food prices in 2022.

While we may see some relief in oil prices in the short term, costs for labour and fertiliser look set to stay high.

In our April Global Food System report we:

  1. identified the need for New Zealand to simultaneously manage affordable access to nutritious foods domestically, while sustaining demand in key international export markets;
  2. advocated for open trading relationships and the removal of export and import restrictions; and,
  3. advocated for increasing targeted investment in the research, science, innovation and technology system to develop new goods that meet the demands of growing consumer segments.

These three imperatives remain. In addition, support for the development of regional and community-driven food initiatives could be increased over the medium term. The gaps in New Zealand’s food innovation system need to be plugged if we are to create a sustainable competitive advantage as the global food system transforms.

Identifying and focusing on a number of national ‘missions’ such as high-value extracts, low-carbon building materials/products, and redesigned value chains to create new industries are areas of opportunity to consider.

Global system stress as a result of rising food and energy prices, increased debt and financial hardship, plus multiple climate events, has been building exponentially for some time.

We are now at an inflection point – we must decide now which ‘mission’ to launch and act on it, the wellbeing of New Zealand’s people and economy depend on it.

This is an edited version of Te Puna Whakaaronui Fit for a Better World‘s Global Food System update. Click here for the full report.



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