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Ukraine, The 2022 Food Supply Crunch

By Dan O'Brien, Co-founder, Diplosphere

On Mon 22 Aug in Wellington, Diplosphere’s founder Maty Nikkhou O’Brien hosted a panel discussion entitled: Inflation, Food Insecurity, and the Coming Global Food Order.

The speaker line up was eclectic, with startup, investor, diplomatic, industry perspectives on display: H.E. Dina el Sehy (Egypt), H.E. Sudesh Maniar (Singapore), Terry Copeland (Federated Farmers), Gil Meron (Sprout Agritech), Sirma Karapeeva (Meat Industry Association), Amos Palfreyman (the moderator, and alternative milk startup, Miruku).

New Zealand animal-free dairy Miruku

The discussion covered developed vs developing nation, and food importer vs. exporter angles. Views were expressed on the threat, and opportunity, that the trends of food self-sufficiency and alternative protein sources pose for New Zealand’s important agriculture sector.

Globally, our food systems are not fit for purpose. This has been known for some time, but 2022 has demonstrated just how fragile our global food system is, how food is so interlinked with trade and security, and who it is that suffers most when food supplies are disrupted. The war in Ukraine, sanctions, supply chain disruptions in a Covid world, and more variable weather affecting agricultural yield as result of climate change have all piled pressure onto a food system which is showing signs of strain. We learnt this year the knock on effects of key inputs.

For instance, fertilizer shortages are felt throughout the food chain: a lack of fertilizer causes seeds not to be sown and yields of wheat and rice to plummet which lowers exports to reliant countries. The lack of resilience in our food system is striking, especially in a world of estimated 9.8 billion people by 2050. Our current food system would need farmland the size of Mexico, or 2 million square kilometres, to feed the additional 2 billion people in 2050 by current methods [2].

The Russia-Ukraine War has Turned Egypt's Food Crisis into an Existential Threat to the Economy

Where it hurts most: developing, food-insecure, importing countries

And as with the changing climate, it is developing countries which will suffer most from food insecurity. Especially food importers. They have few mechanisms to buffer supply disruption shocks, and wild price upswings. One such country is Egypt, and the facts are sobering:

  • Egypt is a fast growing developing country and a large food importer

  • Wheat represents 40% of the food component of about 105 million Egyptians. About 22 million tons of wheat per year a year, of which 12 million tons are imported, 80% of which comes from Russia and Ukraine. Egypt imports about 2 million tons of sunflower oil, as well as 95% of its needs for cooking oils and 10 million tons of corn annually, which is used in the production of animal fodder. [3]

  • In 2022, food prices have jumped +24% (Jan through August)

  • This is a young country with 250k babies born in last 50 days, and country which is 95% of country desert, 5% Nile Valley

The poorest and most vulnerable are the most at risk, and what is called for is solidarity - as with during the Covid-19 pandemic - where the vaccine intellectual property restrictions were waived . If developed nations waived agri and food-tech licensing royalties, developing nations could build resilience in their systems faster.

But where is the impetus to do this?

Diversification is not enough: developed, food-secure importers

Contrast Egypt with Singapore - another nation reliant on food imports, but a highly advanced developed nation-state. Its leaders have coped with the question of food insecurity for many years. Singapore imports 90% of its food from 170+ countries, with only 1% of its own 750 km2 landmass dedicated to agriculture (7.5 km2). Its long-running strategy has been diversification of food supply. But is this enough? In 2019, before Covid-19, the nation-state adjusted its long-running diversification strategy. Why? Climate change and ensuing disruption to food supply chains. This proved prescient as further problems have shown themselves in food supply chains. What is the approach? Tech. The goal is to sustainably produce 30% of the nation’s nutritional needs locally by 2030 (”30 by 30”) [4]. An example is vertical farms with LED lighting and aquaculture systems to produce 10 to 15 times more than traditional farms.

And for food-secure exporters, like New Zealand?

New Zealand is incredibly lucky to have such natural abundance which has been harnessed to feed 10s of millions worldwide. Estimates show New Zealand feeds 5% of the diet of 800 million people [5]. We are an exporter par excellence. New Zealand’s sheep and beef processing industry is export focused with more than 90% of domestic production exported to over 108 countries worldwide. And we produce food efficiently too. The carbon footprint of sheep and beef production (on-farm Life Cycle Analysis) is estimated to be around half the average figure globally (and that takes into account shipping to offshore markets).[6]

Yet even in New Zealand, food insecurity exists: some Kiwis are unaware of how to best make use of food before them, they lack of purchasing power, they lack of understanding food. So the challenge is not only: how to make enough food, but also educate consumers - what to consume, when to consume, how much to consume. Of course the irony is: globally we produce enough food at a calorie level to feed the world, but food waste, overconsumption by certain, and underconsumption by others. In the tech world, this would be termed an “optimisation problem” . Some countries like the Netherlands, deeply understand this, and are investing in people, not just technology.

And there is an elephant in the room. If consumer demand shifts towards breakthrough alternative protein sources, New Zealand may be left in the lurch. It a not too distant future one may well envisage a UK supermarket shopper in front of the cold meat shelf at a Tesco or Sainsburies and choose the plant-based alternative over the chilled leg of grass fed NZ lamb because it simply tastes better - and is cheaper, without even considering the perceived ethical benefit of doing so. This is a very real threat, but also an opportunity for a forward looking NZ agricultural sector - which has never ceased to invent and simplify things.

NZ agriculture has again played a pivotal role in times of need, as in the past two years of pandemic induced lockdowns, and unsettled global trade. The sector has exported goods, kept people employed and paid, helped communities through. Farmers are under intense pressure to comply to new environmental regulation, but how much burden can be placed on a sector which already suffers from high rates of mental stress and fatigue, and which is often mischaracterised by large swathes of the population.

So where are the bright spots in all this?

There are bright spots. Netherlands is held up as a light. As often the case, a lived national experience - the Hongerwinter (”hunger winter”) of 1944-1945 caused by a German blockade that cut off food and fuel shipments - has moved the country from hunger to food security. Incredibly, the Netherlands is the world’s number two food exporter by value after the United States. One fifth the size of New Zealand, and with only 2% of their population in agriculture: how did they do? They are very good at it, they used technology.

The last real revolution in agricultural methods happened in the 1960s - the 'green revolution' - a period when scientists boosted yields by breeding smaller, hardier versions of common crops. Farmers used these alongside improved irrigation methods, strong pesticides and efficient fertilizers.[7]

Today, data is the fertilizer in agriculture. Data and smart applications using the data can help optimize the application of fertilizer and pesticides, allow for individualized stock, paddock, and plant care, meet environmental standards, and take out the busywork of compliance.

Agriculture is data rich. In one handful of soil there is information about soil type, nutrients, moisture, and microbes—all of which tell a story about the optimal seed genetics for that ground. If we widen our lens to the field, this includes data regarding crop spacing, pest and disease pressure, irrigation, weather, yields, and satellite, as well as in field, imagery. And if we zoom out further, there is data to be collected regarding storage, transportation, logistics, equipment maintenance, animal health, food processing, and cold chain management. Agriculture is a data rich industry with a wealth of information that can provide actionable insights for optimising operations throughout the food system.[8]

What has changed is this data is now being captured at unprecedented rates, and this is only set to grow. Ten years ago the average farm captured zero data points per day, today 500,000 data points per day are captured. Some estimates show this will grow to 4 million data points per day by 2036. [9]

The data, combined with hyper-scale cloud storage and processing capability, pervasive network coverage via 5G networks, and device on the “edge” which are becoming smarter with features like computer vision, sensing, and robotics are creating a wave of opportunity in agri-tech to transform agriculture. The same is true with agri-food where a genetic analysis, 3D printing techniques, and computer modelling have led to many new food-tech producers, including in New Zealand like Miruku - a plant based, alternative protein, molecular farming technology company developing future dairy foods and ingredients. This is attested to by the investment going into the sector.

Venture capital investors pumped US$51.7 billion into agrifoodtech startups worldwide in 2021, which represents an 85% increase over 2020’s $27.8 billion total illustrating the plethora of opportunity, often termed “deep tech” as based on fundamental agricultural research which is then commercialised. [10]

So the challenge to New Zealand is this: we are food secure, we produce food efficiently, and export food to consumers around the world who want it. The demand is strong. But will it always be the case? And will the new foods being developed intensely in places like Singapore, Israel, the Netherlands, and elsewhere leapfrog our “food performance”.

Do we see this as a threat, an opportunity, or both? A call to action for many the budding agritech and foodtech entrepreneur in the country!

Daniel O’Brien, Diplosphere

Footnotes / More Reading:

[2] The Listener magazine, May 15-21 issue

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