Daily Archives: March 22, 2013

Are Your Supply Chains Prepared for Riots?

Last August, SI pointed out that food costs are still spiking and asked if you were ready for the risks. At the time, food riot fears were on the rise around the globe, including in developed countries like Japan, Canada, and the UK, where riots DID take place.

Well, it looks like the risks are coming back again. A recent article in The Financial Express that notes that the supply chain of essential items faces disruption in Dhaka, Bangladesh, as the supply chain was shutdown for 48 hours countrywide earlier this week amid fresh fears of commodity price hikes. Truck owners in rural and suburban areas refused to drive due to fear of vandalism and arson before, during, and even after strike hours.

As a result of the strike, poor people, and day labourers in particular, have been hit particularly hard – as per a front page article on the daily sun. The two day shutdown enforced by the Bangladesh National Party (BNP) (which is Bangladesh’s opposition political party to the governing Bangladesh Awami League) ended up paralyzing normal life as many people stayed inside due to panic triggered by hartal (strike) violence. As a result of the strike, the fears of price hikes have come to pass as the prices of essential commodities have risen.

It doesn’t look like this is a situation that’s going to end well. Especially since a recent article over on the Guardian has proclaimed that food riots are likely to become the new normal as a result of intensifying inequality, debt, climate change, and fossil fuel dependency. Since 2008, global food prices have been consistently higher than in preceding decades, despite wild fluctuations. This year, even with prices stabilizing, the food price index remains at 210 – which some experts believe is the threshold beyond which civil unrest becomes probable. Food riots are still a regular occurrence in Egypt, Tunisia, and Libya — and have been ongoing for over a year in some of these places.

What’s going to happen when prices rise again as a result of tight grain stocks from last year’s poor harvest (which was down 3% from the 2011 record harvest due to adverse weather conditions)? Of if rice yield, which has decreased 10% to 20% in key food-basket regions due to droughts exacerbated by global warming, keeps worsening?

Riots are coming across the globe. Is your supply chain ready?