Daily Archives: August 24, 2015

Environmental & Sustainability Damnation 23: Food Shortages

So far we’ve covered natural disasters, EMPs, water, waste, rare earth minerals, and Greenpeace, but that still leaves four environmental damnations to discuss, and the next on the list is food shortages.

A few years ago, global food reserves hit a fifty year low.
With approximately 800 Million people, which is almost 11% of the global population, food insecure, and the increased rate of natural disasters, this is scary both from a social viewpoint and a corporate viewpoint. Every time there is a food shortage, the commodity prices spike, and contracts be damned.

If a significant portion of a supplier’s crops are wiped out and it doesn’t have enough to satisfy its contracts, it can claim force majeure, and unless your organization is paying the most, it’s claiming force majeure on you and your supply is out the window. If a considerable portion of its crops are wiped out, and it theoretically could meet demand, but a considerable portion of the global supply was wiped out and prices have skyrocketed, the supplier might choose to still claim force majeure and sell to the highest bidder, contracts be damned, and while you might be able to go to court and make a case that it should have fulfilled your contracts, that could take years, and you’re certainly not getting the crop this year unless you pay market price. If a major product line depends on that crop, your organization could be out of business before it won the lawsuit and recouped any damages.

Since most crops are still grown in fields, and not greenhouses (which are not as environmentally friendly as one might think if one is trying to grow crops in the summer), the right climate is needed for a good yield. Sun and warmth, but not enough to dry the plants (and bake them to a crisp), enough rain (and irrigation), a sufficiently long growing seasons, and an absence of pest swarms. A drought can quickly wipe out a crop. A fire can quickly wipe out a crop. An earthquake that can destroy irrigation systems and storage containers can wipe out a crop. And so on. Moreover, as the rate of natural disasters increases as a result of global warming (which is a bad term because it’s not just global warming, it’s global climate change on a broad scale), the rate of natural disasters that destroy crops and lead to food commodity shortages is going to increase. Diversified supply is no longer an option, but a must. Excess production and storage in diverse locations for eventual disasters is a must. Planning ahead years at a time is a must.

It’s another damnation that does nothing but increase the complexity of your job.