The Western world is seeing a once-in-a-generation pressure on the cost of living, with food prices in the United Kingdom rising rapidly in recent months.
The causes of rising food prices are numerous, with fertiliser costs and driver shortages among the most often mentioned offenders.
However, one of the key structural causes for the fragility of our food supply is the way we organise our supply chains — they are extremely centralised and brittle. Because of how merchants obtain their food, we frequently do not have access to local produce on supermarket shelves, with fruit needing to travel via massive global and national transportation networks before arriving in our shopping carts.
There is an apparent solution: decentralisation of food supply systems. This is not a novel concept, as we have heard several times in the media about the need of encouraging local goods. But, because to advances in technology, we may now get closer to realising this ideal.
How supply chains now function
Currently, food production is largely fragmented. Producers do not supply directly to retailers, but instead sell through centralised wholesalers and distribution networks, which warehouse and send food to retailers.
Wholesalers’ economies of scale have pushed them to embrace “just-in-time” logistics, in which they pay for transport capacity on short notice and at a cheap cost. As a result, bottlenecks might arise on a regular basis. This is a common narrative throughout Europe, as millions of producers are pushed to adhere to difficult supply timetables in order to help wholesalers increase their profit margins.
Because of these just-in-time operations, wholesalers purposely operate with limited inventories. When combined with a lack of permanent hauling capacity, unexpected economic or social shocks might put food deliveries to a standstill. The current system makes us all extremely vulnerable to changes in circumstances, while also being inefficient in many ways: it’s a bad deal for farmers, and it’s also a bad deal for the environment, because centralised warehousing means a lot of unnecessary transportation back and forth for produce.
How technology might help link local farmers and merchants
The ideal alternative to this arrangement is a decentralised and direct supply chain model, in which manufacturers sell directly to nearby shops. However, as you might expect, this is a challenging problem because wholesalers play a vital role in quality control, dispute settlement, and delivery.
This is where technology comes in, with software acting as an intermediate between quality control, dispute resolution, and logistical assistance. A new wave of companies is developing digital solutions to link farmers and merchants, expedite communications and billing, and provide shops easy access to inexpensive local goods.
Such software allows manufacturers and retailers to not only decrease transportation costs, but also emissions and waste, while increasing the percentage of local products in supermarkets. These short supply chains, when entrenched in local food procurement, can assist prevent supply bottlenecks and stabilise food prices.
The epidemic has demonstrated how even little disruptions in food production or transportation may have a significant impact on the livelihoods of producers, merchants, and consumers. One of the most important lessons we’ve learnt as a society in recent years is that our global logistics network is excessively weak and environmentally unsustainable.
Technology provides this alternative by allowing us to disrupt business as usual in logistics and food delivery. The ability of a new generation of software entrepreneurs to handle conventional wholesaler duties while connecting local farmers with local merchants provides a major opportunity for food security, the environment, and our wallets.
