Here's how we make the $9 trillion global food supply chain sustainable

The food industry is responsible for a major part of modern production and consumption. By 2024, the global food market is expected to be worth $9.12 trillion, growing at an annual rate of 6.7%.

The food supply chains that deliver goods from the farm to our plates are notoriously complex. They involve many upstream, midstream and downstream actors at different tiers, all of whom are responsible for supplying and transforming key raw materials, commodities and various items into finished products.

The trend towards global sourcing and outsourcing is making this even harder, because of the varying nature of interdependencies and processes between firms, and the cooperative or adversarial relationships that exist between them.

Critically, many food companies struggle to integrate the concept of sustainability into the management of their supply chains in order to gain a competitive advantage. To become more sustainable, firms now need to consider how they operate as part of an extensive multi-tiered supply network with multiple supply and demand links, reverse loops, multi-way interactions and exchanges with numerous actors and non-linear dynamics — all of which can impact economic, social and environmental performance indicators.

The impact of second, third and fourth-tier suppliers on sustainability performance and practice is a subject of mounting concern. Suppliers upstream (i.e., lower-tier suppliers) or sub-suppliers in countries with weaker regulations are frequently accused as the source of supply chain sustainability-related concerns. These upstream suppliers also have characteristics that make it difficult for lead firms to manage sustainability — they might have inadequate information about them, for example, or lack sufficient influence over them.

The implementation of sustainable practices can be hampered by a number of factors, including a lack of visibility beyond first-tier suppliers, a lack of trust among actors, the complexity of managing inter-firm relationships and the risks associated with managing extended supply networks that involve many stakeholders and broader performance objectives. In addition, power imbalances and power dependencies are ever present, as power is typically skewed towards large retail buyers.

Food supply chains also offer a diverse range of product types, including fresh agricultural products and processed foods. This often leads to a wide range of product-related issues, including seasonality, variability in quality and quantity and shelf-life constraints. In addition to food shortages, pre- and post-harvest losses, unsustainable land-water-energy use, food waste, food fraud and climate change issues, food supply chains continue to face other sustainability challenges such as forced labour and unethical trading practices.

Becoming more sustainable has both financial and non-financial costs. Adhering to sustainability standards requires systemic changes. For example, for certain products to meet sustainability standards, firms may need to eliminate certain resources, materials or ways of working.

Knowledge gaps among multi-tier supply chain partners are another issue. Complex interconnectivity in the multi-tier food supply chain can hinder the transfer of knowledge about sustainability and its implementation. Firms often have different areas of emphasis based on what they perceive to be important to them, with less information about other parts of the network.

Poor sustainability infrastructure is also a factor. Investment in sustainable infrastructure has not yet been widely considered as a collective, dedicated investment by all multi-tier actors.

The apparent impracticality of certain organic farming methods, such as crop rotation and producing cover crops, is another reason why sustainable practice fail upstream in the food value chain. Farmers have limited agency to use these methods. For instance, research in Kenya reveals that smallholder coffee growers cannot practice crop rotation because of regulations governing land use and ownership, which limit the varieties of crops that may be grown on rented farms. Likewise, farmers' lack of access to sufficient raw materials for composting on their farms has led them to make a deliberate and logical choice to continue using potentially environmentally-harmful NPK fertilizers.

Firms in multi-tier supply networks can, however, address these issues. Here’s how.

It is crucial that we continue to engage in profound analysis of our planet, which requires addressing pressing concerns about the way production and value-added activities are designed and managed to promote sustainable food sourcing, production and supply. Doing so will ensure a future where food is available and nourishing — and doesn’t cost us the planet.

Co-authors of this blog: Teslim Bukoye, PhD, Associate Professor of Project and Operations Management, University of Bath; and Ying Yang, PhD, Professor of Operations and Supply Chain Management, Newcastle University.