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Ecological issues threatening food and beverage operations

31 May 2024

New research from regulatory compliance company, Ideagen, has revealed that almost half of food and beverage businesses now cite one or more ecological issues as a risk to their operations.

In analysis of the challenges businesses mention in their Risks and Uncertainties statements, weather is mentioned by 18%, climate change by 14%, environmental risk by 11% and sustainability by 5%. Added together, these become the single biggest risk other than financial worries for the first time.

The 2024 Food Industry Audit Report further emphasises the urgency for large businesses, where the number mentioning an ecological issue jumps to 74%, making it the second-biggest overall risk. This rise aligns with the increasing frequency of extreme weather events – heatwaves, floods, and droughts – which food producers report are leading to catastrophic crop losses.

From disrupted wine production to shrinking grain harvests, recent headlines paint a clear picture – ecological risks are having a tangible impact on the global food system. Compounding the issue of limited harvests is the war in Ukraine, a new entrant to the ranking and mentioned by 29% of businesses, which is further driving up the cost of essential goods.

Tim Bisley, Executive Vice President of Quality and Environmental Health and Safety at Ideagen said, “The food and beverage industry, battered but not broken by the pandemic, now faces a perfect storm. Global instability, skyrocketing costs, and a regulatory tidal wave threaten to engulf us. But the most pressing issue we face is the threat to our planet. The industry is sending a stark warning: climate change is increasingly jeopardising the stability of our food supply.”

The report shows businesses are also grappling with broader challenges that directly affect their bottom line. Three quarters of businesses now identify commodity inflation as a major risk, followed by currency, credit and liquidity.

Tim added: “The fact commodity inflation is top in the list of risks in 2024 also has implications for food safety as it is a causal factor in food fraud, another challenge the industry is working hard to prevent. It isn’t just about the affordability of what goes on the table, it’s the integrity. Do we trust we know what’s in the food we eat?"

This surge coincides with a rise in supply chain concerns, which have jumped two spots to sixth place on the list of top risks. This year, 38% of businesses now cite it as a challenge, a significant increase from 29% in 2023.

Meanwhile, COVID-19 and Brexit have disappeared from the top 10 risks. Rated first and third in 2023, they are now in 15th and 13th places respectively. This is despite the long-term effects of Brexit only beginning to emerge. The UK economy is estimated to be nearly £140 billion smaller as a result, and new border rules for EU imports introduced in April 2024 add further complexity.

“Many of the risks cited by businesses are not isolated. They’re intertwined.” explained Tim. “Geopolitical tensions can disrupt resource production in key regions, leading to price fluctuations and shortages. At the same time, extreme weather events driven by climate change can destabilise fragile political situations, creating conflict over resources and further disrupting supply chains. It's a vicious cycle. Decision-makers must heed the voices of growers and food producers. These experts understand their entire supply chains and are developing their risk management strategies accordingly.”


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