Food industry absorbs shocks so well that supply risks go unpriced, experts say
At a roundtable in the UK, experts said food companies' success in keeping supply steady is masking growing climate, nature and supply-chain risks. Panellists urged boards to assess these risks over a longer horizon.
Food businesses have handled one shock after another so effectively that climate, nature and supply-chain risks are not being properly priced in, experts argued at a Future Food Movement roundtable in the United Kingdom this week. Future Food Movement is a network for food industry professionals; the discussion was moderated by its founder, Kate Cawley.
Success as a weakness
Ana Cuddeford, head of investor engagement at Inside Track, said results and valuations at large listed food companies have held up, so the risk is not yet reflected in prices. According to her, boards weigh risk mainly on a commercial and capital-allocation basis, and less on nature. Cawley added that retailers keep shelves stocked, so consumers do not feel the pressure either.
Sophie Bauer, head of food system transformation at WWF-UK, cited analysis from the Energy and Climate Intelligence Unit: the UK imports around 40% of its food, and about a quarter of those imports come from regions at high risk of drought, flooding and extreme weather. With El Niño approaching, she expects this year's harvest problems to repeat. WWF's latest Living Planet Report recorded a 73% average decline in monitored wildlife populations since 1970.
Getting risk onto the board agenda
Cuddeford suggested an insurance lens and urged boards to run scenario analysis further ahead, noting that most planning covers 12 to 24 months. Bauer named water risk as the easiest entry point, along with legal exposure: the EU Deforestation Regulation applies from the end of this year, and companies selling into the EU must show their ingredients are not linked to deforestation. Shifting to regenerative farming takes around seven years to pay back, she said.
Innovation and alternative protein
According to AgFunder data, venture funding for agrifoodtech start-ups fell from $56 billion in 2021 to $16 billion last year. Kevin Watson, chief sustainability officer at Levy, part of food service firm Compass Group, said Levy signed a letter of intent with packaging company Notpla when its product cost around 240% more than the alternative, and is now Notpla's biggest customer.
