Food security beyond the farm gate
Food security is sometimes discussed as if it were primarily a question of agricultural output.
Our research suggests a much more interconnected picture.
Top five areas of concern regarding food security for businesses
21%
Energy costs
19%
Weather events/access to water
13%
Supply chain logistics (including suppliers ceasing to trade)
12%
Employment costs/workforce availability
7%
Armed conflict
The importance of this finding lies partly in its breadth.
Concerns are spread across energy costs, weather and access to water, supply chain logistics, employment costs and workforce availability, rather than pointing to one isolated threat.
In assessing food security, the resilience of the whole supply chain should be taken into account.
"Food security beyond the farm gate depends on managing a range of connected risks. Alongside pressures such as energy, weather, water, logistics and workforce availability, businesses should also consider the risk of cyber attacks on supermarkets and key supply chains. "Mapping critical dependencies, identifying alternative sources of supply and having robust contingency plans can help businesses prepare for disruption. Contractual protections should support rather than replace operational planning: the ability to source elsewhere may offer limited protection if alternative supplies are unavailable."
Fiona Teague Commercial Partner, Mills & Reeve
Water: A fundamental constraint
For growers, weather and water availability have an immediate impact on production. Where rainfall becomes less reliable, irrigation, reservoirs and access to abstraction become increasingly important.
Responding to these pressures is not simply an agricultural issue. New reservoir capacity can involve capital investment, timing and success of grant funding applications, planning requirements, winter-fill abstraction licences, third-party rights for new infrastructure and engagement with the Environment Agency.
This demonstrates how closely physical resources, infrastructure, regulation and investment have become connected.
Energy reaches far beyond the utility bill
Energy costs also travel through the supply chain. Agricultural businesses require fuel for machinery and transport, while energy prices affect processing, manufacturing and storage. Oil and gas prices also affect the production cost of fertiliser and chemicals. An energy shock can therefore affect production economics well beyond a business's direct fuel bill.
For processors and manufacturers, the exposure can become more complex again. Higher energy costs can affect production and storage directly, while also feeding through indirectly through suppliers, transport and other inputs. For businesses already managing tight margins and workforce pressures, those additional costs can influence production decisions, investment priorities and overall resilience.
A resilience test for the whole chain
The implication for boards and management teams is that resilience planning cannot stop at their own operations. Businesses should understand:
- Where critical inputs originate
- Exposure to water, energy and workforce constraints
- The financial health of key suppliers and customers
- Where infrastructure represents a single point of failure
- Which investments could address multiple vulnerabilities simultaneously
The takeaway
Business continuity and food security are related but not identical. An alternative supplier may protect one business without increasing the total food available, particularly if others depend on the same source. Assessing resilience across the supply chain therefore requires businesses to consider both whether they can continue operating and whether their contingency arrangements remain workable during disruption affecting several counterparties at once.
"The UK's focus on supply-chain resilience is mirrored internationally, where climate volatility, geopolitical uncertainty and changing trade requirements continue to expose weaknesses in sourcing models.
"Businesses should consider supplier and geographic concentration, alternative sources of critical ingredients and materials, and whether greater traceability and supply-chain visibility could reduce exposure to future disruption."
Alex Kenworthy Corporate Partner and European Co-Head, Mills & Reeve
