When the food supply chain is functioning correctly, it acts as an invisible force. It begins with farms planting crops and rearing livestock, and ends with food on your table.
Loosely defined, the food supply chain is the collection of public and private organizations that plant crops and raise live stocks, package and produce, distribute and market, study and regulate all aspects of food.
For most people whose only involvement in the food supply chain is buying food at the local 24/7 supermarket, it’s easy to take for granted just how all that food ends up on the shelves of your favorite grocery store. The food industry is massive – in the U.S. alone, an estimated $1,000,000,000,000 is spent annually on food. There are many different components in the food supply chain, for clarity, we’ll break these phases down into primary and secondary stages.
- Primary stages include four parts – agriculture, processing, distribution, and retail.
- Secondary stages also include four parts – finance, research & development, regulation, and marketing.
Agriculture – includes the planting, caring, and harvesting of crops and/or livestock. This is the first phase and perhaps the most labor intensive phase of the food supply chain. Farms of all sizes must prepare the land, plant seeds, hope/pray for favorable growing weather, and finally harvest the crop for food to advance to the next stage.
Processing - in this stage, plants and factories package and process raw food crops (or livestock) into the foods that are sold in grocery stores and wholesale brokerage channels. Examples of this stage include commercial slaughterhouses, makers of frozen and canned foods, and other firms that provide food components to fast food establishments and restaurants.
Distribution - Once food has been processed and packaged, it is then distributed to potential buyers. The distribution stage is comprised of land, sea, and air modes of transportation. In addition to being transported, food also needs to be stored in warehouses, silos, granaries, freezers, etc. In the food supply chain, logistics is the parent discipline that manages the complex network of transport and storage that enables food in Europe to be shipped and sold in the United States within 24 hours.
Consumption – In the final primary stage, food is then sold and consumed. Once food makes its way onto the shelves of your local grocery store, it’s sold to you and me and makes its way into our pantries and onto our plates for dinner. It generally takes months for food to make it from stage one of this flow to the final stage of consumption. From seed to meal, there are many vulnerabilities in the food supply chain, which will be discussed later in this post.
In addition to the primary stages of the food supply chain, there are secondary, or indirect stages that are part of the holistic food supply chain.
Regulation -Regulation is a huge part of the food supply chain. In the U.S., the FDA and USDA are tasked with ensuring food safety. On a global scale, the WHO, EFSA, and more all have vested interests in safe guarding the world’s food supply.
Education/Research – Schools, private labs, NGO’s, and even non-profits are responsible for finding ways to increase efficiencies, educate future generations of farmers, managers, and scientists with vested interests in improving the food supply chain.
Finance & Marketing -the global food supply chain is estimated to represent almost 10% , or $4.8 trillion USD, of the world’s estimated $48,000,000,000,000 GDP. This includes everything from grain commodity indexes, wholesale brokerage firms, and private marketing campaigns by corporations such as ConAgra or General Mills. In case you’re interested, check out the list of the worlds 100 largest food companies.
As with any large scale industry, there are many vulnerabilities to the global food supply chain. Threats range from man-made malicious weaknesses such as terrorism to uncontrollable elements such as bad weather. With the average grocery store in the U.S. stocking just three days worth of food, even a small disruption in the food supply chain could have serious disruptions to the availability and prices of the world’s food supply.
The global food supply chain is one of the world’s largest and most complex industries. Representing approximately 10% of the world’s gross domestic product, there are tens of thousands of firms that comprise the global food industry. The food supply chain is one of the most important global industries as all humans have to eat. Bulk food storage is an excellent way to hedge against inevitable disruptions in the food supply chain.