Consumers have been struggling with high prices since the pandemic first shook supply chains in early 2020. Extensive traffic jams for cargo ships in the Suez Canal, unusually high demand for household goods, and the resultant severe — though short-lived — recession overwhelmed both industry and our economy.
Although global inflation has eased significantly from its peak in 2022, prices are still unusually high. Massive natural disasters, severe weather and many other effects of climate change are only making things worse: “Scientists and economists agree that rising surface temperatures have impacted yields — from vegetables and durable crops to even animal sources of protein — leading to a sustained increase in food inflation,” Business Today explains.
This week in the news, Supply Chain Dive reports on very dry conditions and a huge number of wildfires that are affecting sugarcane production in Brazil: “The ingredient’s prices have surged by 4.2% and the fires have disrupted the entire supply chain. … Around 100,000 hectares of sugarcane fields were burned from the end of August to early September.”
Meanwhile, Raizen SA, Brazil’s largest sugar producer, has lost much of its crop for the 2024-25 season, per Reuters. Fortunately, the burned crop can still be harvested, but the process must be completed on a much faster timeline so the sugarcane doesn’t diminish in quality. As of August 29, sugar prices were at a five-week high, Supply Chain Dive continues, and producers are concerned about how the crop will fare against future droughts, extreme heat and heavy rains.
Also in Brazil, futures for premium Arabica coffee beans are at their highest cost since 2011, reports Bloomberg, up 4.8% to $2.718 per pound because of the extreme drought. JM Smucker Co., parent company to brands including Folgers and Café Busto, raised prices already this summer; last month the company announced further hikes coming in early October. And fast-food chain Pret a Manger “scrapped its UK coffee subscription that gave customers as many as five drinks per day,” Bloomberg notes. "The coffee industry was already suffering from port congestion in several countries, global scarcity of containers, disruptions around the Red Sea, and disappointing crops in Vietnam.”
These higher costs for producers may even be emboldening some suppliers to cut corners on quality — to detrimental effects. According to The New York Times, “One dozen of 36 cinnamon products tested by a consumer group contained elevated levels of lead,” a contaminant that is especially deadly to children. After similar findings were discovered in cinnamon applesauce last year, the FDA even went as far as to suggest that “cinnamon had been intentionally adulterated with lead chromate, a powder used to stretch the valuable commodity and increase profits.” Whereas the applesauce itself is rigorously tested, the cinnamon addition may have been overlooked, demonstrating a lack of visibility in the supply chain for these products and a surge in risk for unsuspecting consumers.
The basics make the difference
Amidst this global supply chain turmoil, understanding the complexities of risk management is more crucial than ever. The 18th edition of the ASCM Supply Chain Dictionary is now available, featuring hundreds of new and updated terms — from risk acceptance and risk analysis to risk tolerance and risk transfer. With more than 350,000 copies and downloads in circulation, the ASCM Supply Chain Dictionary is a key member benefit and the authority on all things supply chain for you and your team. Check out the latest edition today!
