Climate, the war in Ukraine and the sanitary crisis continue to affect the economy and are hitting industry hard: supply difficulties, increase in prices of raw materials and production costs. In this article, we take stock of the obstacles the plant and natural ingredients are facing within this challenging context…
Review of conditions
Emergence of the climatic impact
Heavier rainfall and tropical cyclones, increasing periods of great aridity and drought (1)… We can henceforth note the early stages of climate change and increasing signals which alert us on the shifting away of so called “normal” conditions. All these upheavals cause a clear decrease in crop yields short term and a decrease in production long term. This new climatic reality we are being faced with complicates the procurement of plant raw materials and requires setting up measures and evolving work methods.
Consequences of the "Zero Covid" strategy
This fundamental fight we carry out against global warming has been upset by the pandemic we have been subjected to for over the past 2 years. Although the sanitary situation has improved greatly in European countries at the beginning of the second quarter in 2022, the situation in China has deteriorated with a direct impact of the "Zero Covid" strategy on the country’s production: suspending links in terms of transport, the country halted with congested ports. The confinement of the Asian giant penalises industry by generating an unprecedented decline in exports since 2020 (2) and difficulties with shipping raw material.
Repercussion of the war in Ukraine
A major geopolitical crisis has been added to this economic downturn, at the origin of closing train lines from Russia and Ukraine, requiring the transport of certain merchandise by air, at a greater cost... The conflict has also provoked a historical increase in price of natural gas on the market, evolving in the same manner as electricity and petrol. (3) Repercussions have been felt in all regions of the world with a disruption of commercial trade, procurement supply chains, transfer of funds and the rise in prices of raw materials … (4)
Impact on the natural ingredients industry
The current context is heavily affected with:
Procurement supply difficulties which have increased for 65 % of French industrials (5)
A price increase of raw materials for 80% of companies... (6)
An increase in production costs: over 70% of company directors declare having been subject to increases in energy production costs, on average 70% since the beginning of the crisis in the Ukraine. (6)
These combined events have sent fixed costs of industrials skyrocketing and this reality is that more noticeable in our activity sector where natural ingredients are fragile resources, directly affected by climate changes or transportation conditions…
The challenges are inevitably passed on to the price of ingredients but despite these obstacles the food transition must remain our priority. We must continue to further our activity with adaptability and resilience while always keeping in mind this objective: respecting humans and the environment.