Miller Magazine Issue: 126 June 2020

57 COVER STORY MILLER / JUNE 2020 56 MILLER / JUNE 2020 The pandemic has shown up as global trade wars already going on and it particularly has af- fected the global supply chains. As a result, gov- ernments and institutions have decided to review their supply chains. The period of pandemics can be defined by VUCA, namely Volatility-Uncer- tainty-Complexity-Ambiguity. The VUCA peri- od affected the supply chains by creating both supply and demand shocks and caused supply chain disruptions. A recent PwC study showed that the number of companies that are planning to change their supply chain structures has sig- nificantly increased. The sustainability of agriculture and food supply chains are vital in this period. There are “The supply-demand gap occurred not because of inadequate production or drought during the COVID-19 pandemic. It is caused by the risks of access to products and uncertainties because of changes in demand. The pandemic will have at least short and middle-term effects on global and longer chains and governments will tend to prefer shorter and regional chains. This may decrease the role of China’s role in these chains.” Agriculture and food supply chains during and after the COVID-19 pandemic Prof. Dr. Arzu Tektaş Department of International Trade Bogazici University mainly two risk factors for agriculture and food supply chains. Governments have forced limitations on exports to maintain domestic supply-demand balance and price stabil- ity. For example, Eurasia Economic Union brought limita- tions on sunflower, rye and onion exports while Russia, the biggest global wheat exporter, has done the same for a cou- ple of products including wheat, barley, and corn. Another risk factor for the supply is the logistic disruptions and delay because of measures being taken against cross-border and intercity transport. On the other hand, some products saw a demand boom because of panic buying during the first days of the pandemic and that has evolved into changing habits since then. For example, staple food products like flour and pasta saw a high level of demand in the first days but as lockdowns started snacks saw higher demand. Un- certainty and instability for both producers and consumers complicated predictability and planning within the chains. That is to say, the supply-demand gap occurred not because of inadequate production or drought during the COVID-19 pandemic. It is caused by the risks of access to products and uncertainties because of changes in demand. Supply chains have globalized in the last few years as a re- sult of increased product range, advanced technology, and cost management applications. Raw materials and interme- diate goods have also become more diverse. The number of main suppliers and suppliers of them has increased and they have been dispersed to different geographical regions. As a result, the structure of the chains has become longer and more dispersed and they have become vulnerable to dis- ruptions especially during the pandemic. These experiences showed the importance of factors like sustainability in ad- dition to cost reduction for supply and production. We can say that companies that have more flexible and agile supply chains to spread the risks by diversifying supply channels to various regions can manage this crisis better. Businesses are redesigning their chain structures with these perspectives. For example, if a company is dependent on a single country for specific input and this country brings restrictions on exports for that input, the supply chain is disrupted. Therefore, companies try to create alternative chains by diversifying single chains. Alternative chains mean new opportunities for undeveloped or developing countries that have advantages such as production experience, lo- gistics opportunities, and low cost. Alternative chains for supply and production are usually at the expense of China which already has a role within the chains. These conditions increase the importance of strengthening domestic produc- tion in agriculture and food and self-sufficiency, especially in critical products. For example, Turkey is self-sufficient in wheat but it imports wheat for its flour and pasta indus- try on condition that products would be exported. As the big grain producers like Russia continue to implement grain quotas, the supply chain for flour and pasta industry might be disrupted and this would put a significant export poten- tial at risk for Turkey. It is strategically important for such critical products that a domestic-production-based export