KANSAS CITY, MISSOURI, US — Instability in supply chains did not disappear once the impact of COVID-19 abated. Disruptive weather across the globe and the Russia-Ukraine war made certain of that.

“I don’t like to call it the new normal, but it’s sort of like the next normal,” said Maggie Slowik, global industry director for manufacturing for IFS, which develops cloud-based software for companies that manufacture and distribute goods. “Companies are dealing with inflation, climate change events. I could list the whole lot.”

The situation has the food industry seeking innovative ways to make supply chains more stable. Companies are sourcing closer to home and avoiding reliance on a single supplier. Agricultural discoveries could lead to plant varieties that are more drought-resistant, and high-fiber wheat flour already is commercially available domestically. New technology such as artificial intelligence (AI) could benefit supply chains as well.

Ingredient supplier relationships have become even more vital.

“While we can’t speak on behalf of the industry, the last few years have certainly highlighted the importance of strong, collaborative partnerships across the supply chain,” said Jeff Zyskowski, vice president and supply chain lead for Ardent Mills, Denver. “We at Ardent Mills have been working very closely with both our customers, transportation providers and suppliers to better forecast and anticipate any potential disruptions so that we are prepared to leverage our broad network and distribution channels for supply assurance.”

Ways to use wheat

Russia suspending its participation in the Black Sea Grain Initiative corridor on July 17 impacted wheat markets globally.

“It just messes with the supply chain, with the trade channel,” said Stephen Nicholson, global sector strategist, grain and oilseed for RaboResearch. “It messes with the whole ecosystem that built up after the war started.”

While Ukraine will be unable to export wheat from Black Sea ports, Russian wheat will become more expensive, partially due to freight cost risk premiums for ships going into the Black Sea region, he said. Countries in Africa and Southeast Asia then may not be able to afford the wheat.

The Black Sea situation will affect the United States, too, although not as harshly.

“It compounds a lot of production challenges because of weather,” Nicholson said. “It is supporting wheat prices here.”

Zyskowski said, “Commodity price volatility in wheat continues to be at the forefront given continual changes in supply and demand, driven by global trade flows, competition for planted acres and weather. We are laser focused on ensuring continuity through our supply chain to consistently meet our customers’ needs.

“While we have not experienced and do not anticipate any disruptions in our supply chain due to the war in Ukraine, we continue to monitor the situation and adjust as needed to continue to meet customer demand.”

The United States remains a net exporter of wheat, said Peter F. Levangie, president and chief executive officer of Bay State Milling Co., Quincy, Mass. Companies in the United States could use that advantage to decrease reliance on overseas supply of other ingredients, like fiber, he said.

“A lot of fiber that our bakers and customers in all sorts of categories rely on is sourced oversea, outside of the United States,” he said. “Wheat, relative to a lot of other ingredients in baking, from a supply assurance standpoint is one of your more reliable ingredients.”

Bay State Milling offers HealthSense wheat flour with up to 10 times the fiber of traditional refined wheat flour.

Flour with a higher stability and a better baking performance could decrease overseas sourcing, too.

“It ultimately makes things like vital wheat gluten and other actives less necessary for baking,” Levangie said. “You build for baking performance. You value-add into the wheat itself.”

Drought led to a smaller oats crop in Canada this year. Bay State Milling has begun to offer a domestic source. The company collaborated with Montana State University to create a high-protein oat variety now sold under the SowNaked brand. The oats have 40% more protein than traditional oats.

“It’s commercially available but in its infancy,” Levangie said. “Ultimately in time it will deliver supply assurance here in the United States.”

Other discoveries, like more drought-resistant wheat varieties, could benefit supply chains.

“The more we can bring innovation into our own domestic agricultural system, which is robust, big and generally a net exporter, the more we are going to limit some of the exposure to the geopolitical whims of Putin and Russia,” Levangie said.

Sunflower substitutes

After the Russia-Ukraine war began in February 2022, sunflower oil became more expensive and eventually cost over $1 per lb. Before the invasion, Ukraine normally was the world’s top producer of sunflower meal, oil and seed and the world’s top exporter of sunflower meal, according to the US Department of Agriculture.

Ingredient suppliers had to react quickly.

“Adaptability is key,” said John Satumba, PhD, global bakery technical lead and regional R&D director for North America, global edible oil solutions for Cargill, Minneapolis. “Supply chains have weathered multiple disruptions in recent times, highlighting the importance of ingredient suppliers with global resources. Within the oil space, for example, when sunflower oil supplies tightened, we helped customers pivot to other options that provided similar functionality.”

The disruptions in the sunflower supply chain sparked changes at many levels, including regulatory policies, raw material sourcing, formulation and R&D investment, he said.

“Early on, we joined others in the industry as a strong advocate for flexible labeling, which enabled brands to make minor formulations changes without updating the ingredient list on product packaging,” Satumba said. “Alongside our work with global regulatory bodies, our ingredient and application experts scrambled to help brands find suitable alternatives, while our global supply chain specialists worked overtime to keep customers’ plants running and store shelves stocked.”

Slowik added, “That is the name of the game now. If you want to bring that product out on the shelf, you have to find suitable replacements.”

The sunflower supply situation also accelerated next-generation crop development programs, Satumba said.

“Faced with a sudden global shortage, it became apparent that too much reliance on a single crop comes with inherent risk,” he said. “In response, we’ve seen a significant uptick in interest and investment in alternative oilseeds. It’s also spurred innovation around novel approaches to ingredient production such as fermentation, which are less reliant on traditional agricultural crops.”

Companies “moved on” to other oils, like canola or soybean, Nicholson said. Russia dropping out of the Black Sea initiative this year may not have as big an effect on sunflower. The price of sunflower oil, Midwest, was 75¢ per lb on July 28, which was down half a cent from July 21 and the same price as a year ago.

Technology opportunities

Slowik said companies may use multiple sources domestically instead of offshore sources. The tactic might cost more, but it could bring sustainability benefits by reducing a company’s carbon footprint.

“Is it feasible to diversify your supply chain?” she said. “Is there enough supply in a given region or market that you operate in?”

Moving to multiple sources could increase complexity, but “technology should really help to reduce complexity,” Slowik said.

London-based IFS offers supply chain management software that allows companies to have a single view across their entire ecosystems, which drives efficiency and manages costs, according to IFS. The software addresses the entire purchasing value chain.

IFS also offers AI-assisted weather forecasts.

“(Companies) may want to improve their forecasting accuracy and not be sitting on a lot of unwanted stock and waste,” Slowik said.

Whether referred to as the “new normal” or the “next normal,” supply chain challenges will mean industry will need to react quickly.

“Perhaps the biggest learning from the last few years is the need to prepare for more market volatility, whether sparked by climate change, geopolitical disruptions or other factors,” said Jason Purtle, commercial manager for softseed crush for Cargill.