The Social Costs of Supply Chain Disruptions

To simplify, the causes of the hunger pandemic can be categorised into demand and supply challenges. Demand relates to the macroeconomic slump causing an affordability problem. Supply relates to disruptions in the flow of food across global supply chains.

The social cost of disruption are mirrored by the social benefit of resiliency

The Problem: Market Failure in Concentrated Markets

Competitive markets maximise consumer welfare. More consumers can access better and cheaper products. The same forces which have allowed us to access the cheapest food in human history, the most advanced healthcare on record, beautiful and cheap garments… these same forces mean a handful of companies are responsible for feeding us, healing us, clothing us and more. Concentrated markets are a function of our quality of life

Market Failure:

The Disruption Risk Paradox

The Private Costs of Disruptions:

Supply chain disruptions negatively impact profitability, shareholder value and share price volatility for up to 2 years

The Social Costs of Disruptions

Quantifying the Social Cost:

Food Waste: Social & Environmental Costs

The FAO estimates the annual economic cost of food waste to be $1tn. However the environmental costs could reach around $700bn per year, and the social costs around $900bn per year.

Human cost of Supply Chain Disruptions-Price rises

Economic Cost

The Social Benefits of Resiliency

Climate change mitigation and adaptation requires strong public and private balance sheets — World Bank

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