Supply Chain Risk

15 Foods You Should Enjoy While You Still Can

Shake-ups are in store for food supply chains as climate change threatens the existence of many common crops consumers rely on every day.
By: | October 11, 2018 • 5 min read
  1. Climate Change Is Threatening Your Coffee. And a Whole Lot More
  2. Climate Change Will Force Some Food Makers to Adapt or Perish
  3. Food Manufacturers Forced to Pivot in the Face of Climate Change
  4. From Peanuts to Peaches, the Food Supply Chain Gaps to Come
  5. A World Without Peanut Butter and Other Threats to the Food Supply Chain

Climate change is destabilizing the supply of many staple foodstuffs across the globe, while overfishing is having a similar negative impact on common fish. Here’s a glimpse at just some of the foods that may become difficult or even impossible to get in the coming years, necessitating some soul-searching among food manufacturers.

1. Avocados

Avocado trees like their surroundings not too hot and not too cold, and they always need water. Avocados require nine gallons of water per ounce to grow — that’s 72 gallons of water per fruit. 10 percent of the U.S. avocado supply is domestically grown in California, but the state’s challenged water supply can’t sustain the nation’s cravings for guacamole and avocado toast.

One study estimated that climate change would hurt California avocado trees so much that the state’s production could be cut in half by 2050.

In Mexico, farmers are ramping up for higher demand by making more room for avocado crops — fueling the rapid deforestation of central Mexico’s pine forests.

2. Cocoa

As the National Oceanic and Atmospheric Administration states, cacao is only able to grow and prosper within a narrow set of conditions.

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Not only can cacao only grow within around 20° north and south of the equator, but both the humidity level and the soil nutrient content must be just so.

Because so many cacao plantations are in regions where the average temperatures have become more volatile, therefore less suitable for ideal cacao growth, a study by the International Center for Tropical Agriculture suggests that farmers will begin to experience a decrease in cocoa production by 2030.

Exacerbating the problem, demand is far outreaching supply. Last year alone, consumers ate approximately 70,000 tons more cocoa than what was produced.

3. Coffee

According to a 2017 study published in Proceedings of the National Academy of Sciences, climate change is threatening both the regions where coffee crops grow, and the bees that are responsible for about 20 to 25 percent of coffee bean production. When bees pollinate coffee crops, they not only widen the yield of the crops, but they also increase the quality of the beans.

Rising temperatures and unpredictable weather could repel bees with lower heat tolerances, preventing them from pollinating coffee plants.

Additionally, Latin America’s coffee-suitable growing areas could shrink by up to 88 percent by 2050.

4. Soybeans

An international team of scientists led by the Potsdam Institute for Climate Impact Research developed a computer simulation that helped them determine how different important crops responded to rising temperatures — and their findings were grim.

According to researchers, if the world doesn’t experience significant reductions in emissions, soybean crops could drop by 40 percent by 2100.

People worldwide rely on soybeans for their protein. Soybeans account for 90 percent of the United States’ oilseed production and are a source of biofuels, making them an economically important bean.

5. Chickpeas

Avocados aren’t the only food that depends on lots of water to grow. Chickpeas use a whopping 76 gallons of water for every ounce. Worldwide production of them has gone down 40-50 percent because of droughts across the globe. The Middle East is one of the most prolific producers of the legume, but the fact that they’re facing terrible water shortages doesn’t bode well for hummus lovers.

6. Almonds

Almonds are also water hogs — it takes over a gallon of water to produce one single almond. So California’s droughts and volatile weather climate are doing the crops little good. Nearly all U.S. almonds are grown in California.

7. Bananas

Bananas, at least a different version of them, already went extinct 50 years ago. A species called Gros Michel was top banana worldwide until it was declared commercially extinct due to the Panama disease, a fungal disease that started out from Central America.

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Desperately seeking alternatives, the industry settled upon the Cavendish cultivar, considered an inferior variety of banana but resistant to the fungus. Cavendish soon became the supermarket staple we currently know. But now the Cavendish is at risk too. The Cavendish banana is being taken over by a disease called “Tropical Race 4,” which disrupts the plant’s ability to properly absorb water and nutrients from soil. The disease is quickly spreading across continents, wiping out whole plantations.

8. Peanuts

Peanuts are considered a fussy crop, requiring a very stable climate to grow. Too little rain will prevent the seeds from germinating, while too much heat will scorch the shoots and halt growth. Too much rain, however, can cause the peanuts to grow mold and other diseases, rendering the crops inedible. The instability of climate change is taking its toll. Peanuts are grown primarily in the southern states — the same places suffering from the most droughts and warmest temperatures.

Even though 2017 growing season produced 3.5 million tons of peanuts, the outlook remains shaky unless the weather cooperates. If peanuts don’t go extinct, they’ll at least become a luxury item.

9. Strawberries

Florida and California grow more than 95 percent of the U.S. strawberry supply. Hotter-than-normal weather delays the flowering and subsequent production of strawberries. According to the International Society for Horticultural Science, unstable climatic conditions through the crop season are resulting in abbreviated crop cycle durations. The trend could signify a more permanent decrease in strawberry production, as well as an increase in price.

10. Stone Fruits

In 2016, the northeast experienced an abnormally warm month in the middle of winter followed by two cold snaps. The warm spell tricked a variety of stone-fruit trees into flowering prematurely, and those crops were destroyed soon after by the cold snaps.

Peaches, nectarines, apricots, plums, and cherries were among the crops devastated by the severe temperature swings, and farmers predict that the likelihood of similar crop damage in the future is high.

11. Wine

Wine grapes are best when picked after the rain after a long drought. But with droughts lasting longer than ever, some varieties are dying before they even get the chance to be harvested.

12. Maple Syrup

The sugar maple trees that produce syrup require specific and stable weather conditions. Because of climate change, the syrup-producing season has been starting earlier and earlier. In addition, warmer summers and droughts aren’t meeting the maple trees’ needs.

13. Eel

The popularity of eel dishes in Japan has led to overfishing and has put eel on track to disappear completely. The price per pound has dropped somewhat from its 2013 all-time high, but eel populations are considered unlikely to rebound.

14. Bluefin Tuna

Atlantic bluefin tuna is sought-after for sushi and sashimi in Asia. A single fish sold for over $1.75 million in 2013. Driven by high prices, fishermen use more sophisticated techniques to catch tuna, and fish are disappearing as a result.

15. White Fish

Overfishing by commercial fisheries is decimating the oceans’ population of white fish including popular species such as pollock, haddock, hoki, hake, cod, redfish, roughies, whiting and Chilean sea bass.

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Scenario

A Recall Nightmare: Food Product Contamination Kills Three Unborn Children

A failure to purchase product contamination insurance results in a crushing blow, not just in dollars but in lives.
By: | October 15, 2018 • 9 min read
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

PART ONE: THE HEAT IS ON

Reilly Sheehan, the Bethlehem, Pa., plant manager for Shamrock Foods, looks up in annoyance when he hears a tap on his office window.

Reilly has nothing against him, but seeing the face of his assistant plant operator Peter Soto right then is just a case of bad timing.

Sheehan, whose company manufactures ice cream treats for convenience stores and ice cream trucks, just got through digesting an email from his CFO, pushing for more cost cutting, when Soto knocked.

Sheehan gestures impatiently, and Soto steps in with a degree of caution.

“What?” Sheehan says.

“I’m not sure how much of an issue this will be, but I just got some safety reports back and we got a positive swipe for Listeria in one of the Market Streetside refrigeration units.”

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Sheehan gestures again, and Soto shuts the office door.

“How much of a positive?” Sheehan says more quietly.

Soto shrugs.

“I mean it’s not a big hit and that’s the only place we saw it, so, hard to know what to make of it.”

Sheehan looks out to the production floor, more as a way to focus his thoughts than for any other reason.

Sheehan is jammed. It’s April, the time of year when Shamrock begins to ramp up production for the summer season. Shamrock, which operates three plants in the Middle Atlantic, is holding its own at around $240 million in annual sales.

But the pressure is building on Sheehan. In previous cost-cutting measures, Shamrock cut risk management and safety staff.

Now there is this email from the CFO and a possible safety issue. Not much time to think; too much going on.

Sheehan takes just another moment to deliberate: It’s not a heavy hit, and Shamrock hasn’t had a product recall in more than 15 years.

“Okay, thanks for letting me know,” Sheehan says to Soto.

“Do another swipe next week and tell me what you pick up. I bet you twenty bucks there’s nothing in the product. That swipe was nowhere near the production line.”

Soto departs, closing the office door gingerly.

Then Sheehan lingers over his keyboard. He waits. So much pressure; what to do?

“Very well then,” he says to himself, and gets to work crafting an email.

His subject line to the chief risk officer and the company vice president: “Possible safety issue: Positive test for Listeria in one of the refrigeration units.”

That night, Sheehan can’t sleep. Part of Shamrock’s cost-cutting meant that Sheehan has responsibility for environmental, health and safety in addition to his operations responsibilities.

Every possible thing that could bring harmful bacteria into the plant runs through his mind.

Trucks carrying raw eggs, milk and sugar into the plant. The hoses used to shoot the main ingredients into Shamrock’s metal storage vats. On and on it goes…

In his mind’s eye, Sheehan can picture the inside of a refrigeration unit. Ice cream is chilled, never really frozen. He can almost feel the dank chill. Salmonella and Listeria love that kind of environment.

Sheehan tosses and turns. Then another thought occurs to him. He recalls a conversation, just one question at a meeting really, when one of the departed risk management staff brought up the issue of contaminated product insurance.

Sheehan’s memory is hazy, stress shortened, but he can’t remember it being mentioned again. He pushes his memory again, but nothing.

“I don’t need this,” he says to himself through clenched teeth. He punches up his pillow in an effort to find a path to sleep.

PART TWO: STRICKEN FAMILIES

“Toot toot, tuuuuurrrrreeeeeeeeettt!”

The whistles of the three lifeguards at the Bradford Community Pool in Allentown, Pa., go off in unison, two staccato notes, then a dip in pitch, then ratcheting back up together.

For Cheryl Brick, 34, the mother of two and six-months pregnant with a third, that signal for the kids to clear the pool for the adult swim is just part of a typical summer day. Right on cue, her son Henry, 8, and his sister Siobhan, 5, come running back to where she’s set up the family pool camp.

Henry, wet and shivering and reaching for a towel, eyes that big bag.

“Mom, can I?”

And Cheryl knows exactly where he’s going.

“Yes. But this time, can you please bring your mother a mint-chip ice cream bar along with whatever you get for you and Siobhan?”

Henry grabs the money, drops his towel and tears off; Siobhan drops hers just as quickly, not wanting to be left behind.

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“Wait for me!” Siobhan yells as Henry sprints for the ice cream truck parked just outside of the pool entrance.

It’s the dead of night, 3 am, two weeks later when Cheryl, slumbering deeply beside her husband Danny, is pulled from her rest by the sound of Siobhan crying in their bedroom doorway.

“Mom, dad!” says Henry, who is standing, pale and stricken, in the hallway behind Siobhan.

“What?” says Danny, sitting up in bed, but Cheryl’s pregnancy sharpened sense of smell knows the answer.

Siobhan, wailing and shivering, has soiled her pajamas, the victim of a severe case of diarrhea.

“I just barfed is what,” says Henry, who has to turn and run right back to the bathroom.

Cheryl steps out of bed to help Siobhan, but the room spins as she does so.

“Oh God,” she says, feeling the impact of her own attack of nausea.

A quick, grim cleanup and the entire family is off to a walk-up urgent care center.

A bolt of fear runs through Cheryl as the nurse gives her the horrible news.

“Listeriosis,” says the nurse. Sickening for children and adults but potentially fatal for the weak, especially the unborn.

And very sadly, Cheryl loses her third child. Two other mothers in the Middle Atlantic suffer the same fate and dozens more are sickened.

Product recall notices from state regulators and the FDA go out immediately.

Ice cream bars and sandwiches disappear from store coolers and vending machines on corporate campuses. The tinkly sound of “Pop Goes the Weasel” emanating from mobile ice cream vendor trucks falls silent.

Notices of intent to sue hit every link in the supply chain, from dairy cooperatives in New York State to the corporate offices of grocery store chains in Atlanta, Philadelphia and Baltimore.

The three major contract manufacturers that make ice cream bars distributed in the eight states where residents were sickened are shut down, pending a further investigation.

FDA inspectors eventually tie the outbreak to Shamrock.

Evidence exists that a good faith effort was underway internally to determine if any of Shamrock’s products were contaminated. Shamrock had still not produced a positive hit on any of its products when the summer tragedy struck. They just weren’t looking in the right place.

PART THREE: AN INSURANCE TANGLE

Banking on rock-solid relationships with its carrier and brokers, Shamrock, through its attorneys, is able to salvage indemnification on its general liability policy that affords it $20 million to defray the business losses of its retail customers.

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But that one comment from a risk manager that went unheeded many months ago comes back to haunt the company.

All three of Shamrock’s plants were shuttered from August 2017 until March 2018, until the source of the contamination could be run down and the federal and state inspectors were assured the company put into place the necessary protocols to avoid a repeat of the disaster that killed 3 unborn children and sickened dozens more.

Shamrock carried no contaminated product coverage, which is known as product recall coverage outside of the food business. The production shutdown of all three of its plants cost Shamrock $120 million. As a result of the shutdown, Shamrock also lost customers.

The $20 million payout from Shamrock’s general liability policy is welcome and was well-earned by a good history with its carrier and brokers. Without the backstop of contaminated products insurance, though, Shamrock blew a hole in its bottom line that forces the company to change, perhaps forever, the way it does business.

Management has a gun to its head. Two of Shamrock’s plants, including Bethlehem, are permanently shuttered, as the company shrinks in an effort to stave off bankruptcy.

Reilly Sheehan is among those terminated. In the end, he was the wrong person in the wrong place at the wrong time.

Burdened by the guilt, rational or not, over the fatalities and the horrendous damage to Shamrock’s business. Reilly Sheehan is a broken man. Leaning on the compassion of a cousin, he takes a job as a maintenance worker at the Bethlehem sewage treatment plant.

“Maybe I can keep this place clean,” he mutters to himself one night, as he swabs a sewage overflow with a mop in the early morning hours of a dark, cold February.

Bar-Lessons-Learned---Partner's-Content-V1b

Risk & Insurance® partnered with Swiss Re Corporate Solutions to produce this scenario. Below are their recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance.®.

Shamrock Food’s story is not an isolated incident. Contaminations happen, and when they do they can cause a domino effect of loss and disruption for vendors and suppliers. Without Product Recall Insurance, Shamrock sustained large monetary losses, lost customers and ultimately two of their facilities. While the company’s liability coverage helped with the business losses of their retail customers, the lack of Product Recall and Contamination Insurance left them exposed to a litany of risks.

Risk Managers in the Food & Beverage industry should consider Product Recall Insurance because it can protect your company from:

  • Accidental contamination
  • Malicious product tampering
  • Government recall
  • Product extortion
  • Adverse publicity
  • Intentionally impaired ingredients
  • Product refusal
  • First and third party recall costs

Ultimately, choosing the right partner is key. Finding an insurer who offers comprehensive coverage and claims support will be of the utmost importance should disaster strike. Not only is cover needed to provide balance sheet protection for lost revenues, extra expense, cleaning, disposal, storage and replacing the contaminated products, but coverage should go even further in providing the following additional services:

  • Pre-incident risk mitigation advocacy
  • Incident investigation
  • Brand rehabilitation
  • Third party advisory services

A strong contamination insurance program can fill gaps between other P&C lines, but more importantly it can provide needed risk management resources when companies need them most: during a crisis.



Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]