At the 2022 World Agri-Tech Innovation Summit, Gro Intelligence’s CEO, Sara Menker, discussed the impact of the Russia-Ukraine war on major commodities wheat, vegetable oils, and fertilizer, and showed how drought and future climate scenarios will rewrite our global food systems.
In the Context of the Current Russia-Ukraine Crisis
Menker framed her remarks within the current Russia-Ukraine crisis - new fuel on a fire of ongoing inflation, drought, and food security risk.
“Three of the major stories from the Russia-Ukraine war that we're all discussing right now are vegetable oils, wheat, and fertilizer,” Menker said.
As the crisis cuts off critical supplies of these commodities from the Black Sea region, it further exacerbates issues we are already facing – high prices and tight global supplies, Menker said.
Soaring Commodity Prices
Using Gro’s Vegetable Oil Feedstock Price Index, developed with Gro’s Custom Price Index Application, Menker showed how vegetable oil prices have essentially more than doubled since the start of the COVID-19 pandemic in 2020.
The average food price index in the US is up close to 29% year over year. Looking at the mix of ingredients in a product - everything from onions to celery to wheat to oils - shows that this is a structural problem, not cyclical.
Worsening Drought Is Impacting World Food Supplies
Using Gro’s Drought Index, which measures drought on a scale of zero-to-five every day for every square kilometer on earth, Menker presented a macro look at current dry conditions globally.
Several major agricultural producing regions currently show levels of extreme to exceptional drought, including Brazil, which is currently coming out of a growing season that took quite a hard hit this year, the US, which is going into the winter wheat-growing season for the summer, Northern Africa, and the Middle East.
Comparing current conditions to the 10-year average for the 10-prior years, for exactly the same point in time, shows that drought conditions in North America, South America, North and East Africa, and the Middle East are significantly worse than normal.
“The question becomes, how are we going to repurpose our systems, to calibrate for the realities that we currently live in? How are we going to think about innovation to manage these risks?” Menker asked.
“If we have these persistent shocks that are occurring from a climate standpoint, it doesn't mean we can't manage them. It just better mean that we have our eyes open - that we know how to measure them and [that] we know how to measure them consistently and for the whole world and every day,” Menker said.
“We want to do that at the most micro-level possible and extend it into macro-level insights. So we can contextualize and understand the world because ultimately, if there's anything we've learned over the last couple of years, it is that we live in a very interconnected global food system. And it is incredibly fragile.”
Seeing Around the Corner
To manage the fragility, Gro provides the ability to see around the corner. We can now use data to understand what's coming over the next 10, 20, or 30 years to better manage, move supply chains forward, and change the trajectory.
“This is the magic and the abilities that we now have in terms of being able to combine complex datasets from hundreds of supercomputing labs and convert them into insights that we can understand,” Menker said.
Using Gro’s Land Suitability Model, Menker looked at how peas and the suitability of growing peas in Europe might change over time, under different climate change scenarios.
“What makes me hopeful is we can't say we don't know. And we can't say we didn't know. So the only thing left is for us to be able to take some form of action,” Menker said.