How come there is not enough sugar in the world?
By Zoryana Zagorodnya, SAP
As summer turns to autumn, we start to smell apple pies, pumpkin spice lattes, and of course, s’more? But when you go to your local supermarket, you should know that probably won’t find all the ingredients. Why? The key word is sugar.
Droughts in one part of the world. Too much rainfall in another. You might think, how is it related to desserts? It turns out that because of the extreme weather conditions, experts are estimating an up to a 15% decrease in the world’s sugar supply in 2023-2024.
It is a bitter pill to swallow.
Floods and droughts significantly impacted the harvest of 2023 in India. The country might lose its position as the world’s largest sugar supplier due to a shortfall in sugar production, which will pressure the agri-food value chains. Brazil, a leading country in sugar supply, could not accumulate enough sugar stockpiles due to the region’s delayed harvests caused by excessive rainfall. And poor sugar beet harvests in European countries in 2023 compounded the global issue.
As a result, the price of sugar is on the rise! In April 2023, the cost of raw sugar reached its highest price since the end of 2011, according to the European Commission.
You don’t have to have a sweet tooth to notice the lack of sugar. Ironically, sugar can be found in the most unexpected products like soups, sauces, and even meat dishes. I was surprised to discover that one tablespoon of ketchup contains 7% of the Daily Value of sugar.
Sugar has a big part to play in our daily diet, and as a result, it is also a key ingredient for many businesses, from local bakeries to big candy manufacturers.
So, how could companies stay resilient in such an unpredictable environment?
Increasing the visibility across every process
Demand for sugar is overreaching the supply, which puts companies in a reactive mode. Real-time data is critical to withstand disruptions and proactively take the necessary actions. By making all processes visible, companies can better understand the current demand state and be more prepared for any disruptions. Real-time data makes it easier to control every process and predict when something is missing.
Keeping up with the new ESG regulations
Sugar is often grown in low-wage areas, so ensure that you buy products that have been sourced ethically and with fair pay to the workforce. That is where ESG (Environmental, social, and governance) regulations can help. But as they are evolving rapidly, it is essential to have transparency all over your supply chain to keep up with the new rules and to give conscious consumers a chance to be aware of the product’s origin and production.
Implementing sustainable solutions
We have already experienced the sriracha hot sauce shortage, followed by the rice shortage in India this year. Sustainability is no longer a buzzword; it is a mind-shifting idea that must be integrated into our daily lives. We must rethink how we use resources and start producing products more sustainably if we want to have them in the future. How do we predict when the next shortage will occur, and what will it be?
The world sugar shortages highlighted the necessity of taking sustainable action now.
Integrating sustainable practices into business operations is crucial. This includes initiatives such as reducing carbon footprint, incorporating green technologies, and adopting circular economy principles.
Restoring and ultimately preserving the prosperity of our environment is not achievable by a single organization – sustainability is a team effort. Sustainable businesses are resilient businesses. As SAP’s Richard Howells says, “Keys to success are responsible design practices, ethical sourcing, sustainable manufacturing practices, and safe maintenance and services”.
With deep visibility into supply chain data and the ability to evaluate and verify partner practices, you can more effectively minimize waste, cut emissions, and reduce your carbon footprint.
To learn more about risk-resilient and sustainable supply chains, check out the latest Oxford Economics Research.