This talk was originally given by Mark Hodgson, Chief Business Officer at Cervest, for Agri-Tech-E’s webinar “Keeping a Sunny Outlook – De-risking Agriculture Through Weather-Tech” on 29th April 2020.
An increasingly uncertain climate is impacting entire food supply chains. Cervest’s pioneering Earth Science AI aims to make food production and supply more secure every step of the way.
Here in the UK, we consumers generally enjoy easy and predictable access to an extensive range of food. We expect to select the food we want every time we visit the supermarket or shop online, in the form we want it in, and at the price we believe acceptable. We assume predictability is reality.
That is thanks to our food production and consumption system which is designed through economic and increasingly political and social intervention measures to satisfy the appetites and desires of the UK population. Meanwhile, it sustains the livelihoods of millions both in the UK and beyond, involved in production, distribution, retail, capital, and policy across that supply chain. It forms part of a highly evolved, complex and interconnected global industrial food engine supporting billions of consumers and livelihoods, engineered for maximum efficiency and output every second of every day.
As we know from recent experience, despite all the highly evolved logistics, crop science, data, support measures and agricultural know-how, supply chains are far from immune to sudden, unexpected environmental, health or political emergencies that befall us. While panic buying, price hikes at the till and bare shelves are not new and tend to pass, the system is not built to withstand a world of greater volatility, more frequent shocks and greater uncertainty. And there’s the rub: the increasing global connectedness of our food industry means that a greater proportion of events globally can affect us as consumers, operators and producers. More potential points of weakness: a wider number of interconnected decisions that could fall foul, including contingency measures and alternative sources we traditionally rely upon.
And that brings me to one area of volatility we cannot ignore.
Growing empirical evidence suggests climate volatility is increasing globally and is a multi-level security threat for the functioning of enterprises, societies, and governments. These are now taking it seriously enough to factor it in the balance sheet. For the largest 500 global companies alone, there is an estimated US$970bn of assets ‘at risk’, with USD $250bn linked to asset impairments or write-offs in the next 10 years (CDP 2019). In a recent survey, 75% of 500 UK business leaders believe climate volatility presents a risk to their company, a significant percentage of them being food chain related.
In the UK, across Europe and further afield, we’re witnessing prolonged, more frequent and more intense storms, heavier rainfalls and greater flooding than previously recorded, increasing conditions for more frequent wildfires and dangerous heat waves. All this on a scale that can lead to significant crop loss across a wider area. It thus also threatens the security of crops and natural capital assets such as river catchments and soil, as well as transportation, storage, energy and food production infrastructure.
Increased climate uncertainty is affecting the accuracy, cost and planning capability for the food we consume. Food produced in the UK as well as imported from established sources such as Northwest, East and southern Africa, Central and South America, even southern Europe, regions that are increasingly water-stressed and less resilient to climate change.
So, who needs to take action? And what actions do we need to take?
When it comes to managing climate-related food security, it is the individual and collective responsibility of the entire food supply chain to be prepared. Organisations and governments can’t afford to be reactive. Unlike the current pandemic where we’ve had a salient reminder of what happens to the supermarket shelves when supply and demand get temporarily out of kilter, food shortages caused by climate volatility will be longer term. My experience of the shock caused by the pandemic is that supermarket shelves were briefly empty, but responded surprisingly quickly. I can now book an Ocado delivery to arrive sooner than I was able to before the pandemic. This suggests that our supply chains are actually very resilient to occasional, short range shocks.
But are we resilient to more frequent climate volatility over the longer term? After all, crop cycles last months or even years, not the days or weeks it takes to restock a supermarket. There exist certain barriers to preparing for longer term, incremental and continued shocks. Perceived high cost, a lack of understanding and de-prioritisation of climate compared to more immediate business issues are primary barriers stopping businesses from incorporating climate risk into their businesses..
Climate security technology for the UK’s global food supply chain is patchy: high-resolution forecasts centre on UK domestic production and particularly natural assets such as crops and fields, not built assets. Furthermore, data is far less prolific for the producer countries we import from.
Across the UK’s global supply chain, different actors along the chain do not tend to collaboratively respond to climate risk. Suppliers of credit and insurance, food production businesses, logistics and the growers have tended historically not to share their risk data for joint or collective responses to climate volatility.
Globally, a growing number of businesses, academics, governments and tech companies do see the economic value of addressing climate uncertainty sooner rather than later. They are testing and deploying advanced technology to improve long term climate resilience measures.
UK-based Cervest is one such company that is enabling the food industry, growers and government to predictively factor climate-driven physical risk on all their assets into their strategic decisions. Working with academic institutions such as the Turing Institute, Imperial College and Oxford University, we are now testing our low-cost solution across food and beverage companies, insurers, government and the financial sector. Users in these sectors want to understand the physical risks of climate events on the natural and built assets that they depend on.
With Cervest, users can monitor and predict the impact of a climate event on an individual physical asset: a building, a specific field, a forest, a processing facility, transport infrastructure, electricity network – and more.
From June 2020 we will invite users to come onto the Cervest platform and identify and map any assets they own or have interest in – farms, crops, transport networks, buildings, utility infrastructure. Through a dashboard, users receive on-demand, personalised analysis of how their chosen assets have been previously affected by extreme events that have caused drought and flooding over the past 40 years as well as predictions and alerts to future climatic events over coming weeks, months and, in due course, years.
Our platform will increasingly offer high resolution images of areas of land, by integrating information and evidence from multiple resolutions across space and through time.
Users can share their alerts and analysis free of charge with upstream and downstream partners so they are equally prepared to deal with the event in question. This can help growers, insurers, government and food and beverage companies to better align on extreme event planning.
Users can assess and plan not just for the short term but over a longer time-frame. We hope that very soon our platform will allow users to answer questions like:
- “How much of my soft fruit gross margin is exposed to extreme climatic events in 5 years time?”
- “How is region-wide land use impacting the flood risk to my built assets?”
- ”Can I ensure a 100% coordinated response to a specific future extreme event across the entire winter barley supply chain?
So what’s the science behind our business?
Earth Science Artificial Intelligence is our proprietary approach that enables users to make better informed decisions on climate security.
Our scientists have built ways to harmonize huge and complex datasets from across several scientific disciplines to generate ‘climate signals’ on assets, at scale. Not only can we provide analysis on areas that are data rich such as UK farmland, but also crop land in data-poor emerging markets.
We ingest and map a vast global inventory of crops and natural assets onto a digital platform. The automated science quantifies the probability of a change in state of these assets across key variables such as extreme heat, precipitation, storms and other hazards. We also model third party meteorology, hydrology, natural hazard risk data to improve our overall simulated impacts.
Decoding climate uncertainty is all about helping key actors across the entire food supply chain understand their personal exposure to climate, in order to make the very best decisions possible, every single day.
Much like the current pandemic, preparing for an unforeseen climate event is extremely difficult but not impossible. At Cervest, we believe that with unified global risk modelling we can build resilience into every stage of the food supply chain, to prepare us for unexpected scarcity and unplanned surplus.
By being proactive and forecasting climate risk, everyone along the food supply chain can individually and collectively understand, respond and plan for climate shocks across the food supply chain, undertaking better short and longer term future infrastructure planning.
Leaders in agriculture, as well as in industry, capital markets and government, may indeed feel compelled to look deeper at climate-related food security, and anyone could be forgiven for thinking it is just too complex or big a problem to address effectively.
However, advances in technology, greater access to data and scientific models today can yield powerful insights to take action.
As the battle against COVID-19 has shown, through better knowledge and better decision making across everyone in a supply chain and the society it operates in, we can take the right actions rapidly and decisively and make us all more resilient to the unexpected.
About: Mark is Chief Business Officer at Cervest. His primary focus is ensuring that our science and data platform delivers the greatest possible value for businesses and government, today and tomorrow. If you’re interested in helping Mark and the rest of Cervest build something truly amazing, then please head over to our careers page!