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Commodity supplies could dry up as climate changes

Europe’s food industry could face supply shortages and higher prices if climate change increases droughts in countries that produce key commodities like soy, palm oil and cocoa.

The Water Footprint Network has estimated that the EU uses around 668 km3 of water for all of the goods it produces, consumes and exports every year – and 38% of this “water demand” lies outside its borders in imported goods.

In the near term, imports of soybeans, rice, sugar cane, almonds, pistachios and grapes are most likely to be affected because they come from areas that currently have significant or severe levels of water scarcity, the researchers concluded.

The availability of soybeans is a particular concern, said co-author Ertug Ercin. “The highest risk that the European meat and dairy sector will face due to climate change and weather extremes lies outside its borders,” he explained. “This is because it is highly dependent on soybean imports from locations that are vulnerable to water scarcity and drought.”

The report, Dependencies of Europe’s economy on other parts of the world in terms of water resources, also warned that “although the immediate risks to the EU economy are due to current water scarcity levels, any disruption to rainfall patterns that occurs in the future due to the effects of climate change in the countries of origin of key crops could have a far greater impact on the EU”.

Firms need to identify hot spots in their chains, where vulnerabilities are high and dependencies are large, Ercin explained. They can then look at improving water productivity and reducing water footprints down their supply chain.