Globalized supply chains may be good for businesses, but they're not always ideal for consumers, especially when they're suddenly disrupted.
BERLIN — "One bag of flour per customer" or "Pasta, sugar and yeast only sold in small quantities." For Germans old enough to remember, the signs on supermarket shelves in the early weeks of the coronavirus pandemic were reminiscent of the days of rationing, and sparked real anxiety about food supplies.
Ultimately the worries proved to be unfounded. European supply chains held strong, despite stockpiling and difficulties with production. "There were a few wobbles, but the gaps were quickly filled," a report by agricultural economists at the University of Göttingen notes.
Nevertheless, a debate over what conclusions should be drawn from this unusual period is just beginning, and according to a survey carried out by the University of Göttingen, most Germans believe their country should step up domestic agricultural production so as to be more self-sufficient moving forward.
"Overall, we are seeing skepticism about globalization of the food chain in our data," the researchers write in their blog Agricultural Debates.
Roughly 86% of those surveyed agreed with the statement that it is important "for Germany to be able to meet its own needs for basic foodstuffs through domestic agriculture." In contrast, only 28% agreed with the statement that "in a global economy it's not a problem if a substantial proportion of our basic foodstuffs comes from abroad."
Relying more on domestic food production could make the country more resilient in a crisis.
The researchers say this call for more food independence may be explained by the fear that, in a crisis, other countries will put their own national interests first, and that border closures and interruptions to delivery could threaten supply. It's an argument, they explain, that cannot be dismissed out of hand "as long as there are no international agreements over how to respond to this kind of crisis and countries even within the EU bring in partial border closures."
Relying more on domestic food production could make the country more resilient in a crisis, says Göttingen researcher Achim Spiller. But it's not a guarantee of success when dealing with future crises, the agricultural economist acknowledges. Cross-border trade will continue to play an important role, especially for dealing with problems prompted, for example, by climate change, he says.
Germany's agriculture and food production industries also profit significantly from international trade. Last year, Germany exported foodstuffs to the tune of 71.6 billion euros, making it the third biggest exporter worldwide. But it imported even more: 11 billion euros worth of agricultural products.
In recent years, food production has become far more international and is spread across the whole planet. "Globalization has brought a lot of advantages," says Rudolf Trettenbrein, managing director of the consultancy firm Inverto Austria. Indeed, supply chains have become so smooth and cost-effective that companies will move production to far-off countries to make a saving of a tenth of a cent on costs.
What's not clear is what all of this means for consumers, especially given how convoluted things can be with regards to food labels. A box of muesli, for example, might contain walnuts from China, dried raspberries from Argentina and honey from Mexico and yet still be marketed as "Made in Germany."
Legally speaking, the label declaring its country of origin is correct if the final stage of production — in this case, combining the ingredients — takes place in Germany. Experts say it's not uncommon for cereals to be shipped to China for baking and sugaring, then transported back to Germany for the final stage.
A grocery store in Rostock, Germany. — Photo: Bernd Wüstneck/DPA via ZUMA
Honey is another example. In Germany, Austria and Switzerland, 80% of the honey bought doesn't come from the EU, but from China, Mexico or Argentina. Honey pots are labeled with the unhelpful explanation "produced from a mixture of honeys from EU and non-EU countries." It would be more useful simply to write: "Provenance: Planet Earth."
Frozen pizzas (of the ham and mushroom variety) are an interesting case as well. The pizza might be cooked in Germany, but with ingredients from many different countries: ham produced in Italy (made from Dutch pigs), mushrooms from the Netherlands, flour from multiple countries including Poland and Germany, Dutch cheese (produced using milk from multiple countries, including Denmark) and tomatoes from Italy.
EU regulations only require the country of origin of a few ingredients to be declared. Consumers are easily misled as a result. The German website Lebensmittelklarheit, a public information platform run by a government consumer rights group, uses the example of Chinese raspberries used in a "Bavarian raspberry yogurt." A label saying "non-EU" or "not grown in Germany" would be enough to make this clear to consumers.
"Many ingredients that could be produced in Germany actually come from China. That's often the case, for example, with dried fruits such as apricots, peaches and plums," says Trettenbrein.
The hundreds of suppliers listed on the German-language site of the Chinese business platform Alibaba give a sense of the scale. And it's not just fruit. Products such as shampoo also contain essential ingredients, including enzymes or scents, from the Far East.
Trettenbrein says that Western interest in these links is only beginning to rise as the coronavirus pandemic has revealed how dependent we are on other countries, even when it comes to the active ingredients in medicines. Companies are starting to rethink their practices, as the crisis has shown that the slightly higher costs of moving production to the EU might be worth it to avoid the risks of globalized supply chains.
"If there's ever been an opportunity to return production to Europe, now is the time," says Trettenbrein. "The interruptions to the supply chain have forced many companies to rethink."
The Inverto Austria executive cautions, nevertheless, that it will take years to make the change — perhaps as many years as it took to build the international network in the first place.
For many food products, Germany may already be more self-sufficient than people assume.
As the Göttingen study shows, many consumers would be in favor of reducing this hidden globalization in food production. There's also a real movement underway toward buying local produce. Agricultural economist Spiller says that supermarkets are finally starting to take note. "Chains such as Rewe and Edeka have started to work together with local farmers," he says.
For many food products, furthermore, Germany may already be more self-sufficient than people assume. According to a consumer study carried out by Göttingen agricultural economist Gesa Busch and colleagues, many Germans underestimate how much food is produced domestically. This is especially true when it comes to meat and milk, as they assume that only two thirds come from German farms. In reality, German farms supply between 114% and 124% of domestic demand for these products, meaning they have significant export rates.
Scientists also warn of the dangers of taking self-sufficiency too far. The consequences could be dramatic. A study led by Pekka Kinnunen from the University of Aalto in Finland suggest that only half the global population could fulfill their demand for specific crops by growing them within a 900-km radius.
For a quarter of people, the minimum distance between where food is produced and where it is consumed would be more than 5,200 km. Certain foodstuffs would always need to be transported long distances. Closing borders, whether as a result of a pandemic, a trade war or other reasons, would lead to rising costs and, in the worst-case scenario, widespread hunger.