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Food grade CO2 is used for hundreds of products. Agricultural chemicals industry produces CO2 as a by-product of its main product, fertiliser. As some UK fertiliser factories stopped working because of extreme rise in wholesale gas prices, there had been a cut of 60% of the UK’s food-grade carbon dioxide supply. The UK poultry and meat producers said that the shortage of carbon dioxide “threatens national food security”.Will these supply shocks prove merely a temporary disruption as the global economy recovers from the impact of the COVID-19 pandemic? Or instead, will we face a meltdown of the global production system? Certain shortages such as those of truck drivers and shipping containers, or gasoline in the United Kingdom directly affect the logistics connecting the links in supply chains. Pandemic ensued border restrictions, distancing requirements and factory closures have all wreaked havoc on traditional supply chains, leading to congestion at ports, delivery delays and soaring freight rates on the main shipping routes between China, the US and Europe. As a result, supply-chain vulnerabilities have rapidly become mutually reinforcing and self-amplifying. Heavy rains have forced the closures of 60 coal mines in Shanxi province, the largest coal mining hub in China. China’s critical electricity shortage is the result of draconian regulation of coal mining, exacerbated by Beijing’s punitive ban on Australian coal imports. Geopolitics, climate catastrophes and trade wars have also disrupted the global supply chains. The highly specialised and inter-dependent global production system has delivered substantial benefits in the past, but its weaknesses are now clearly visible.( V Venkateswara Rao is an alumnus of IIM, Ahmedabad and a retired corporate professional.)
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Global supply chains are ‘close to collapse’
