Food and Beverage (F&B) procurement teams are operating in increasingly volatile and unpredictable circumstances as commodity supply chain disruptions increase due to environmental, economic, geo-political, and other factors. Businesses that rely on very specific ingredients to make their products have no choice but to secure supply for the upcoming season, putting pressure on contract negotiations under extremely limited time horizons.
Procurement teams often lack the expertise and time required to synthesize disparate but critical data sources that can help predict supply and price movement and allow them to secure favorable long term contracts.
In order to help navigate disruptive swings in the price and availability of essential commodities, Gro Intelligence has added Supply Risk Level (SRL) to our growing suite of innovative agricultural and climate analytics modeling. A Gro Supply Risk Level is a singular, daily-updating metric that immediately defines the forward supply risk of a particular commodity up to 6 months into the future.
Each Supply Risk Level indicates a risk metric for specific crop and country pairings: low, medium or high. If the risk level is low, that means that supply is sufficient and not at risk relative to historical availability for each crop and region, therefore prices will likely not be significantly impacted and could even trend lower.
If the risk is high, supply availability is falling below historical levels, and prices could swing higher as a result. High risk levels may lead some businesses to respond by substituting in alternative ingredients, however others that have no choice due to their adherence to a strict proprietary formula, for example, will need to act quickly to secure supply and possibly avoid even higher prices in the future. Gro’s SRLs are designed for quick and easy understanding of often complex agricultural and climate systems with significant market repercussions.
Source: Gro Intelligence Commodities Tracker
While different crop/country pairs covered by our SRLs contain small variations in their calculation due to the availability and relative importance of different data sets, each model utilizes Gro’s yield, production, and/or stock forecasts weighted by their deviation from their historical trends to indicate risk accordingly.
The SRLs are available in Gro’s Commodities Tracker, and currently cover a growing list of commodities, including corn, wheat (including hard red winter, spring, high protein and common wheat), and produce such as tomatoes and potatoes.
Each SRL is active during the growing season, which varies by crop and region, and is updated daily. A detailed breakdown of seasonality for each crop and region pairing is available in the Crop Insights tab of the Commodities Tracker.
The Gro Intelligence Commodities Tracker is a user-friendly dashboard of critical, contextualized, and actionable metrics comprising crop insights, climate patterns, historical context, and market impact (including price). The Tracker’s simple supply risk leveling system offers CPG and procurement teams trustworthy and accessible crop and climate analysis and market movement predictions.
For more information on our Supply Risk Levels or Gro’s suite of climate and agricultural analytics products, reach out to our team here.