Climate Change and its Impact on Soft Commodity Procurement

The increasing effects of climate change are impacting soft commodity procurement, altering the dynamics of sourcing, pricing, and supply chain management. For companies dealing in agricultural commodities like coffee, tea, cocoa, and nuts, understanding and adapting to these changes is critical to maintaining efficient operations and profitability.

Changing Weather Patterns  

As weather patterns become less predictable, crop production for commodities is facing significant fluctuations. Droughts, floods, and extreme weather events are now more common, directly affecting the availability and quality of crops. This variability makes it harder for procurement teams to maintain consistent supply, leading to increased risk.  Recent weather related events, like Milton, which made landfall in Florida this October, highlight how the frequency of climate impacting events directly impact supply chains worldwide.  

Increased Costs 

With reduced yields, prices of soft commodities are rising, creating volatility in the market. This scarcity drives procurement costs, as buyers compete for limited resources. Leveraging software like Eximware’s XMS Sourcing solution can help companies mitigate rising prices.   By providing enhanced price discovery and competitive supplier negotiations, ensuring that businesses can still secure raw materials without incurring unsustainable expenses.

Sustainability  

Demand for sustainably sourced products is growing in response to environmental concerns, adding pressure on procurement teams to find ethically sourced commodities. Climate change only intensifies this challenge as it reshapes production regions. For instance, coffee growing regions are shifting, forcing companies to source from new locations.  

The Need for Data 

The unpredictability of climate change means that procurement decisions must be more data-driven. Commodity management solutions with advanced analytics and real-time market data, such as Eximware’s platform , allow companies to make informed, timely decisions to secure the best terms under challenging conditions.

Gain Control

Companies in the soft commodity market must adapt to the realities of climate change by using advanced procurement technologies that help mitigate risks, manage costs, and support sustainability. Now is the time to embrace these solutions for a more resilient supply chain.