Supply chains are hanging by a non-existent threadBy Pietro Paganini

Leggi in italiano

Article published by

We need a strategy for raw materials that is geopolitically resilient, sustainable, and economically convenient. Globalised supply chains are subject to sudden shocks. SMEs are unprepared to face them. And the government’s energy plan is insufficient.


Italian and European small and medium enterprises were unprepared to manage the global supply chains providing them with the raw materials necessary for production.

  • They did not have access to tools needed to make effective strategic choices.
  • They only acted according to the logics of trade, marketing (as is the case for sunflower oil), or price.
  • They have ignored geopolitical variables.
  • Trade associations have largely failed to be useful.

The Italian government is working toward a national/European plan for energy that is only concerned with large enterprises.

  • Other sectors that are crucial for food security are excluded.

Italy, along with Europe, must adopt a strategy for raw materials. It should not be limited to energy, but rather must include all sectors that are strategic for the survival of Italians and Europeans.

  • These sectors are characterized by SMEs that have proven unable to manage global chains. Instead, they must be supported in making appropriate choices.

The unfortunate choice made by many companies to abandon palm oil in favor of sunflower oil will teach an important lesson.

  • They substituted a vegetable oil produced in large quantities by at least 6 countries along the Tropics with an oil produced mainly in Ukraine and, to a lesser extent, Russia.
  • Sunflower oil is therefore exposed to weather and seasonal variables to a higher degree than palm oil.

Trade strategy has won over the more complex supply strategies.

  • The responsibility lies with managers and entrepreneurs (whose ethics in the case of palm oil should be questioned);
  • But it also falls to trade associations;
  • And to the government and national institutions that should not interfere with free market choices, but can provide knowledge and tools to protect the country’s industrial policy and the competitiveness of its actors.

The Secure Raw Materials Strategy is needed to protect Italian and European prosperity in a context of global competition.

Energy, food, and raw materials needs should be forecasted on an annual and decennial basis.

We must identify the resources needed to satisfy such needs on the basis of several variables and three principles. Supply chains must be:

  • Economically convenient (as Russian gas is);
  • Resilient, meaning that they allow SMEs to rapidly adapt in the event of a crisis;
  • Sustainable, because Italy and Europe can and should promote the balance between human interests and biodiversity protection while keeping the first two points in mind.

Clearly, SMEs would have a hard time following these principles with strategic support from trade associations and institutions that, other than providing them with information and analyses, can also guarantee diplomatic action in the supplier countries – what else are embassies for?

The government is more attentive to energy because it concerns the bigger producer and importing companies (owning a share of a couple of them), which are richer and more powerful. On the other hand, it ignores other sectors, like agrifood, what is composed of many smaller businesses with little economic or political power.

Trade associations of the agricultural and food sectors should convince the government to change its outlook: a strategic plan for raw materials is much needed. People can move around in bikes, enterprises can go out of businesses; but hungry people take to the streets.

PS: with a solid supply chain strategy, our government will also be less amenable to Washington’s policies and their side effects.

Join Our Community and Stay Up to DateSign up to receive weekly updates, thoughtful ideas, and exclusive invitations