Assessing External Supply Risk: Perspectives from a Low Middle-Income Country

Global disruptions due to causes such as the COVID-19 pandemic and the Russia-Ukraine conflict have highlighted the vulnerability of the agri-food supply chain and its impact on food security. Sri Lanka, facing its economic crisis and food scarcity due to these disruptions, ranks 79th out of 113 countries regarding food security. Wheat is the second most consumed cereal in the country. Thus, Sri Lanka must assess the external risks associated with wheat imports to ensure a smooth supply. However, there needs to be more comprehensive research on the risks of relying on imported food in the extant literature, particularly regarding factors including import dependence, supplier country reliability, and transit risks. To address this research gap, the study employed the Herfindahl-Hirschman Index and Shannon-Wiener Index to assess the external wheat supply risk in Sri Lanka. The analysis showed that despite the relatively low overall risk, high dependence on Russia and other high-risk countries increased the wheat supply risk. This study recommends reducing import percentages from high-risk countries and diversifying supply to low-risk countries to mitigate risks. The study also found that the level of political risk in supplier countries had a more significant impact on supply risk than the distance and import shares of the supplier countries. Further, the study provides valuable insights into Sri Lanka's external wheat supply risk and recommends measures to mitigate risks and enhance food security. The findings are generalizable to low and middle-income countries with similar characteristics.