Food and Agriculture Organization of the United Nations
    FAO Data Lab

    News digest - 07/07/2020

    Selected daily news on food chain disruptions and countries responses to the COVID-19 impact on food chains.

    Forest of Fontumnia (Rubber trees)
    ©FAO/Roberto Faidutti

    FOOD CHAIN DISRUPTIONS

    Canada and South Korea may be facing serious food security issues in the near future: while around 512,000 more Canadian families struggled to maintain their jobs during the coronavirus pandemic and now feel food insecure, South Korea depends on different grain exporting countries (such as Russia, Ukraine and several Southeast Asian countries) for the provision of wheat, corn and barley, so that if they keep limiting their exports, food security concerns in the country will aggravate. This is why it is extremely important for South Korea to keep monitoring the international grain market in case export restrictions are prolonged.

    Canada’s food insecurity problem

    Canada’s national statistical agency estimated that 512,000 more households feel food insecure, mainly because of the effects of COVID-19 on the labour market. Many Canadians have lost their job, while the food inflation rate is rising and is likely to reach 4% by the end of the year (normally, it is somewhere between 1.5% and 2.5%): that is due to the fact that transporting food to markets and stores has become more expensive with physical distancing, personnel turnover, and all the other containment measures that limit the spread of the coronavirus.

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    Food supply disruptions a concern in South Korea

    South Korea has no national grain procurement system, meaning that if wheat, corn and barley export restrictions from Russia, Ukraine, Cambodia, Myanmar and Malaysia are extended, the prices will increase vertically, and South Korea will face food security issues. However, some private companies are arranging for a reinforcement of their position in the international grain market, signing deals with logistics firms.

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    Food Entrepreneur: Funding in a financial crisis

    Start-ups in the food industry are facing issues in raising capital in a market disrupted by the coronavirus pandemic. However, while it’s harder to raise funds during an economic downturn, the start-ups that demonstrated relevance and resilience in this situation have been rewarded. For example, Imperfect Foods, which distributes food surpluses and flawed produce, raised USD 72 million in May, and during the first three months of the current year, producers of plant-based meat and of alternatives for eggs and dairy products raised around USD 741 million.

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    IMPACT ON COMMODITIES AND FOOD PRICES

    Different causes of food price fluctuations around the world: Argentinian grain traders and analysts attributed a recent spike in wheat prices to the Peronist party’s protectionist agenda, as exporters would be discouraged to purchase the food product from farmers and this would advantage local millers; in Uganda, the traders believe food price fluctuations depend on seasonality and on the hike in transport fares determined by the coronavirus pandemic; in India, rubber prices fell in an attempt to face competition from countries such as Vietnam, Indonesia, Thailand and Malaysia.

    Puzzling Wheat Prices Raise Fears of Manipulation in Argentina

    In Argentina, wheat price anomalies are making farmers suspicious about the ruling Peronist party’s interference in grain markets, which may be driven by its wish to prioritize the domestic production. In fact, traders and grain analysts believe that the distortions in the Ministry of Agriculture’s FOB reference prices for wheat (used by exporters to pay farmers) aims to discourage the exporters and to allocate more wheat to local millers. This wouldn’t be new to the Peronists, who restrained wheat shipments to keep flour cheap in Argentina the last time they were in government.

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    Uganda: COVID-19 Eats Into Food Prices

    Ugandan farmers are dealing with overproduction as many businesses of the hospitality industry closed during lockdown. They are seeing their incomes plummeting, as many food prices decreased as an effect of the coronavirus pandemic, and in order to avoid excessive food waste, the farmers are selling food surpluses at minimum prices. Most traders attribute the rise in food prices to the hike in transport fares, while others to seasonality (floods during the rainy season resulted in losses for many farmers).

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    Why Kerala is planning to allow its famed plantations to grow exotic fruits

    Because of a recent fall of rubber prices in Kerala (an Indian state on the southwestern coast of the country), due to a cheaper output from other Southeast Asian countries, and to the state’s need to improve its vegetable production during the coronavirus lockdown, the local authorities decided to convert unproductive rubber plantations into other crops. This is why they allowed the farming of exotic fruits on a large scale, including durian, passion fruit, grapefruit, dragon fruit, litchi and avocado.

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    COUNTRIES' RESPONSE

    Two recent proposals to tackle food supply bottlenecks and food loss in the Philippines: boosting the use of extant digital technologies (such as eKADIWA and the Supply Chain Analytics Dashboard / Reporter) that ensure an ample supply of commodities during the rainy season and the coronavirus lockdown, and focusing on the enhancement of the country’s cold chain infrastructure. Some of the obstacles to the latter proposal may be represented by high electricity prices in the Philippines (which increase the operating costs), by the contrast between national and local government regulations, and by the country’s limited foreign investments, which make accessing to strategic partnerships difficult.

    NEDA: Digital technology and supporting the agriculture value chain key to stable prices amid the pandemic

    The president of the National Economic and Development Authority of the Philippines recently proposed that during the rainy season and with the ongoing implementation of the coronavirus containment measures, the government and the private sector could focus on using digital technologies to tackle food supply shortage issues. A specific reference was made to eKADIWA (a digital marketing platform), the Supply Chain Analytics Dashboard (which informs government agencies and industry associations about issues concerning the flow of goods and inputs) and the Supply Chain Analytics Reporter (a smartphone app that makes it easier to feed data into the Dashboard).

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    What’s Driving the Cold Chain Expansion in the Philippines?

    The Department of Agriculture of the Philippines’ government recently stressed the importance of strengthening the country’s cold chain infrastructure to reduce post-harvest food losses and waste. Furthermore, this would meet the consumers’ shifting preferences toward purchasing frozen foods at supermarkets, instead of going to the traditional “wet markets” (marketplaces selling fresh meat, fish and other perishable products). However, high electricity prices in the Philippines (some of the highest in the whole continent) pose a threat to such objective.

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    REGIONAL FOCUS

    While 11 Sub-Saharan countries received funding totalling USD 200 million from the International Islamic Trade Finance Corporation to allow agricultural exporters to face the negative effects of the coronavirus pandemic on their business, food security issues in Latin America and the Caribbean are much more difficult to mitigate. 18.5 million households could suffer from food insecurity in the region as a result of the pandemic, and the most affected countries will be Venezuela, Honduras, El Salvador and Guatemala.

    ASIA – Grey areas and weak policies mar lucrative Asian trade in live reef fish

    To meet a growing demand of reef fish from Hong Kong, China, Singapore and Taiwan, the trade extended from the Philippines to other Southeast Asian countries, such as Indonesia and Malaysia: taken together, they share a marine area that hosts most of the reef fish species in the world. However, some of them are at risk of extinction, and overfishing in this region of the world is increasing such risk. Furthermore, some of these endangered species play an important role in keeping reef ecosystems in balance by eating smaller fish.

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    AFRICA – Afreximbank strikes deal with ITFC to boost support for food exports

    The International Islamic Trade Finance Corporation has agreed to provide USD 200 million to the African Export-Import Bank, which will be destined to assist the African agricultural exporters in mitigating the negative effects of the coronavirus pandemic. More in particular, there are 11 African countries that will benefit from this financing (including Kenya, Nigeria, Tanzania, Ghana and Uganda), while the most affected commodities will be cashew nuts, cocoa, sesame seeds and maize.

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    AMERICA - Emergencia sanitaria y de alimentos en América Latina

    Food chain disruptions caused by COVID-19 will determine food security issues for 18.5 million families in Latin America and the Caribbean. More in particular, Venezuela is one of the most vulnerable countries in the region because of hyperinflation, which makes different food products unaffordable for the population, 32.3% of which is already food insecure. El Salvador, Guatemala and Honduras are facing similar situation, which may be aggravated by cyclical droughts caused by the El Niño-Southern Oscillation.  

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