Food and Agriculture Organization of the United Nations
    FAO Data Lab

    News digest - 10/09/2020

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

    09 July 2018, Tiba, Nubaria, Egypt. Mabrook 'Rabea' Khamees, grape farmer. Rabea is harvesting grapes.
    ©FAO/Heba Khamis

    FOOD CHAIN DISRUPTIONS

    Grape farmers in Palestine and winemakers in California are currently facing several difficulties, in spite of the good premises: thanks to the favorable weather conditions and to the fact that the coronavirus pandemic brought grape farmers in Palestine to look after their lands more (leading to increased production amounts and improved quality), it also hampered the market and discouraged the consumers; in the Sonoma County, CA, on the other hand, 73% of the agricultural production is represented by wine grapes, but this year the pandemic and the fires led the farmers to plant fewer crops.

    Coronavirus pandemic reduces sales of grape in Palestine

    Despite harvesting a bumper crop this year, thanks to the favourable weather conditions and to the fact that the coronavirus lockdowns gave the Palestinian grape farmers the opportunity to till their vines in the occupied West Bank, they are complaining about the fact that the pandemic has drastically reduced the sales of the fruit, leaving farmers with no market. Since there are less customers, most of the grapes are now being turned into molasses at almost half their original value.

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    Food emergency exacerbated by fires in Sonoma County, California

    The Sonoma County, California, which is characterised by the extent of available and fertile agricultural land and by an abundance of high-quality irrigation water (in fact, it is known for its 250 wineries), is being severely tested by fire, COVID-19 and recession. Farmers are now planting fewer crops because they have lost market partners such as restaurants and bars, food prices in grocery stores are high and thousands of unemployed workers line up for free food giveaways.

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    IMPACT ON COMMODITIES AND FOOD PRICES

    Three food trade, production and price updates around the world: China is ever closer to reach its US soybean imports target (under the US-China Phase One trade deal) as it has recently purchased the largest daily total of soybeans since July; Russia’s production of sugar will slow down this year, due to the fact that farmers reduced their sugar beet sowing area by almost 20%; since the UK has announced its intention to override the Brexit withdrawal agreement on Northern Ireland with the European Union, the talks with Michel Barnier’s negotiation team are stuck at a stalemate once again, raising concerns about future food price increases in the country’s supermarkets in case a final tariff-free trade deal will not be reached.

    China scales up soybean imports from the US

    This week, the prices of the US soybeans rose to their highest levels since 2018, after the US Department of Agriculture announced that Chinese buyers purchased around 664,000 tons (the largest daily total since July 22). Furthermore, China’s demand for soybeans is likely to grow as we are approaching that time of the year when the country is more typically purchasing soybeans from the northern hemisphere, and China’s hog herd numbers are slowly recovering from the African swine fever outbreak.

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    Lower sugar domestic prices discouraged Russian farmers from growing sugar beets

    This year, farmers in Russia reduced their sugar beet sowing area by 18%, because they were discouraged by weak domestic sugar prices. However, the country has doubled its sugar output over the past decade, in order to end its reliance on imports. Therefore, despite sugar exports are likely to be lower than last year (182,000 tons, against 1.4 million tons during the previous season), a sugar stockpile from 5 years of over-supply will ensure that there will be enough sugar for the Russian consumers.

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    More evidence confirms food price increases in case of a hard Brexit

    More evidence, coming from Britain’s fourth-largest grocery chain, confirms that supermarket prices will go up unless the UK government manages to reach a final tariff-free Brexit deal with the European Union. The grocery chain has already launched its biggest round of price cuts, as families are likely to watch their budgets in the coming months, due to job losses and economic difficulties caused by the coronavirus pandemic.

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    COUNTRIES' RESPONSE

    While the Asian Development Bank and Mastercard will focus on digitalizing supply chains for the Asian retailers (starting from Indonesia and reaching around 5000 retailers by the end of Q1 2021), and many cocoa farmers in western Africa are now benefiting from new digital solutions developed by an American company, Kenya’s grain farmers will be granted a better access to the markets, to credit and to agricultural inputs, thanks to the government’s reforms in the agricultural sector.

    Government reforms in Kenya aim at formalizing grain trade

    For many years, Kenyan farmers have suffered from a poor access to credits, markets and quality farm inputs, but this may change in the future, thanks to the government’s reforms in the agricultural sector that aim at improving productivity across the value chain and dismantling the cartels that choke this sector. For example, the Warehouse Receipt System Act will facilitate the creation of a stable agricultural commodities market in the country, by formalizing grain trade in Kenya, improving access to credit for farmers and promoting good agronomic practices.

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    Digital solutions improve cocoa supply chains in western Africa

    Deforestation, child labor and a general lack of information that hinders the cocoa farmers’ ability to maximize yields in western Africa have all plagued the cocoa industry for years. However, cocoa supply chains in Ivory Coast, Cameroon and Ghana have recently changed thanks to an American Software As A Service company, which developed a suite of digital solutions that made cocoa supply chains more traceable and efficient in these countries, benefiting more than 200,000 farmers.

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    Mastercard and the ADB will help digitalize supply chains for Asian retailers

    Mastercard has undertaken a partnership with the Asian Development Bank (ADB) to allow for greater digital efficiency across Asia’s retail supply chain and increase the wholesalers’ access to credit. As a result of the coronavirus pandemic, small and medium-sized enterprises across the world have been significantly impacted: for example, their ability to access credit and their control over cash flow have both decreased. However, thanks to Mastercard’s and the ADB’s support, 1 billion individuals and 50 million micro and small businesses (starting from 500 retailers in Indonesia) will be brought into the digital economy.

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    REGIONAL FOCUS

    Two new biopesticides were created from natural sources by the International Centre of Insect Physiology and Ecology, and they have already proved effective against the fall armyworm (which damages maize crops in many countries of Sub-Saharan Africa); therefore, they will be commercialized in East Africa in the coming months. Meanwhile, different palm oil companies in Central America have adopted the RSPO palm oil certification standards, that are particularly important for Guatemala and Honduras (where palm oil production has become an important part of the economy).

    AFRICA – New pesticides against fall armyworm are being commercialized in East Africa

    The fall armyworm represents a serious threat to food security in Sub-Saharan Africa: its infestation causes maize yield losses of up to 11.6% in Zimbabwe, 26.6% in Ghana, 32% in Ethiopia, 35% in Zambia and 47% in Kenya, according to the International Centre of Insect Physiology and Ecology. This is why the Centre has created two biopesticides from natural sources (including fungi, bacteria and plants), that have already proved effective against the pest’s eggs and are now being commercialised in East Africa.

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    AMERICA – Palm oil companies in Guatemala and Honduras adopt sustainability standards

    Palm oil production has become an important part of the economic development of both Honduras and Guatemala, and both countries are producing the crop for exports into Europe. Palm has historically been a controversial crop, because of deforestation and poor labour practices; luckily, however, several members of the Roundtable on Sustainable Palm Oil in Guatemala and Honduras have adopted the sustainable palm oil standards, which will bring greater sustainability and competitiveness to the companies in these countries’ palm oil industry.

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