Food and Agriculture Organization of the United Nations
    FAO Data Lab

    News digest - 12.13/07/2020

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

    Arukudi Erupe's chickens are fed early in the morning in Morungole, Turkana County, Kenya
    ©FAO/Luis Tato

    FOOD CHAIN DISRUPTIONS

    While small grocers selling agricultural products in the United States have managed to cope with the combined effect of a supply shortage and an increased demand from the consumers by enhancing their bonds with local producers and buyers, the agricultural producers in California are still facing major difficulties: the coronavirus pandemic ha disrupted the state’s agricultural supply chain and export market, and the resulting negative consequences are borne by the poor and rural communities. In South Africa, the domestic poultry production will be highly impacted by the EU’s and US’ dumping, which has been a common phenomenon in the country ever since it reduced import tariffs between 2008 and 2017.

    Grocery Stores Slowly Catching Up With Demand

    In the United States, the retail grocers selling agricultural products witnessed a major increase in demand and a parallel shortage of different food products, especially beef; both are caused by the effects of the coronavirus pandemic. Grocers are slowly adjusting with this level of sustained demand, while consumers are more aware of the origin of the food products they purchase: this ensured the survival of the independent supermarkets, which focused on strengthening their connection with local producers and consumers.

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    Californian Agriculture Suffers Under the Pandemic

    The coronavirus pandemic has dealt an unprecedented blow to California’s agriculture industry, disrupting its supply chain and export market, and modifying the consumers’ buying patterns (their interest in foods with longer shelf lives has surged, for example). The cumulative losses in the sector are projected to be between USD 5.9 and 8.6 billion, but the effects of such losses are much more impactful on the poor and rural communities (in the rural regions, unemployment rates range from 27% to 81%).

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    For struggling SA chicken producers, post-Covid-19 world promises a flood of imports

    The South African poultry sector will probably face a difficult period in the near future, as producers estimate that large chicken imports will flow in the country after the coronavirus pandemic, because of the US’ and Europe’s dumping behaviour. This phenomenon impacts on the country’s domestic producers, who get pushed out of the market because of the imported chicken’s low prices. This is due to the fact that South Africa opened up its domestic market to the international competition by reducing tariffs, and reduced support to the local producers.

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    IMPACT ON COMMODITIES AND FOOD PRICES

    In Latin America, Mowi ASA (one of the largest seafood companies in the world) pledged to reduce its soy-related deforestation risk in Brazil by only sourcing deforestation-free soy and by liaising with its soy suppliers so that they will not trade soy that is grown on land deforested from 2021, thus driving sustainability wins further; on the other hand, in Argentina a strike organized by the Dairy Workers Union could cause a dairy products supply shortage. In Nigeria, smallholder farmers struggle to get access to land and financing to establish palm oil plantations.

    Lácteos: con un paro se agrava un conflicto y alertan que podrían faltar productos

    The dairy industry in Argentina, already shaken by the effects of the coronavirus pandemic, will suffer the additional brunt of a strike organized by the Argentinian Dairy Workers Union (Asosiación de Trabajadores de la Industria Lechera de la República Argentina). The protest will determine that the companies will not be able to collect the products from cheese factories, which in turn could cause a supply shortage for the consumers.

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    COVID-19, challenges cripple palm oil sector’s prospects

    In Nigeria, the closure of the country’s land borders and the consequent restrictions on palm oil imports benefited the domestic palm oil industry; however, they have also determined a shift in demand and price fluctuations. Furthermore, the industry in Nigeria suffers from the farmers’ inability to access land and from the difficulty in obtaining funding from the banks. For example, the Central Bank of Nigeria only provides loans that are suitable for big companies, since smallholder farmers cannot afford to pay them back.

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    Mowi says Brazil soy suppliers 'going the extra mile' with deforestation-free targets

    Mowi, the world’s largest producer of Atlantic salmon, pledged to only use deforestation-free soy in its own brand fish feeds from 2021 (salmon feed generally contains about 25% soy protein). This promise will stimulate the Brazilian soy suppliers to ensure that the entire supply chain will be sustainable, because other industries will be tempted to commit to similar deforestation policies. For example, another salmon giant, Grieg Seafood, will exclude one of the parent companies from the proceeds of its green bond until it reduces its soy-related deforestation risk in Brazil.

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    COUNTRIES' RESPONSE

    In Ghana, two different district assemblies are providing direct support to farmers in the respective areas, by contributing to extant national measures (such as the Planting for Export and Rural Development Programme) through the distribution of new equipment and seedlings. In Argentina, an ambitious recovery plan established by the province of Mendoza aims to stimulate entrepreneurs and businesses to invest in different sectors, including agriculture, in exchange for tax benefits, bonuses and ongoing support.

    Mendoza Activa en detalle: quiénes y cómo podrán acceder al plan para reactivar la economía

    In Argentina, the governor of the Mendoza province presented a plan to create jobs and boost the economy of the region after the most acute phase of the coronavirus pandemic. Anyone can issue their investment project proposal (as long as it focuses on the province of Mendoza), in any sector, including agriculture, and they will receive tax benefits, bonuses, and ongoing support in return. Furthermore, the proposed activities must bring benefits to all the citizens of Mendoza.

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    Asene Akroso-Manso District acquire machinery to add value to agriculture produce

    The Asene Akroso-Manso district assembly, in south-eastern Ghana, will contribute to the Planting for Export and Rural Development Programme (which aims at enhancing the foreign exchange earning capacity of the Ghanian economy) by acquiring equipment for young farmers in the district, which will include a palm oil digester and boiler, a winnowing machine, a rice mill and a destoning machine.

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    Cashew farmers receive free grafted seedlings to boost production

    The coronavirus pandemic has highly affected the marketing of cashews in Ghana, since India has temporarily restricted cashew imports from the country, resulting in a disincentive for farmers in Ghana to produce these nuts. The West Gonja district in northern Ghana will soon distribute 2000 high-yielding grafted cashew seedlings to 50 farmers in order to boost the production of cashew in the Savannah region of the country, thus complementing the government’s effort in this area and contributing to poverty eradication.

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    REGIONAL FOCUS

    After years of concerns related to the future of the UK food and drink industry during the negotiations of a post-Brexit trade relationship between the country and the European Union, the UK government is now investing GBP 705 million to fund new infrastructure, jobs and technology for the future GB-EU border. The optimism generated from this pledge may have contributed to the positive forecasts on the European food production: the production of cereals in 2020/21 will be 1.7% higher than the 5-year average, for example. Meanwhile, the new SOFI for 2020 highlights that the cost of a healthy diet in Latin America and the Caribbean is the highest in the world.

    EUROPE – EU publishes short-term agriculture outlook

    Thanks to the fact that many lockdown measures around Europe are being progressively lifted, multiple agriculture sectors are recording good production prospects. For example, the EU cereal production for 2020/21 is forecasted at 286.3 million tons, which is 1.7% above the 5-year average, and its demand from bakeries and restaurants is expected to grow. However, both the beef and the poultry production are projected to decline in 2020, because of persistent market uncertainties caused by the pandemic.

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    EUROPE – Brexit: £705m funding package to help manage UK-EU border

    The government of the United Kingdom will invest GBP 705 million for the future border with the European Union, in order to make sure that it will be fully operational at the end of the Brexit transition period (December 31st). Most of the funding covers port and inland infrastructure improvements that will ensure compliance with the new customs procedures and controls, while parts of it are destined to staffing and IT systems.

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    AMERICA – Obtener una dieta balanceada cuesta más en América Latina

    FAO’s State of Food Security and Nutrition in the World for the year 2020 indicates that 7.5% of all people under the age of 5 in Latin America and the Caribbean is overweight (world average is 5.6%). This is connected to the fact that the cost of a healthy diet in the region, amounting to USD 3.98 per person on average, is the highest in the world. This means that around 104 million people in Latin America and the Caribbean (26.5% of the regional population) can’t afford a healthy diet.

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