Food and Agriculture Organization of the United Nations
    FAO Data Lab

    News digest - 13/08/2020

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

    Mangoes are displayed for sale on a fruit stall in a street market in Sao Paulo.
    ©FAO/Miguel Schincariol

    FOOD CHAIN DISRUPTIONS

    During the first coronavirus lockdown imposed by India’s central government, tens of millions of migrant workers tried to get back to their villages, carrying the virus with them. This phenomenon reflects a strong inequality of opportunities in India between the urban and rural areas, which enhances internal labor migration in the country. In order to ease these movements of people, India should focus on creating a rural development model that enables rural populations to be employed locally. China, on the other hand, is facing increasing food supply concerns as flooding and insect infestations keep damaging the crops in the central and southern regions of the country.

    India should rethink rural development model to reduce inequality of opportunities

    In India, one in four workers is a migrant (more than 100 million people), and most of them work in the cities because of a rural-urban imbalance that reflects the inequality of opportunities in the country. Therefore, it is important for India to focus on developing a model of a rural economy that enables local populations to be employed locally. Within this model, farmers would be turned into rural entrepreneurs; however, for the moment this vision is hindered by four underlying issues in India: shrinking arable land (caused by over-cultivation and urbanisation), climate change phenomena, lack of productivity and shortage of processing facilities.

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    Food supply endangered by flooding and insect infestations in China

    The President of the People’s Republic of China has recently called for an end to food waste in the country, probably because of the threats to the supply of grains and pork posed by the flooding, the African swine fever and the coronavirus pandemic. The flooding is currently continuing in the Yangtze River, Huai River and Yellow River basins, which are all important grain-producing regions in China, and the country is also facing insect infestations which may further endanger the country’s food supply, considering that the fall armyworm and the desert locust feast on corn.

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    IMPACT ON COMMODITIES AND FOOD PRICES

    Since Lebanon’s capital is the main entry point for food products in the country, the explosion that destructed Beirut’s port (and with it a grain silo that was capable of containing up to 120,000 tons of wheat) may determine a serious food shortage in Lebanon. In Vietnam and Thailand, rice export prices remain high due to production issues: the current harvest in the former country is coming to its end (and the next one will not begin until October), while rice production in Thailand was heavily affected by a drought earlier this year. Finally, food prices in the US’ grocery stores remain high due to additional distribution costs born by food processing companies.

    Explosion in Beirut may determine wheat shortage in Lebanon

    Following the explosion that shook Lebanon’s capital last week, thousands of people currently lack housing, food and medical supplies. More in particular, FAO’s representative in Lebanon determined that the large silo at the port (a 120,000 tons capacity structure) that was destroyed in the blast was the only major grain silo in the country: since Lebanon imports almost all of its wheat from abroad, and Beirut’s port is the main entry point for food products, the destruction of these fundamental infrastructures may determine serious shortages in the country’s food supply. With banks in crisis and one of the world’s biggest public debt, Lebanon has limited resources to repair the damage caused by the explosion. 

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    Low rice production in Vietnam and Thailand is causing high export prices

    As the summer-autumn harvest is coming to an end in Vietnam, the reduced production of rice in the country determined an increase in export prices, which rose to USD 470 per ton toward the end of last week. Furthermore, the supply crunch pushed local traders (worried that they will not be able to fulfil their export contracts signed with Cuba, Malaysia and the Philippines) to hoard rice in anticipation of higher prices. A similar issue is affecting Thailand, where rice prices remained high due to a strong local currency, deterred buyers, and a drought earlier in the year affected rice production, so that prices are likely to stay high despite the recent rainfall.

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    Distribution costs in meatpacking plants determine high prices in grocery stores

    When the coronavirus pandemic began, supermarkets in the United States were able to manage supply and demand by limiting the amount of meat consumers could buy. However, prices are still high in grocery stores: initially, it was due to the fact that the coronavirus outbreaks forced many meatpacking plants to reduce or suspend their production, but now the price increases reflect the additional distribution costs put on meat processors. In fact, food processing companies increased production in plants that were not affected by a labour shortage, which often added to cost. That distribution cost is now determining the higher prices in grocery stores.

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    COUNTRIES' RESPONSE

    The UK Embassy in Mauritania has recently launched a call for proposals to finance development projects to be implemented by civil society and private sector organizations in the country: the initiatives must end no later than 31 Mach 2021 and should assist the country’s recovery from the coronavirus pandemic. Canada and Ghana, on the other hand, will provide financial support respectively to agri-food companies and to businesses in the cocoa industry.

    UK launches call for proposals to support Mauritania’s recovery from pandemic

    The British Embassy in Nouakchott has recently announced a call for project proposals from civil society and the private sector in support of Mauritania’s response to the ongoing Covid-19 pandemic, under the Foreign & Commonwealth Office’s Covid-19 Enabling Fund. More in particular, the embassy has allocated up to GBP 50,000 from the said fund, which shall be used for a maximum of 7 months by one or multiple projects, starting from September 2020. The intended outcomes of the proposals should include assisting local businesses in surviving from the effects of the pandemic, increasing the diversification of the local food production, improving access to food, and enhancing the quality of Mauritania’s health system.

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    Government of Canada funds agri-food development initiatives in Northern Ontario

    The Government of Canada’s economic development organization for Northern Ontario will provide CAD 3 million in funding for 13 different initiatives that will support the growth of the agri-food industry in the region and assist producers in recovering after being hard hit by the coronavirus pandemic. The outcomes of such initiatives include enabling research and development projects that create innovative agricultural technologies, providing training and technical support to communities and food cooperatives, promoting sustainable agriculture and developing value-added food processing businesses.

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    Parliament of Ghana approves USD 1.3 billion loan to Ghana Cocoa Board

    The Parliament of Ghana has recently approved a USD 1.3 billion syndicated loan facility for the Ghana Cocoa Board, which facilitates and promotes the growth and sustenance of the cocoa industry in the country. The funds will be used to purchase cocoa beans for farmers and to finance other operations for the 2020/2021 crop season, such as cocoa disease and pest control, fertiliser distribution and application, and child education support.  

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    REGIONAL FOCUS

    Palm oil production and exports from Indonesia decrease due to drought and to the effects of the coronavirus pandemic, but manage to stay afloat thanks to an increased internal demand (driven by an increased production of oleochemicals, which are used in sanitation products) and to growing exports to India and Pakistan. In Ivory Coast, on the other hand, the production of mangoes was not affected by the pandemic thanks to the country’s efforts to establish partnerships with other mango producing countries and to finance the development of the facilities that process this fruit.

    ASIA – Palm oil exports from Indonesia decrease for all countries but India and Pakistan

    Indonesia, which is the biggest palm oil producing country in the world, saw production and exports contract in the first half of 2020 due to the impacts of drought and the coronavirus pandemic. The lockdowns imposed by governments worldwide affected the global demand for palm oil products: therefore, palm oil exports from Indonesia declined for all major destinations, except for India and Pakistan. The internal demand for palm oil, on the other hand, was driven by the increased production of oleochemicals, which are the main components of sanitation and pharmaceutical products.

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    AFRICA – Ivory Coast keeps mango exports stable amid pandemic

    The production of mangoes has withstood the health crisis prompted by the coronavirus pandemic in the northern part of the Ivory Coast, which is now the third supplier of mangoes to the EU’s market. This is due to the development of different industrial units that are dedicated to process heat-treated mangoes in Northern Ivory Coast, and to the strategic partnerships with companies that are located in Burkina Faso and Mali.  

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