European hospitality industries and exporters face difficulties
Both developing and developed countries faced issues related to agricultural exports during the month of October, but the retail and hospitality sectors of the developed countries were the most affected. This was confirmed by several newspaper articles mentioning reduced exports and shutdowns in the hospitality industries of several European countries, such as the United Kingdom, Ireland, France and Germany. More in particular, the adverse weather conditions affected wheat production in France towards the end of August (as mentioned in the previous issue of this monthly news digest), which later had repercussions on the country’s exports. Algeria is one of the largest customer of French wheat, but an increase in Russian supplies undermined France’s position in October: Algeria relaxed its wheat tender specifications to accommodate the Russian exporters and Russian shippers were invited to Algerian tenders; however, Algeria has yet to benefit from such decision, as Russian wheat export prices have increased in the meantime, due to the dry weather.
Germany, on the other hand, has seen its pork exports to China, Japan and South Korea decrease after an outbreak of African swine fever in wild boars was confirmed at the beginning of last month, which also had an effect on pork prices, that decreased by 14% in the country. Wine trade in Europe also decreased during the first half of 2020: the value of Austrian wine sales in the United Kingdom plummeted, and so did wine exports from Spain, France and Italy to Germany. Finally, the new restrictions imposed by European governments to limit the growing number of Covid-19 cases in October severely damaged Ireland’s, Scotland’s, Wales’ and England’s hospitality industries, and fuelled protests in London.
Agricultural producers struggling in South and Southeast Asia
Last year, an oversupply of rice in the Philippines determined a collapse in rice prices that impacted on farmers; in October, rice prices saw a sudden drop again (towards the beginning of the month, one kilogram of rice was sold on average at PHP 12), which according to the president pro tempore of the country’s Senate was an effect of the current rice tariffication law, that opened the market to cheap imported rice from Vietnam and Thailand (where rice producers are backed by government subsidies). Owing to the increasing competition with Ecuador, Cambodia and Vietnam, and to the damages caused by the Panama disease and the fusarium wilt to banana plantations in the Philippines, the country’s banana industry was also struggling at the beginning of October.
For what concerns India, the producers that were most affected in the country during the month were poultry and vegetables producers: the poultry sector was still operating at half its capacity at the end of September due to the pandemic-induced restrictions in the processing plants, which determined supply constraints (production decreased by nearly 40%) and egg price increases; the heavy rains in India started to pose difficulties to farmers during the second half of the month, when vegetable prices increased in the markets of several cities, and continued affecting producers until recently, when the government of Maharashtra announced a new financial aid package.
Indonesian and Malaysian palm oil and coffee producers were also affected by demand contraction and adverse weather events. The coronavirus pandemic determined a contraction in household spending by 5.51% year-on-year in the country, which reflected negatively on coffee production: the low prices and the scarcity of buyers in the export market led many farmers in the country to hold tons of coffee under a warehouse receipt. More recently, torrential downpours have caused flooding in Vietnam’s rice fields and in Indonesia’s and Malaysia’s palm oil plantations, while Pakistan keeps struggling with the wheat crisis described in the previous issues of this monthly news digest, with prices still increasing throughout October.
Reduced grains and soybeans production in the United States and Brazil
The dry weather affected the production of soybeans in Brazil, which found itself devoid of sufficient supplies of this commodity after it exported large amounts of soybeans to China (whose demand increased exponentially when the country’s pig herd recovered after the outbreaks of African swine fever): these factors contributed to the increase in soybean prices, which the Brazilian government tried to limit by cancelling import tariffs, in an attempt to increase the supplies of soybeans in the country. For what concerns the United States, on the other hand, the generalized lack of rainfall raised concerns about the prospects for wheat planting in the country at the beginning of October, which were confirmed towards the end of the month. Large portions of land in Colorado, for example, are now in an exceptional drought that prevents cattle from feeding on sufficient quantities of pasture grass.