The enhanced frozen fries exports from European countries (who have millions of tons of surplus produce due to the new lockdown measures that governments are imposing throughout the continent) to New Zealand are posing difficulties to the country’s potato processing sector, because the manufacturers of frozen foods are reducing the number of their employees and potato farmers are reducing the acreage for this commodity. This also applies to Australia, where the influx was even larger and where wine exporters are currently struggling due to the ban on several imports that China imposed as a retaliation against the country’s call for an independent probe into the origins of the coronavirus pandemic.
Selected daily news on food chain disruptions and countries responses to the COVID-19 impact on food chains.
FOOD CHAIN DISRUPTIONS
The supply chain disruptions caused by the coronavirus pandemic, and an increase in dumped imports of European frozen fries (currently, there are between 1.5 million tons and 2.6 million tons of surplus potatoes in Europe) are both threatening New Zealand’s potato processing sector, with farmers planning to grow less potatoes and people losing their job. In fact, the influx of European fries to New Zealand resulted in more than 40 containers of potatoes flooding into the domestic market, and the manufacturers of frozen foods have responded by limiting the volumes being produced and by reducing the number of employees.
According to the FAO, 90% of the world’s fish stocks are currently overfished or depleted, due to illegal fishing and unsustainable fish farming systems (that leach chemicals, waste and uneaten fish feed into the sea, thus harming marine ecology), climate change, habitat loss and pollution. This is why groups around the world (composed of international organizations and local fisheries) are trying to keep waters clean, while bolstering local economies and empowering marginalized fishing communities.
Normally, around this time of the year the Australian wine exporters should be preparing for shipping products to China ahead of the Christmas and New Year celebrations; however, stockpiles of wine are currently mounting in warehouses, as the Chinese authorities have ordered importers to stop purchasing wine, lobsters, barley and copper ore from Australia.
IMPACT ON COMMODITIES AND FOOD PRICES
Overall inflation rates and food inflation rates have increased significantly in Kyrgyzstan and Saudi Arabia: in the first case, the increase was caused both by the effects of the coronavirus pandemic and by political instability, while in Saudi Arabia the main driver was the decline in oil prices, which put pressures on the national budget and triggered a rise in the value added tax to 15% (in an attempt to contain fiscal shortages in the country). Meanwhile, banana prices have recently increased in the Chinese region of Guangxi, but so did exports from the Yunnan province.
The recent political instability in Kyrgyzstan and the effects of the coronavirus pandemic on the country’s economy have both had repercussions on price inflation, which increased by 5.6% year-on-year for all goods and services and by 11% for stable foods (grains, meat, fish, milk and dairy products, fruits and vegetables). The country’s government is trying to limit further increases by establishing price controls on 11 essential food items and by regulating import and export volumes.
The overall inflation rate in Saudi Arabia has increased from 2-4% in the first quarter of 2020, to 13-14% in the third quarter: more in particular, the main factors were the large increase in the food price inflation in July 2020, which was caused by a rise in the value added tax from 5% to 15% in an effort to contain fiscal shortages, and the decline in global oil prices, which put pressures on the national budget (the oil sector contributes about 50% of the country’s GDP).
Last week, banana prices in China’s production areas have increased due to a decreasing supply from the Guangxi region and to a drop in temperatures. However, the overall market trend in the country is optimistic, and shipments from the Yunnan province have increased, although modestly.
Today’s media coverage highlights two relevant initiatives for the modernisation of the United Kingdom’s agriculture and food industry: in Scotland, a public body that supports Scottish red meat producers has developed a free virtual tool that will help them maximize returns through a careful selection and presentation of their stocks, while a Cambridge-based startup has created a connectivity platform that focuses on crop and supply chain intelligence to translate raw and complex food supply chain data into transparent insights for farmers and businesses. In Ethiopia, on the other hand, an equipment leasing company has provided several beneficiaries with a total of 85 combine harvesters that will assist farmers in resisting the invasion of desert locusts that is still haunting the country.
Ethiopia’s first privately held equipment leasing company has distributed 85 combine harvesters worth USD 16 million to several beneficiaries, including the Ethiopian Agricultural Business Corporation (which received 10 harvesters). The equipment will generate new economic activity in the country, and it will improve efficiency and grain yields in the agricultural sector by reducing post-harvest losses, thus supporting farmers in their fight against the locust swarms that keep ravaging crops in Ethiopia.
A public body that supports the Scottish red meat sector has recently developed a free online tool for livestock farmers that highlight key factors that need to be considered by farmers to ensure that livestock meet target carcase specifications required by processors and consumers. Thanks to the tool, red meat producers will acquire the skills and knowledge to maximise their profits and minimise the risk of condemnations and carcase downgrades.
An agritech company in the United Kingdom has recently raised around EUR 1.2 million for a supply chain management platform that it developed. This platform uses big data and machine learning to assist farmers, field staff and procurement managers in making informed decisions: more in particular, it integrates data from crops, stores, load dispatches, satellites and field sensors in order to help businesses meet contractual obligations on quality and quantity of the produce.
In West Africa, Morocco’s army has finally managed to dismantle a roadblock in Guerguerat organized by the Polisario Front (a Sahrawi rebel national liberation movement that aims at ending Morocco’s presence in the Western Sahara), which was preventing haulers from transporting fruits and vegetables to Mauritania and other West African countries. In East Africa, on the other hand, Rwanda and Kenya are currently on the right path to establish a large-scale production of avocadoes, but only the latter has adopted the necessary international quality standards that allow it to export around 68,000 tons of this fruit annually.
For almost one month, the separatists of the Polisario Front in Western Sahara organized a roadblock in Guerguerat, a small village that represents the only crossing point for haulers between Morocco and many West African countries, including Mauritania. However, thanks to the efforts of the Moroccan army, the roadblock was dismantled towards the end of last week. Therefore, the markets in Nouakchott are now stocked again with fresh fruits and vegetables, and food prices have begun to stabilize.
Rwanda and Kenya currently offer excellent conditions for large-scale production of avocadoes: the former produces 141,130 tons of avocadoes per year, but most of them (around 82,000 tons) are unfit for export, while Kenya produces 115,000 tons of avocadoes annually (70% are normally grown by small-scale farmers), and it managed to increase its exports by 15% to 68,000 tons over the last 12 months, thanks to the adoption of higher international quality standards.