General considerations concerning food chain disruption-related news
During the month, the mentions to developing countries in the newspaper articles that were selected for the Data Lab’s daily news digests largely outnumbered the mentions to developed countries (105 mentions against 63 mentions). The only food value chain stage that was exclusively mentioned in relation to developing countries was Market. Newspaper articles mentioning developing countries and highlighting food chain disruptions that occurred in the Transport, Storage, Producer, Export, Consumer and Distribution stages were more numerous, if compared with articles focusing on disruptions occurring in the same stages, but in developed countries, while the disruptions that were more frequent in developed countries corresponded to the Retail, Restaurants, Processing and Harvest stages.
Producers struggling in Sub-Saharan Africa and South Asia
Most of the newspaper articles describing food chain disruptions occurring in the Producer stage made reference to Sub-Saharan African ad South Asian countries (combined, they received 25 mentions out of 30). More in particular, the Nigerian and Kenyan producers were the most affected: in Nigeria, the leading flour producing companies operate like a cartel, manipulating flour prices and preventing bakers and pastry producers from having a say, and taking advantage of their greater financial power to exploit local farmers and bakers. This and other factors (such as the effects of the coronavirus pandemic and the duties on wheat imports) affected flour prices, which sharply increased in mid-September.
The most affected producers in Kenya during the month, on the other hand, were dairy producers and coffee, grain and banana farmers. Milk production in the country suffered from the unusual cold weather (normally seen between June and July), which stressed dairy cattle and caused a 36% decrease in milk volumes. Grain farmers, on the other hand, were impacted by the prolonged decision by the country’s government to shut all bars in Kenya as part of the measures to limit the spread of the coronavirus pandemic (barley, sorghum and wheat are normally used to produce beverages), while banana growers have been struggling to find a market for their products.
Finally, the most affected producers in South Asia during the month of September were the Indian, Vietnamese and Bangladeshi rice producers, and the Indonesian and Malaysia palm oil producers. The pandemic-induced disruptions curtailed rice supplies in India and Vietnam, while several consecutive natural calamities in Bangladesh (including intense rainfall, floods and a cyclone between March and July) damaged the crops and determined an increase in domestic prices by 20%. Heavy rains also determined a decrease in palm oil production in Indonesia and Malaysia, which led to a hike in prices.
Food producers and exporters experiencing difficulties in developed countries
All of the mentions to food producers experiencing issues in developed countries made reference to the countries of the English-speaking world. In the United States, pork prices remained low for most of the summer in Minnesota, affecting hog farmers, while a new invasive pest (the brown marmorated stink bug) began ravaging vegetables, fruits, nuts and row crops in Florida toward the end of August. Furthermore, the US seafood industry was further damaged by Hurricane Laura, which hit Louisiana, among other states, after the lockdown measures had already affected this sector by causing closures in the hospitality industry. Finally, the hundreds of wildfires that destroyed around 600,000 hectares of land in California represented an additional challenge for the state’s farmworker community.
Most of the newspaper articles related to Australia and New Zealand, on the other hand, mainly focused on exports. The trade relationship between Australia and China hit its peak in 2019-20, after 14 years during which the former has mostly relied on a single overseas market for its exports. More recently, China’s sanctions against key farm imports from Australia (such as beef, wine and barley) were allegedly used as a lever to force the country to withdraw some of its criticisms on the way China handled the first coronavirus outbreaks. This is forcing Australia to identify new markets for its agricultural and food exports, such as India, Bangladesh, Vietnam and Indonesia (which already imports large quantities of barley, wheat and sorghum from the country). For what concerns New Zealand, on the other hand, the country saw a contraction of its tomato exports, caused by the fact that farmers delayed the planting of tomato crops in April, when many restaurants were forced to shut down by the country’s government, which resulted in a supply shortage and also in a hike in tomato prices.
Finally, with the intensification of the negotiation talks between the United Kingdom and the European Union, before the Brexit transition period ends in late December, many newspaper articles offered insights on the future of the trade relationship between the two parties, and on the consequences on exports and consumer prices. More specifically, several groups representing road haulers and a report by the London School of Economics and Political Science warned the UK’s government about severe supply chain disruptions after the end of the transition period, caused by new tariffs and border controls, which will eventually impact on food prices.