Venezuela is still struggling with the sanctions imposed by the United States in an unsuccessful attempt to oust the South American country’s president, who is accused of having rigged his re-election in 2018. Last year, the US barred oil companies from supplying Petróleos de Venezuela (the country’s state-owned oil company) with diesel, and now it has started to ration fuel to truckers, with negative consequences on agricultural production and on the regular food supply. Japan and the United Kingdom, on the other hand, are still facing reduced exports: the former suffers the consequences of the Fukushima Daiichi nuclear disaster, caused by the 2011 Tōhoku earthquake and tsunami, which still discourages certain countries from importing food products from nearby areas; the latter has recently seen its food exports plunge due to the non-tariff trade barriers that have been in place since the beginning of 2021, after the end of the Brexit transition period.
Selected weekly news on food chain disruptions and countries responses to the COVID-19 impact on food chains (08/03/2021 to 14/03/2021)
FOOD CHAIN DISRUPTIONS
Due to the sanctions imposed by the United States, Venezuela is currently facing a shortage of fuel that forced the country’s state oil company to ration diesel to truckers. As a consequence of this, the latter have protested by blocking a highway in the central state of Maracay, but diesel is also widely used in agriculture: farmers have warned for months that the fuel shortages are hindering the planting and harvesting of crops (laborers cannot get to fields for harvest and agricultural machinery can’t be used). Furthermore, farmers find it very difficult to transport their food products to the markets, due to the combined effects of the COVID-induced restrictions to movement and the shortage of diesel that blocks most of the truckers in the country.
There are currently six countries that are still limiting food imports from specific areas of Japan that were affected by the nuclear disaster that followed an earthquake and a consequent devastating tsunami in 2011. More in particular, these countries are China, Hong Kong, Macau, Taiwan, South Korea and the United States, despite some of them being important export destinations for Japan’s agricultural, forestry, fisheries and food goods (Hong Kong, for example). In order to contrast this issue, the Japanese governments has recently issued a bill that aims at improving investments in the agricultural sector, in order to expand the agricultural exports, and it is negotiating with other countries to remove trade barriers and relax regulations on agricultural products.
According to the UK Office for National Statistics, the country’s exports of food and live animals to the European Union, which include seafood and fish, decreased by 63.6% in January, due to the combined effect of the coronavirus pandemic and the new Brexit checks for consignments that caused heated protests from the fishing industry. The hardest hit were the exports of fish and shellfish from Scotland, which plunged by 83% year-on-year (from GBP 92 million in January 2020, to GBP 16 million in January 2021). The pandemic has had a big role in reducing demand for these food products, but according to the director of Scotland Food & Drink, Brexit and the non-tariff trade barriers it brought on were at the core of the reduction in exports.
IMPACT ON COMMODITIES AND FOOD PRICES
China’s exceptional demand for grains (which is driven by its intention to maintain stable food security and animal production levels, after recovering from the disruptive effects of the African Swine Fever on its pig herd), combined with the export restrictions imposed by the largest grain exporting countries, such as Russia, Ukraine and the EU, is generating substantial price increases for wheat, corn and soybean. These are particularly felt by low-income countries, such as the Dominican Republic, where the price of the main food commodities is also affected by the rising maritime freight rates, and Bangladesh, where the local Trading Corporation has recorded a 10% price increase for wheat flour and a 37% increase for coarse rice. The commodities that are seeing the largest price increases in India, on the other hand, are edible oils, in view of the forthcoming wedding season and consequent festive demand.
The global grains market will probably be driven by the growing demand of the largest buyers in the world (which remained strong during the hardest phases of the coronavirus pandemic), while supply restrictions will become less and less relevant. One of the key grain importers (especially soybean and corn) is China, which is recovering from the disruptive effects of COVID and the African Swine Fever. In fact, according to the US Department of Agriculture, China will import 24 million tons of corn in 2020-21, against the 7 million tons imported in 2019-20. The main reasons for this increase in imports is the country’s intention to maintain good food security levels, and to source high quality feed grains, because it has invested a lot in its animal production sector. However, at the same time the key grain exporting countries have placed export restrictions to safeguard domestic supplies (Ukraine, Russia, Argentina, and the European Union).
The growing maritime freight rates and the increase in the prices of raw materials are two of the many consequences of the global coronavirus pandemic. For this reason, many food products in the Dominican Republic have seen their prices increase recently (including lettuce, cabbages and yams), while others, according to the Dominican Poultry Association, have steadily increased in price during last year (in some cases, even by 50%). For what concerns grains specifically, the uncertainties connected to the yields in the producing countries and the huge demand for these commodities (such as wheat, corn and soybean) in China have triggered a global alert related to the impact of these factors on the basic food basket.
Due to the approaching wedding season and subsequent festive demand, edible oil stocks are depleting in India, and therefore the prices for this commodity continue their upward trend. However, thanks to the fact that Indian farmers have seen an increase in the minimum support price for mustard and soybean, they could be able to increase the sowing area for oilseeds instead of wheat and rice, which would make the country able to meet the growing demand for edible oils and to export it. According to the Trading Corporation of Bangladesh, on the other hand, the price of coarse rice shot up by 37% and that of wheat flour rose by 10%: this is putting low-income people under a lot of pressure, and to keep the market stable, the Bangladeshi government should ensure the stockpiling and supply of daily commodities.
This week’s media coverage highlights different approaches adopted by three countries in Sub-Saharan Africa to tackle food insecurity issues (aggravated by the difficulties posed by the coronavirus pandemic). In Ghana, a research institute that carries out scientific and technological research for national development is developing a digital hub that will allow farmers and other agricultural stakeholders to use web and mobile-based digital platforms to share knowledge and to trade food products. In Zimbabwe, a donation of 20,000 tons of maize from Japan and a new method to prevent rampaging elephants from damaging crops will temporarily offset the risks of acute food shortages in the country. Finally, Nigeria chose to facilitate the import of 262,000 tons of maize and to release 300,000 tons of this commodity into the market to make up for the difficulties farmers face in sourcing maize seeds, due to the COVID-induced border closures.
The Council for Scientific and Industrial Research (which carries out scientific and technological research for national development in Ghana) is developing a Digital Agricultural Innovation Hub under the Modernising Agriculture in Ghana programme, whose objective is to strengthen Ghana’s agricultural sector development and to improve agricultural productivity. The Hub will provide farmers and other stakeholders in agriculture with direct access to easy-to-use web and mobile-based platforms that share knowledge related to innovative agricultural solutions. For example, the Agriteck Advisor provides mobile phone solutions to farmers, while the Kuafo Marketplace represents an online portal for buying and selling agricultural products.
Zimbabwe is currently facing serious food shortages that are mainly caused by the consequences of the coronavirus pandemic, by inflation and by drought. Furthermore, during harvest season, the Zimbabwean farmers face another serious obstacle, which is represented by rampaging elephants that attack farms and damage the crops. To provide a temporary solution to such shortages, Japan has recently donated approximately 20,000 tons of maize to the Food Deficit Mitigation Strategy, which is the government of Zimbabwe’s programme through which the World Food Programme provides cash assistance and food transfers to food insecure households during the lean season. As for the rampaging elephants, on the other hand, a new concoction (a mixture of chili, garlic, ginger and cow dung) was tested in villages that are close to national parks and enjoyed great success in keeping elephants away from the crops.
Due to the restrictions that were imposed by Nigeria’s government following the beginning of the coronavirus pandemic (including border closures), maize farmers are struggling to get seeds as the planting season kicks in across the country. Because of these obstacles, the fears that agricultural productivity will decline and that food security will be threatened are growing, as seed shortages are predicted also for other crops. For this reason, the Central Bank of Nigeria released about 300,000 tons of maize into the market to help reduce the prices of the commodity, and the Nigeria Customs Service facilitated waivers for four firms to import around 262,000 tons of maize. The production of sorghum, on the other hand, remains stable in Nigeria, and the federal government is promoting a collaborative effort with all stakeholders to further improve agricultural productivity for this commodity.
In Asia, the Philippines and India are currently trying to strengthen their trade ties with other countries in the Asia-Pacific region: the former is looking forward to including rice in a list of 152 essential goods that are exempt from the restrictive trade measures between the ASESAN member countries, established in response to the coronavirus pandemic; the latter is considered by Australia a promising export market, especially to boost its wine sales after the imports of this product (together with other food commodities, such as barley) were banned in China. Meanwhile, the South African Poultry Association has recently claimed that four EU member states have been dumping frozen chicken onto the South African market, thus causing unfair competition. Finally, the Tanzanian smallholder cassava farmers will be supported by a project funded by the Bill and Melinda Gates Foundation that aims at providing them with affordable high-quality cassava seeds.
As a way to slow down the continued rise in consumer prices, the Philippines is currently pushing for the inclusion of rice in a list of commodities that are exempt from any COVID-induced restrictive trade measure between the member countries of the Association of Southeast Asian Nations. This list was confirmed within the framework established by a memorandum of understanding that was signed in November, and it includes 152 essential goods, consisting mostly of medical products. India, on the other hand, is proving to be Australia’s fastest growing market (especially for its wine exports), after the escalating tensions between the latest and China led to the imposition of export bans on many Australian food products. Furthermore, India has overran China as the largest source of net migration to Australia.
The South African Poultry Association has recently applied for anti-dumping duties on imported chicken from Denmark, Ireland, Poland and Spain, which are accused of having dumped frozen chicken portions in South Africa (dumping margins up to 201% have been found in this specific case), thus causing unfair competition for the local producers. Exporting poultry products at prices that are lower than their production costs, or lower than the prices of the final product in the country of origin, is unfair under the General Agreement on Tariffs and Trade rules, and it is harmful for the economic growth of the country of destination, because it creates jobs in producer countries while costing local jobs.
The BEST Cassava project is founded by the Bill and Melinda Gates Foundation and it will be implemented in Tanzania by the Ministry of Agriculture, the Mennonite Economic Development Associates and the International Institute for Tropical Agriculture. Since productivity-enhancing technologies alone, without a proper access to markets, cannot get poor African farmers out of poverty, the BEST Cassava project aims at establishing a network of government-certified commercial cassava seed entrepreneurs. Different varieties of quality-assured and disease resistant cassava seeds will then be made available and affordable for smallholder cassava farmers. This way, potential industrial users of cassava that are usually concerned about the safety of the manufactured foods will be more incline to purchase cassava that is more resistant to major diseases from smallholder farmers.