With four months until the end of the transition period that started with Brexit (on 31 January 2020) in order to give some time for the UK-EU negotiations to take place and determine their future trade relationship, the United Kingdom’s government is still lagging behind with the preparations. More in particular, there is no contingency planning and not all of the IT systems for the haulage firms have been developed, and these factors increase the risk of supply chain disruptions after the end of the transition period. Meanwhile, Brazil’s beef industry is still benefiting from the fires that are intentionally started in the Amazon to create pastureland for cattle farming (in this area, the number of cattle has almost quadrupled to 86 million in 2018).
Selected daily news on food chain disruptions and countries responses to the COVID-19 impact on food chains.
FOOD CHAIN DISRUPTIONS
The United Kingdom’s government is working to avoid a border crisis when the country will leave the European Union’s trade regime; however, with just four months until the end of the transition period, the government’s preparations still have critical gaps, and the threat of border disruption is becoming more tangible. For example, a contingency planning in case things go wrong is still lacking, and some of the IT systems that haulage firms will have to navigate from are still being developed. Whether the UK manages to reach a free-trade agreement with the EU or not, it will have to apply customs controls on goods (including fresh food) moving aboard 10,000 trucks a day to the EU 27 countries.
Deforestation increased by 34.5% between August 2019 and July 2020 in Brazil’s Amazon (destroying a total area of 9,205 km2), and an alarming number of new fires have recently been detected by Brazil’s National Institute for Space Research. The fires are still started intentionally by private individuals who clear forested areas to make way for pastureland, and this illegal activity supports Brazil’s multibillion-dollar beef industry. In fact, cattle farming is the main driver of illegal land seizures on reserves and indigenous territories in the Amazon, fuelling deforestation: 63% of the area deforested from 1988 to 2014 has become pasture for cattle.
IMPACT ON COMMODITIES AND FOOD PRICES
A global overview of grains on world markets: for the third consecutive month, global food prices have risen; they were driven, among others, by the growing prices of sorghum (pulled by an increasing import demand from China) and maize (determined by a curtailment of production in Iowa, which was hit by a violent derecho storm in mid-August). Punjab, Pakistan’s most populous province, is currently producing around 3.2 tons of wheat per hectare, but yields could be improved by using certified seeds. Finally, South Africa’s maize exports (mainly to Japan and to Southern African countries) currently amount to 1.18 million tons, and they will further increase by the end of the year.
For the third month in a row, global food prices have increased in August: the FAO Food Price Index averaged 96.1 during last month, up 2% from the previous month and reaching its highest level since February 2020. More in particular, sorghum prices rose 8.6%, mostly because of a strong import demand from China, while maize prices increased by 2.2% because of the devastating derecho storm that hit Iowa, raising concerns about its impact on supply. Furthermore, sugar prices rose by 6.7% because of a reduced production in the European Union and Thailand, due to bad weather conditions.
In order to improve Pakistan’s resilience against future threats of wheat shortage, the director general of the Ayub Agricultural Research Institute has recently highlighted the benefits of planting hybrid wheat as a way to enhance yield per hectare. Currently, the yield of wheat in Punjab is 3.2 tons per hectare, but experiments have showed that if farmers use the certified seed, an increase of 0.8 tons per hectare can be achieved. However, for the moment the total use of certified seed in Pakistan is only 40%, and the share of the government in the seed production is 10%.
South Africa’s agricultural sector is being driven by an increased grain production: it has grown by 27.8% during the first quarter, and between 20% and 25% during the second quarter. In August, the country exported 32,563 tons of maize (almost half of the total volume went to Japan, while the rest was exported to different Southern African countries), while South Africa’s total maize export currently amount to 1.18 million tons. The country is also expected to meet a further increase in white maize exports toward the end of the year, when Zimbabwe’s maize stocks will be low, and it will increase its imports.
Three initiatives to counter threats to food security in India, United States and Ghana: India’s Minister of State for Agriculture and Farmers Welfare has reaffirmed the country’s efforts to collaborate with other Asia-Pacific regional countries in the exchange of knowledge and in the development of specific interventions in order to ensure food security in the region; the US Department of Agriculture has granted USD 250,000 to a university in California to start a food supply chain program; Ghana improved the production of cashew thanks to the implementation of the Planting for Export and Rural Development Program.
India’s Minister of State for Agriculture and Farmers Welfare has recently reaffirmed the country’s commitment to share responsibility with the other Asia-Pacific regional countries to ensure food security for all, through collaboration in the exchange of best practices in research and development and interventions that are aimed at enhancing agriculture productivity. The region is home to more than half of the world’s undernourished people, and because of the coronavirus pandemic the number of food insecure people in South Asia is projected to increase to 330 million by 2030.
The Humboldt State University in California is launching the La Comida Nos Une (“Food Unites Us”) program, which is supported by a USD 250,000 grant financed by the US Department of Agriculture and was designed to attract and support undergraduate and graduate students from underrepresented groups to pursue a career related to food, agriculture, natural resources and human sciences. The program will focus on the importance of food supply chains, whose complex reality was highlighted by the coronavirus pandemic.
The production of cashew was boosted in Ghana’s Bono East Region through the implementation of the Ministry of Food and Agriculture’s Planting for Export and Rural Development Program, and now the crop is labelled as a cash crop next to cocoa because of the favourable climatic conditions for its cultivation. The objective of the Program is to meet Ghana’s industrialisation and export policy targets, in order to ensure a stable supply of cashew to the locally established processing factories, thus empowering the rural economy and alleviating poverty.
The Association of South-East Asian Nations could seize the opportunity granted by the coronavirus pandemic to strengthen its internal ties in order to boost regional integration, in order to diversity and expand its intra-regional trade network, instead of focusing on its extra-regional markets. In Europe, on the other hand, several health organizations sent a joint letter to the European Commissioner for Agriculture with three recommendations to make the EU’s Common Agricultural Policy promote more nutrition-oriented supply chains.
Before the coronavirus pandemic, the Association of South-East Asian Nations focused on the strengthening of just five extra-regional markets, while investing less efforts to expand and diversify its intra-regional trade network. This reliance on a handful of markets made the effects of the coronavirus pandemic even more disruptive. However, this global health crisis may be the opportunity for ASEAN to finally forge closer relationships with its own neighbourhood and to speed up the process of regional integration.
As part of the Common Agricultural Policy (CAP) reform, different health organizations made three recommendations to promote nutrition-oriented supply chains (with more fruit and vegetables, whole grains, legumes and nuts, and less meat, in order to reduce obesity rates by 2030) in a joint letter to the European Commissioner for Agriculture. The recommendations include adding a nutrition indicator to the CAP, using existing instruments to boost supply chains for healthy products, and launching an evaluation of the Policy’s impact on public health.