The weakening of the Syrian pound is causing an increase in prices for most of the imported products in the country, such as fodder and livestock antibiotics. This unleashed a chain of consequences: the rising production costs for poultry farming, which led many plants to stop operating, a decrease in production, and a hike in the prices of organic fertilizers made of composted poultry manure. Meanwhile, markets and millers Pakistan’s Punjab province are still suffering due to the wheat shortage that hit its peak in the country in December, and the implementation of the third phase of the Irish Covid-19 plan is expected to immediately cause many people in Ireland’s hospitality industry to lose their jobs.
Selected daily news on food chain disruptions and countries responses to the COVID-19 impact on food chains.
FOOD CHAIN DISRUPTIONS
The fluctuations in the exchange rate of the Syrian pound against the US dollar have caused a hike in fodder and medicines (both of which are mostly imported) prices, which consequently determined an increase in the costs of raising chicken in Syria. Therefore, the country’s poultry sector has taken a severe blow, as many farmers gave up on raising chicken, and now only a few poultry farms are operating in Syria (and those few have curtailed their production by nearly a half).
Despite the fact that a shipment of 800,000 tons of wheat has reached Pakistan, many markets and millers in the Punjab province are still struggling to procure enough flour. While they are claiming that the government’s supplies of wheat are not sufficient to meet the local demand, the Punjab Minister for Information is blaming Sindh’s provincial government, which according to him is intentionally delaying the release of wheat from the official stocks to provide an opportunity to the opposition to criticize the government.
Ireland has just moved to Level 3 of the government’s five-level Covid-19 plan, which forces cafes and restaurants in the country to move to outdoor dining and takeaway only, thus affecting consumer sentiment and footfall in a critical time of the year for retailers and for the hospitality industry (the run-up to Christmas). In fact, according to the Restaurants Association of Ireland, the move to Level 3 will determine the almost immediate loss of over 180,000 jobs in the sector.
IMPACT ON COMMODITIES AND FOOD PRICES
The weather pattern known as La Niña, which occurs in the Pacific Ocean every few years but is capable of affecting global weather and climate, will increase the risk of droughts and heavy rainfalls in different parts of the world, thus impacting on the production of specific commodities (such as sugar and maize). Therefore, it is considered as one of the potential factors for a future hike in global food prices, which have already increased by 367% in Lebanon, due to the financial crisis that is heavily affecting consumers in the country. The low rains in Brazil, on the other hand, are expected to delay soybean planting, and therefore to limit the production in January, thus benefiting the country’s competitors, such as the United States.
Several factors are contributing to the increase of global food prices, which would curtail the consumers’ spending power: the main ones are represented by the tightening of food supplies (partly due to China’s efforts to meet its trade deal obligations, such as those provided for under the US-China Phase One trade deal), and by the disruptive potential of La Niña, which could worsen droughts and extreme rainfall in different parts of the world (thus curtailing the production of maize and sugar, among others).
Due to the inability to use the funds provided by the Central Bank and to the progressive weakening of the Lebanese pound on the exchange market, Lebanon is recording sharp price increases in all areas of spending that are not subsidized. According to the country’s Central Administration of Statistics, food prices rose by 367%, while markets are still witnessing a substantial demand from consumers to stockpile all kinds of subsidized items, such as flour, medicines and other basic foodstuffs.
A scarcity of rainfall in the coming days in Brazil is projected to further delay the soybean planting process, which would affect the country’s production of this commodity in January. This will benefit the United States, which directly competes with Brazil for what concerns the exports of soybeans, and it will have the opportunity to continue selling this product to China in January.
Three initiatives to improve production and traceability in Sub-Saharan Africa’s food supply chain: Liberia’s government focused on enhancing the rice processors’ ability to access credit in order to improve their processing capacity and increase the amounts of rice they can purchase from smallholder farmers; in Ghana, an international NGO has undertaken to distribute around 90,000 cassava seedlings to 3000 farmers by 2022, and it has already reached 1200 farmers in the Savannah Region; in South Africa, a new blockchain platform will improve traceability in the country’s beef system.
Many smallholder farmers do not have adequate access to credit, due to the unwillingness of commercial banks to give out loans because of risk factors. However, thanks to a USD 400,000 cash collateral loan scheme signed by Liberia’s Ministries of Agriculture and Finance and the National Rice Federation of Liberia, many rice processors have recently been able to increase their purchases of rice from smallholder farmers, and they have received loans from Afriland First Bank Liberia to enhance their processing capacity.
A non-governmental organization that operates in the forestry and environmental sector has distributed almost 50,000 cashew seedlings to more than 1200 farmers in Ghana’s Savannah Region to boost the production of this commodity in the country, as part of a bigger environmental intervention whose final objective is to support 3000 farmers with 90,000 seedlings by 2022.
A South African technology platform project is developing the first ever blockchain-enabled solution for the beef supply chain in South Africa, by offering a digital livestock identification and traceability system that can validate the origins and security of the products in real time. This will be particularly beneficial for the beef industry of South Africa, which is facing the combined effects of a foot-and-mouth disease outbreak and the coronavirus pandemic.
The European Commission has recently identified possible anti-competitive business practices carried out by a major Italian food company specialized in the production of tomato pulp, in order to distort competition. After it found that two other European companies were engaged in similar practices last year, the Commission has launched a new investigation to verify the presence of a canned vegetable cartel in Europe. Meanwhile, wine exports from Austria to the United Kingdom, and from France, Italy and Spain to Germany have been decreasing.
During the first half of 2020, the value of Austrian wine exports to the United Kingdom plummeted by 26.9%, as a result of the negative effects of the coronavirus pandemic on trade, but the overall wine exports from Austria have declined by just 1%, compared to the same period last year. For what concerns other wine-exporting countries in Europe, Spanish, French and Italian wine sales to Germany respectively decreased by 12.9%, 9.6% and 2.8%.
The EU antitrust regulators have recently launched another investigation to verify the presence of anti-competitive business practices (such as horizontal price-fixing and market sharing agreements) that are allegedly leading to the reestablishment of a canned vegetable cartel in the European food market. In fact, last year the Commission found that a French cooperative and a Dutch company participated for more than 13 years in a canned food cartel in the European Economic Area.