Food and Agriculture Organization of the United Nations
    FAO Data Lab

    Selected weekly news on food chain disruptions and countries responses to the COVID-19 impact on food chains (12/04/2021 to 18/04/2021)

    04 March 2021, Vehari, Pakistan - Ms Shugufta Yasmeen, 41, women beneficiary and a community mobilizer, who is also involved in different field operations like harvesting of wheat crop, cotton picking etc to support her family
    ©FAO/Aamir Qureshi

    FOOD CHAIN DISRUPTIONS

    The coronavirus pandemic stands at the core of the countless issues faced recently by agri-food supply chains around the world. However, it is not the only negative factor affecting agricultural producers. In Nigeria, for example, most small-scale farmers were already suffering from a limited access to markets and insufficient infrastructures even before the outbreak of the coronavirus pandemic, while the Australian beef industry, in recent years, has been scourged by one of the worst droughts in the history of the country (which, together with the trade tensions with China, is impacting on prices and supply levels). The global poultry industry is also facing difficulties that are not strictly connected to the pandemic, such as the consequences of the African Swine Fever outbreaks, and those of the avian influenza, both in Asia and in Europe (which have led to short supplies and increased price volatility).

    Coronavirus pandemic underlined flaws in Nigeria’s agri-food supply chain

    The coronavirus pandemic had the indirect effect of underlying some of the issues that afflict food supply chains in Nigeria, and more specifically in its capital city (Africa’s most populous). First of all, Nigerian small-scale farmers, although they represent 70% of the country’s agri-food supply chain, have a limited access to markets. Furthermore, Nigeria’s infrastructural links are few and in a precarious state: for example, roads are poor and bumpy, storage and refrigeration practices are not advanced, and there are no urban and rural freight networks. Moreover, due to a lack of research and development and to weak agricultural extension services, Nigeria has spent over USD 3 billion annually in food imports over the last ten years. Therefore, in the near future the country should focus on developing science and innovation policies, in order to invest in technologies that are capable to boost food production and ensure food security.

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    Australian beef industry is facing limited supplies and high prices

    The Australian beef industry is currently suffering from the continued trade tensions with China, lower supplies and an appreciation of the Australian dollar. In fact, herd sizes in the country are near their lowest level since the early 1990s, and the lack of a sufficient stock for the global market comes at a time when international demand for beef is picking up from the disruptions caused by the coronavirus pandemic. The reduction of supplies is partly due to the recent droughts in Australia: after rains finally replenished pastures last year, farmers are now holding onto livestock, squeezing supplies and driving up the prices. In fact, most of the farmers have to decide whether to keep their female cattle to expand herds, or to send them immediately for slaughter in order to repay the debts they have incurred during drought years.

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    Global poultry industry facing challenges in Europe and Asia

    The global poultry industry is gradually improving after a rough first quarter; however, it is still afflicted by several issues, including the ongoing challenges posed by the coronavirus pandemic, the avian influenza in the northern hemisphere, and the African Swine Fever (ASF) in Asia. More in particular, the rising prices of grain and oilseed is driving up the costs of production for poultry farmers, while the ASF outbreaks have affected pork production in China and Vietnam, which are both planning to boost the production of pork as soon as possible (this, together with a growth of chicken production, is likely to deflate poultry prices later this year). Finally, the EU, UK, Russia and South Korea have all recently been impacted by the avian influenza, which caused a reduction in supplies and an upside pressure on prices.

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    IMPACT ON COMMODITIES AND FOOD PRICES

    The FAO Food Price Index stresses that global food prices have reached their highest levels since 2014, through a tenth consecutive increase last month: combined with the other repercussions of the coronavirus pandemic (especially the effects on the labour market), they are disproportionately affecting the most disadvantaged households around the world, which are now forced to spend most of their incomes on food. More in particular, Namibian and Pakistani consumers are currently struggling with the soaring prices of wheat and wheat flour, due to an inadequate supply of wheat and to the increasing import prices in Namibia, and to a lack of effective procurement and price control strategies in Pakistan. In Myanmar, on the other hand, food prices are being affected both by the effects of the pandemic and of the coup d’état that brought to power the country’s military in February and caused a drastic reduction in foreign investments and economic assistance.

    Wheat and wheat flour prices on the rise in Namibia and Pakistan

    Because of the inadequate local supply of wheat, together with the increase in the costs of importing inputs (due to Russia’s new export tax on raw wheat), one of Namibia’s biggest milling companies has recently announced that the prices of most food staples (wheat, rice and millet products) will go up starting from 12 April 2021. Due to the repercussions of the coronavirus pandemic on low-income families in the country (which have lost their breadwinners during last year), this price increase will place a huge burden on consumers: for this reason, the University of Namibia has urged the health ministry’s welfare department to support families in distress. The Sindh province in Pakistan is also witnessing significantly higher wheat flour prices, as a consequence of the higher procurement price set by the province’s authorities and to a lack of an effective price control strategy.

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    Prices of imported foodstuffs have increased in Myanmar since the coup d’état

    Since the coup d’état that took place in Myanmar on 1 February 2021, the country’s currency has been gradually depreciating, and this has had significant repercussions on the prices of imported foodstuffs, which are becoming more and more expensive for the Burmese consumers. Moreover, the decrease in the inflow of foreign capital (investments, economic assistance, etc.) has further contributed to the price hikes. The situation is all the more serious, considering that Myanmar heavily relies on imports for many products, including processed food, and that is why the depreciations in the local currency led to consumer price rises. For example, edible oils prices increased by 31% in early April from late January, while soybean milk soared 15%. Since Myanmar is a rice exporter, on the other hand, rice prices remain stable.

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    Global food prices increased for the tenth consecutive month in March

    According to a recent assessment conducted by the FAO, global food prices rose for the tenth consecutive month in March, reaching the highest levels since 2014. This increase disproportionately affects poor households around the world, making the rich less affected, due to the unequal effects of the coronavirus pandemic on the disadvantaged: for example, in Pakistan residents spent more than 40% of their income on food, and the same is true for the Philippines (41.9%), Algeria (42.5%) and Nigeria (56.4%), while in the United States, the bottom fifth of the population spent 36% of their income on food. The main food products concerned by the price increases are meat, poultry, fish and eggs (5.2% increase), citrus fruits (9.5%), canned vegetables and soft drinks (6%).

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    COUNTRIES' RESPONSE

    The Nigerian Federal Government will have access to a USD 3 million financing provided by the United States Agency for International Development, which will be used to assist youth-led agri-food companies and mid-stage companies (with a consumer base of more than 1000 people) that were severely affected by the consequences of the coronavirus pandemic. Furthermore, with the same goal, Lagos’ State Government will enable private entities in the agriculture sector to access to the Central Bank of Nigeria’s funding schemes. In Mexico, on the other hand, a new bill aims at ensuring minimum price guarantees and subsidies to around 500,000 coffee farmers, who are constantly exposed to sharp prices crashes (especially during last year). Finally, the International Fund for Agricultural Development and the Islamic Development Bank Group have recently partnered to provide some of their common member countries with a USD 500 million financing to implement agricultural and rural development programs.

    Nigeria stimulates agri-food sector’s recovery from COVID-induced disruptions

    In order to speed up the Nigerian economy’s recovery from the impact of COVID-19, Lagos’ State Government has recently called for private sector investment and collaboration in its agriculture sector (and especially in the red meat value chain, artisanal fisheries and livestock feed mills), in order to boost production, create new jobs, standardize operations in the value chains and increase the gross domestic product of the state. With a view to stimulating public-private collaboration, the state’s administration has partnered with financial institutions in order to enable private entities to access to the Central Bank of Nigeria’s funding schemes. At the same time, the United States Agency for International Development has offered to provide USD 3 million in funding and technical assistance to mitigate the impact of COVID-19 on Nigeria’s agri-food systems.

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    IFAD and IsDB team up to help member countries achieve food and water security

    The International Fund for Agricultural Development and the Islamic Development Bank Group (a multilateral development financial institution) have recently signed a USD 500 million, 5-year cooperation and co-financing agreement. These funds will be used to finance agricultural and rural development projects in some of the two institutions’ 57 common member countries, with the primary objectives of tackling climate change, improving food and water security, and improving access to markets and rural financial services in the world’s poorest rural communities. Furthermore, this joint initiative aspires to help the common member countries draw on the emerging global value chain opportunities in order to build up their resilience and create wealth in a post-COVID-19 world.

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    New bill aspires to support the livelihoods of coffee farmers in Mexico

    Mexico is the world’s tenth biggest coffee producer, with about 500,000 coffee farmers that are concentrated in three southern states. Despite this, the country lacks an entity that regulates and grants minimum support prices for coffee. After the Mexican Association of the Coffee Supply Chain pushed the country’s government for the creation of a new agency that would regulate and set coffee prices in order to protect and improve the livelihoods of Mexico’s coffee farmers, a bill was introduced in Congress by a ruling party senator that proposes to create such an agency, along with minimum price guarantees and subsidies to farmers. Establishing fair prices for coffee farmers is fundamental in order to ensure that they can recover their production costs and earn a profit.

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    REGIONAL FOCUS

    Among other sensitive issues related to food value chains, the coronavirus pandemic exposed the West African cashew sector’s reliance on foreign importers and the Caribbean islands’ dependence on food imports. In fact, almost the entirety of the cashews produced in countries like Burkina Faso and Togo are then exported to Vietnam and India, but the closures imposed by governments to limit the consequences of the coronavirus outbreaks prevented foreign traders from conducting their normal business, which resulted in a huge income loss especially for cashew producers. In the Caribbean, the pandemic has brought into sharp focus the region’s food insecurity and growing dependence on imported food, wish pushed the CDB and CARDI to implement a specific project to boost the production of sweet potatoes. Most countries in the MENA region, on the other hand, are suffering from water scarcity, but technological innovations in agriculture could mitigate the issue in the future.

    AFRICA – The coronavirus pandemic’s impact on West Africa’s cashew production and trade

    The coronavirus pandemic exposed the fragility of West Africa’s cashew sector, whose supply chain greatly depends on foreign actors (almost 90% of the raw cashews are exported to Vietnam and India, where they are processed): the COVID-induced containment measures (which included border and market closures) that were imposed last year have drastically affected trade in cashew, to the detriment of many West African cashew farmers, who saw their incomes vastly shrink. Furthermore, instead of intensifying financial support, the local financial institutions slashed lending during the pandemic. The cashew businesses that managed to survive the disruptions caused by COVID-19 are the ones that relied on long-term debt financing provided by impact investors and farmer co-operatives.

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    MENA – Water scarcity in the MENA region could be countered through technology

    According to the United Nations, the Middle East and North Africa (MENA) region is the most water-scarce in the world, with 17 countries below the water poverty line, and this situation is gradually worsening due to a booming population growth, poor infrastructure and overexploitation (according to the World Bank, agriculture alone accounts for around 80% of water usage in the region). For this reason, researchers are working to find new ways to protect water supplies and encourage good conservation habits. In Morocco, for example, water reserves are stretched to their limit, but some agricultural communities are currently using fog-harvesting techniques to save water (after an NGO promoted their use in rural communities), and they are recycling brackish water.

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    AMERICAS – New project funded by CDB will support Caribbean sweet potato farmers

    According to the Caribbean Research and Development Institute (CARDI), the coronavirus pandemic has exposed the Caribbean region’s over-reliance on food imports (in fact, the regional food import bill was projected to exceed USD 5 billion by 2020), which represents a threat to food security. In order to tackle such a sensitive issue, the Caribbean Development Bank (CDB) has provided CARDI with USD 600,000 to implement a three-year project that would enhance the production, processing and marketing of sweet potatoes in Antigua and Barbuda, Barbados, Guyana and Saint Vincent and the Grenadines. This project will support farmers and other actors along the sweet potato chain, by identifying opportunities for market linkages and by making available climate resilient varieties for production and processing.

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