In Myanmar, rice farmers are struggling to increase their incomes as many of them in the country’s rural areas lack access to electricity; a solution could be represented by the combustion of rice husk (a byproduct of rice milling), which can be used for both energy and income generation. In other parts of Asia, Latin America and East Africa, coffee farmers are bearing the brunt of the coffee shops closures in developed countries like the United Kingdom and Australia (where workers and owners lost their jobs as they were forced to shut down). In California, on the other hand, most of the farmworkers are undocumented, meaning that despite the long shifts and the wildfires that break out every year, they must continue to work for around USD 14 per hour.
Selected daily news on food chain disruptions and countries responses to the COVID-19 impact on food chains.
FOOD CHAIN DISRUPTIONS
A one-year research project that investigated the intersection between agricultural livelihoods and energy access in Myanmar’s rural farming communities found out that, because of a lack of access to electricity in such rural areas, rice farmers have limited opportunities to increase their income. In order to bridge agri-livelihoods and energy access, Myanmar’s farmers and millers need access to credit, investments to support bioenergy facilities (and more policy focus on bioenergy to encourage them), and capacity building through a collaboration between local businesses and civil society organizations.
Just like what happened in the United Kingdom (as mentioned in yesterday’s daily news digest), the precarious employment of many hospitality workers since the beginning of the coronavirus pandemic in Australia meant that hundreds of thousands of café workers and owners lost heir jobs. At the same time, at the other end of the coffee supply chain, many coffee farmers in developing countries (most of them are in East Africa, but other are in Latin America and Asia), who were already struggling to fight poverty, have found it even more difficult to make a decent living as coffee shops closed in developed countries.
Farm labourers in California have continued to work during the coronavirus pandemic, while, at the same time, hundreds of wildfires were ravaging around 600,000 hectares of land across the state. More than 400,000 people work in the agricultural sector in California, but since many of them are undocumented, they cannot benefit from government assistance programmes, meaning that they work long shifts under the scorching sun for about USD 14 per hour. The pandemic (school closures force workers to stay home to watch their kids) and now the wildfires represent additional challenges for the farmworker community in California.
IMPACT ON COMMODITIES AND FOOD PRICES
Chinese and Vietnamese exports have been steadily increasing in recent months: more in particular, Vietnam is now capable of exporting larger quantities of rice to the European Union with a 0% tax rate thanks to the EU-Vietnam Free Trade Agreement. Chinese imports, on the other hand, have decreased compared with last year (especially imports from Australia, some of which were allegedly banned for political reasons). In India, on the other hand, the price of potatoes has recently increased in the state of West Bengal, and traders in retail markets have blamed such increase on the amendment to the Essential Commodities Act (which allows barrier-free exports to neighbouring states).
Potato traders in West Bengal, India, have recently blamed the amendment to the Essential Commodities Act (through which the government can control the production, supply and distribution of the essential commodities, such as foodstuffs, and impose a stock limit) for a hike in potato prices in retail markets, as it allows barrier-free trade of the agricultural product. Since between 15% and 20% of the daily supply of potatoes is being exported to the neighbouring states, the traders claim the prices got to around INR 32-33 a kilo, while decreasing exports would bring the prices down to around INR 4-5 a kilo.
Thanks to the European Union – Vietnam Free Trade Agreement (effective last month), Vietnam can export 80,000 tons of rice per year with a 0% tax rate, which gives the country an opportunity to assert its position in the EU market and in the world. Although the EU consumes about 2.5 million tons of rice a year, Vietnam was only able to supply 20,000 tons due to the high import taxes before the agreement was reached, and therefore it could not compete with rice from Thailand, the US or Australia (which could export larger quantities), or from Laos, Cambodia and Myanmar (which where tax exempt).
China’s exports grew during the month of August for the third successive month, while imports decreased by 2.1% year-on-year, despite the efforts made to meet the terms of the Phase One trade deal with the United States by purchasing large quantities of soybeans and maize almost every day. Because of the bans and tariffs imposed by China on Australian food products like barley, wine and beef (which are suspected to have a political motivation, as Australia’s government was one of the most vocal proponents of an investigation into the origins of the coronavirus pandemic), imports from the latter also plunged by 26.2% form a year earlier, while exports to Australia increased by 24.4%.
Three technological improvements in the Nigerian, Chinese and American food industries: a Nigeria-based innovation hub created solar-powered refrigeration units to remedy the lacks of electricity supply and appropriate storage facilities in the country, and to increase the shelf life of many perishable agricultural products; a Chinese governmental agency announced several plans to use artificial intelligence, 5G technology and cloud computing to improve granary security and management; a new agri-tech center in South Carolina will reduce the need to import food products from Mexico and reduce water wastage in the state.
In Nigeria, farmers and food supply actors are heavily affected by post-harvest losses, which are mainly caused by high ambient temperature and humidity that accelerate the natural decay of the agricultural products, and by the lack of appropriate storage facilities and electricity supply. A Nigeria-based company has developed a solar-powered refrigeration unit that provides affordable cold storage rooms so that farmers can store and preserve fruits, vegetables and other perishable foods, extending their shelf life from 2 to 21 days. The company has recently won the Cooling as a Service Prize, which recognizes outstanding providers of refrigeration in developing countries.
China’s National Food and Strategic Reserves Administration has announced several plans to focus on science, technology and manpower upgrades over the next five years, in order to ensure local food security (after the recent floods in China affected 11.2 million tons of food and brought the matter of food supply back into the spotlight). Such technological innovations will be used to reduce food losses and optimize China’s ability to react to emergency situations: for example, the 5G technology, artificial intelligence and cloud computing could be used in the food industry, in areas like granary security and management.
Last week, the US Department of Agriculture announced the establishment of the USD 314 million Agriculture Technology Center in South Carolina, which will combine 200 acres of greenhouses with an on-site packaging facility and a distribution center in order to be able to immediately ship tomatoes, lettuce and berries directly to the stores. The agri-tech center will allow farmers to use only a fraction of the water and land that traditional farms need, and will provide retailers with a consistent supply year-round, thus reducing imports from Mexico.
OCP Africa will support the Ivory Coast’s improvement of rice production by providing access to fertilizers, capacity development and training on good agricultural practices. In Europe and the Middle East, on the other hand, new trade opportunities will allow Turkey to increase its exports to the European countries, which are searching for alternatives to China in order to mitigate the risk of a second wave in the coronavirus pandemic. Furthermore, the peace agreement reached by the United Arab Emirates and Israel will allow for the establishment of an enhanced economic cooperation between the two countries (and, more in particular, in the fields of water management, food security and energy).
A Moroccan based phosphate fertilizer producer has recently signed a memorandum of understanding with the Ivory Coast in order to boost its production of rice and make the Sub-Saharan country self-sufficient by 2025. The Moroccan company plans to achieve such objective by restructuring value chains for rice-growing activities, providing a broader access to suitable fertilizers to Ivorian farmers. The agreement also includes training sessions for farmers, awareness-raising initiatives about good agricultural practices and the digitalization of the value chain process.
The peace agreement between the United Arab Emirates and Israel, which was signed on August 13, 2020, and received wide international support, will foster economic cooperation in several areas between the two countries. For example, the sectors of advanced technology, energy and agriculture will be the first to benefit from the peace treaty: the UAE ranks sixth among the world’s largest oil exporters, while Israel has huge gas reserves and it is among the first countries in the world for what concerns agricultural and food security technology and in the field of water treatment (which serves the Emirates’ interest).
Thanks to Turkey’s advantageous location and production quality, the country has become a relatively new supply base for the European buyers who were in search of an alternative route to China, in order to mitigate the risk of a second wave in the coronavirus pandemic. The pandemic has also changed the stock strategy of many firms in Europe, as they now maintain their stocks at minimum levels to prevent undesired piling, further benefiting Turkish exporters. More in particular, Turkey has been exporting more food products such as pasta, bulgur wheat and sugar products.