The coronavirus pandemic had negative repercussions on food security in Tajikistan, where the movement restrictions that were imposed to limit the spread of COVID-19 in the country and in Russia, and the ban on the export of food products, have impacted on food security and led vulnerable households to enact several coping strategies (such as limiting the amount of food consumed per day). Several countries in Sub-Saharan Africa are dealing with similar issues, on top of the consequences of climate change, which are particularly impactful on this region of the world: more in particular, large-scale droughts are reducing yields, causing food price spikes and leading to unstable and supply and consumption of food and to internal migration in Ghana and Lesotho. Finally, the pandemic has impacted on the US’ meat industry, and despite the grants provided to small processors by the federal government, the sector still revolves around few large companies.
Selected weekly news on food chain disruptions and countries responses to the COVID-19 impact on food chains (15/03/2021 to 21/03/2021)
FOOD CHAIN DISRUPTIONS
According to the Intergovernmental Panel on Climate Change, the impact of climate change phenomena on poor communities in Sub-Saharan Africa will be great, as 96% of the farms in this region use rainwater, 60% of the total population relies on agriculture and 41% of the people live on less than USD 1.90 per day. In Ghana, such phenomena are already causing internal migration to rural middle-belt areas, which are characterised by good farming conditions (richer soils, biannual rainfall season). Similarly, climate change is pushing Lesotho’s already fragile food security over the edge, as it decreased the number of farming households in the country that were previously self-sufficient by 50%, and it decreased their purchasing power by 37%.
The meat shortages in the United States that were prompted by the start of the coronavirus pandemic last year pushed the federal government to grant millions of dollars to support small meat processors and lessen the country’s grocery stores’ and restaurants’ reliance on giant slaughterhouses. However, although the grants helped small processors and created rural jobs, the economics of meat in the US still centres on large slaughterhouses, as small processors cannot absorb the share of livestock that is normally supplied to big slaughterhouses by livestock producers (small processors normally slaughter only 10 or 20 animals a week). This is due to the fact that the meat industry has been consolidating for decades, and now 80% of meat is slaughtered by just a few companies in the country.
Due to the repercussions of the coronavirus pandemic on employment, income, remittances and food market prices, the number of households in Tajikistan that are not able to afford quality nutritious diets has substantially increased since last year. More in particular, the movement restrictions have affected all sources of income because they have reduced the opportunities for seasonal migrant workers, delayed salary payments and reduced the farmers’ incomes (due to the ban on food exports). The pandemic has forced people in the country to adopt various coping strategies, such as limiting the amount of food consumed per day or decreasing the portion size of the meals, and the most vulnerable households are found to be those headed by women.
IMPACT ON COMMODITIES AND FOOD PRICES
China is carrying out an aggressive import campaign to ensure a stable supply of feed grains that the country needs to rebuild its hog herd, after an epidemic of African Swine Fever decimated it last year, forcing farmers to put down thousands of heads of cattle. By December 2020, China had already reached 90% of the pre-ASF levels, and pork production is expected to grow at least by 14% during the next twelve months. Meanwhile, this extraordinary demand for feed grains has caused an increase in the prices of raw materials such as maize and wheat, which Vietnam does not produce domestically and therefore is forced to import in large quantities. This led to substantial hikes in the prices of livestock fodder in the country, which caused huge losses for poultry and cattle farmers. At the same time, China banned barley imports from Australia as a result of a political dispute between the two countries; however, this gap was quickly filled by Saudi Arabia, which increased its barley imports from Australia.
In Australia, Queensland’s grain growers look forward to capitalising on strong commodity prices and low interest rates, and they expect the conditions of the state’s agricultural economy to improve over the next year. After harvesting their biggest-ever wheat crop last year, most of them think that the good moisture levels in Queensland will lead to back-to-back bumper seasons. For this reason, the state’s wheat farmers are acquiring crop-planting machinery, fertilisers and other farm products, and suppliers are struggling to meet this strong demand. While wheat was not caught up in trade bans and other restrictions by China, barley was; however, Saudi Arabia (that is one of the world’s biggest markets for grains) has seen an increase in barley imports from Australia.
The current rally in the price of feed grains has largely been driven by an aggressive import campaign from China, which is looking forward to rebuilding its pig herd after the African Swine Fever (ASF) decimated it last year. In fact, as early as in December 2020, China announced that its pig herd was reaching 90% of pre-ASF levels, and pork production will increase by 14% to 47 million tons during 2021. Furthermore, according to the US Department of Agriculture’s Global Agricultural Information Network half-yearly report, the impact of the ASF epidemic on pork production in China also determined an expansion in the country’s domestic beef production, mainly due to the higher prices for all meat proteins in the country, and also in part thanks to the growth of the dairy industry.
Because of the higher prices of raw materials and agricultural inputs (such as corn, rice bran and fish flour), the cost of livestock fodder has also increased by 15% to 30% in Vietnam, resulting in substantial losses for many pig and poultry farmers in the country. According to the deputy chairman of the Vietnam Animal Feed Association, such hikes in the prices of raw materials are due to crop failures, to China’s increasing demand for these commodities and to a shortage of empty containers (which are stuck in various ports around the world). Furthermore, Vietnam only produces rice bran and cassava, while it is almost completely dependent on imports for the supply of other inputs, such as maize, as it failed to develop areas to grow diversified feed inputs due to poor productivity.
Several countries in Eastern and Southern Africa are currently channelling funds towards the development of infrastructural projects and other initiatives that are meant to improve the farmers’ incomes while reducing food waste and to grant them a better access to the market. For example, both Kenya and Ethiopia are focusing on the implementation of water irrigation projects to fight droughts and the progressive degradation of the natural resources (due to erosion, for instance) and to provide farmers with better opportunities to improve their incomes. Namibia’s government, on the other hand, has recently allocated funds for the creation of a new desalination plant, while South Africa is reducing post-harvest losses and waste while also providing grants to black farmers. Finally, both China and India are modernising their respective agricultural sectors through the implementation of agritech and the use of digital platforms.
This week’s media coverage highlights three infrastructure development initiatives in Eastern and Southern Africa. The first one was implemented in the Kenyan county of Tharaka-Nithi, where the new Cabinet Secretary for Water, Sanitation and Irrigation had established KES 2 billion worth in water irrigation projects that have reduced crime among youths, enhanced self-reliance and improved the farmers’ incomes. Similarly, Ethiopia’s new policy and strategy on agricultural and rural development has made the promotion of small-scale irrigation and rainwater harvesting its core, in order to create production opportunities and improve incomes. Finally, Namibia’s government has recently outlined a plan to attract investments worth NAD 27 billion, that will be used to build a new desalination plant in the Erongo region.
China and India are both developing interesting initiatives to modernize the respective agricultural sectors. The former is implementing its 14th Five-Year Plan for the development of modern agriculture, whose main objective is to improve the farmers’ incomes by building innovation and entrepreneurial platforms in rural areas and by sending sci-tech experts there. Furthermore, a renowned e-retailer that is also China’s biggest agriculture platform has recently introduced a next-day service that offers a list of agricultural produce from local farms and suppliers to consumers in the same region. In India, on the other hand, a new post-harvest agritech platform will source harvest-grade dry commodities (rices to spices) directly from the farmers, turn them into trade-grade commodities and make them retail-ready for exports.
South Africa is currently focusing on the improvement of its agricultural sector in two ways: by tackling food waste, and by supporting black farming. In fact, the collaboration between a bank, an agritech firm and the country’s largest food redistribution company has led to the launch of the OneFarm Share initiative, which has collected and distributed more than 270 tons of food to beneficiary organizations that prepared around a million meals for vulnerable households. For what concerns black farming, on the other hand, the country’s government has set up a ZAR 5 billion fund to help black farmers gain access to capital and facilitate their entry to commercial agriculture by providing grants that will be used to expand and acquire farming operations.
Two development finance institutes have recently teamed up with an Austrian development bank to create a syndicated loan facility that will be used to support climate-resilient agricultural practices and improve agricultural processing capacity and logistics in Africa in order to reduce food loss and waste, ultimately benefiting around 600,000 smallholder farmers in the continent. Several countries in South Asia and Central America, on the other hand, are currently experiencing food export issues: the supply of tropical fruits from countries like Vietnam, Laos and Cambodia to China (which has a huge demand for this food product and an insufficient surface area devoted to tropical fruit plantation) is hindered by the delays at ports determined by the coronavirus pandemic, while the supply of bananas from Guatemala and Honduras (which were hit by two hurricanes towards the end of last year) has drastically slowed down, and it will probably take years before it will be completely restored.
The Netherlands Development Finance Corporation has recently teamed up with the Canadian Development Finance Institute and an Austrian development bank to allow the Agri Commodities and Finance (a subsidiary of the Export Trading Group, a global conglomerate that builds regional agribusiness supply chains around the world) to expand its operations in Africa. More in particular, the three institutions announced a USD 115 million syndicated loan facility, which will indirectly support around 600,000 smallholder farmers in the continent, while also contributing to more sustainable and climate-resilient agricultural practices. More in particular, the group will use these funds to improve processing capacity and logistics, thus reducing crop losses and reducing food waste.
This week’s regional media coverage highlights two issues connected to food exports in South and Southeast Asia. Many Southeast Asian countries (especially Vietnam, Laos and Cambodia) export tropical fruits to China, as it has an enormous annual demand for fruit and the Chinese production areas of tropical fruit shrink every year because of climate change. However, the coronavirus pandemic is causing delays at ports, which usually have disastrous consequences on fresh fruit, thus also affecting their prices. India, on the other hand, has recently expressed concerns over the growing exports of soybean oil from Nepal, which is accused of importing crude oil from other countries at minimum prices and then exporting the finished product to India with zero tariff facility.
15% to 20% of the total weekly supply of bananas to the United States was disrupted due to the losses incurred by Honduras and Guatemala as a consequence of the hurricanes that hit the countries last November. For this reason, supplies are now also coming from other Central and South American countries, such as Costa Rica, Ecuador, Colombia and Mexico, but banana prices have vastly increased over the year (they are currently 50% to 55% higher than last year). According to the experts, crop recovery in Honduras and Guatemala will take at least two years, as it will be necessary to invest hundreds of millions of dollars to make up for the damages caused by the hurricanes