According to the Road Haulage Association (a British trade association), the recent ban on food imports from Denmark imposed by the United Kingdom after a mutation of the novel coronavirus was found in Danish mink farms could lead to a shortage of bacon and other pork products in the UK. Furthermore, whether the UK manages to strike a trade deal with the European Union or not, Ireland’s food and drink industry (since the country exports more than one-third of all its food products to the UK) is likely to be the most affected by the consequences of Brexit on trade (namely, new customs procedures and regulatory burdens, which will drive up transport costs) in Europe.
Selected daily news on food chain disruptions and countries responses to the COVID-19 impact on food chains.
FOOD CHAIN DISRUPTIONS
According to Food Drink Ireland (Ireland’s main association for the country’s food and drink industry, representing over 150 food, drink and non-food grocery manufacturers and suppliers), whether the United Kingdom manages to reach a trade agreement with the European Union before the Brexit transition period ends or not, the Irish food and drink sector will be the most exposed to Brexit in Europe (in 2019, roughly 37% of all Irish food and drink exports went to the United Kingdom), because of additional customs procedures, regulatory burdens and rising transport costs.
The United Kingdom imposed a ban that suspends food imports from Denmark, as the country is currently struggling with a mutated version of the coronavirus that has been recently found in farmed minks. Since a quarter of all pork products are imported from Denmark, the United Kingdom may be facing a shortage of bacon in the near future.
IMPACT ON COMMODITIES AND FOOD PRICES
The unfavourable weather conditions in Brazil, that have recently affected the production of soybeans, are now affecting productivity for what concerns rice: in order to prevent rice prices from increasing due to a possible shrinking supply, the country’s government will have to boost imports in 2021. In Europe, on the other hand, French and Polish wheat futures have increased for the third consecutive week, due to a strong export demand (especially from Saudi Arabia, Algeria and Turkey).
Due to a shrinking rice supply in Brazil (caused by productivity issues), prices for this commodity are expected to increase in 2021: more specifically, according to the forecasts of the Brazilian Institute of Geography and Statistics, the production of paddy rice should decrease 2.4% next year to 10.8 million tons. In order to offset the consequences of this decrease in production, the country’s government will have to apply zero import tariffs for paddy rice in order to boost rice imports.
The European wheat futures in Paris have hit a three-week high this week, due to a strong overnight rise in the US futures and to an increased demand in export tenders: more in particular, both Turkey and Algeria have requested European wheat imports during the week. Furthermore, wheat prices are still firm in Poland, thanks to the purchase of around 860,000 tons of wheat from Saudi Arabia on Monday.
While Iowa’s Department of Agriculture has recently provided meat and poultry processors with additional CARES Act grant funding in order to purchase new personal protective equipment or set up alternative direct-to-consumer sales strategies, the Kenya Agricultural and Livestock Research Organization has intensified its cross-breeding program to improve beef production, especially in the country’s arid and semi-arid lands, where beef production represents the main economic activity. Several entrepreneurs in India, on the other hand, are developing apps for farmers that allow them to reach big buyers more easily, thus improving their access to the market.
Several entrepreneurs in India are currently selling farmers apps (affordable mobile phones and ultra-cheap data make it easier for Indian farmers to go electronic) to connect them to big buyers nationwide, and using artificial intelligence to improve the food supply chains that lose one-fourth of the country’s agricultural produce to wastage. In fact, huge amounts of India’s grains, fruits and vegetables rot between producer and consumer, due to manual handling, lack of adequate storage and slow movement of the goods.
In Kenya’s arid and semi-arid lands, beef production (which contributes 36% of the country’s GDP) is the main economic activity. However, the demand for beef has overtaken supply in Kenya (which produces 260,000 tons of beef, against a demand of 300,000 tons): for this reason, and in order to improve the country’s beef production, the quality of livestock and the farmers’ livelihoods, the Kenya Agricultural and Livestock Research Organization (KALRO) is stepping up its cross-breeding program.
Iowa’s Department of Agriculture has recently awarded more than 200 local meat and poultry processors with meat processing and expansion grants (thanks to the federal Coronavirus Aid, Relief and Economic Security Act funding) that can be used to purchase or upgrade equipment, develop a direct-to-consumer sales strategy (which includes, for example, setting up online sales platforms or alternative sales channels) or participate in food safety certification trainings.
In Africa, a company that aims at facilitating the communications between food manufacturers, distributors and buyers in South Africa, Namibia, Angola and Zambia has recently received new financing from a start-up funding initiative, which it will use to develop a better digital marketplace and further streamline the food service supply chain in this region. Meanwhile, Nigeria has officially ratified its membership to the African Continental Free Trade Area (despite closing the land borders with Benin, Cameroon and Niger for over one year).
The Food Supply Network, a company that streamlines communication and trade between manufacturers, distributors and buyers in the food industry and that operates in South Africa, Zambia, Namibia and Angola, has recently received investment from Naspers Foundry (a South African start-up funding initiative) to improve its digital marketplace and to eliminate the inefficiencies in the communication between buyers, distributors and manufacturers.
Despite having closed the land borders with Benin, Niger and Cameroon for over a year (allegedly in order to stop the smuggling of food items that undermined the local agricultural businesses), Nigeria’s central government has officially ratified the country’s membership to the African Continental Free Trade Area this week, which will come into effect on January 1st, 2020.