Since the relationship between China and Australia continues to deteriorate, with China showing no signs of lifting the tariffs and bans on Australian food products (barley, wine and beef), Australia is seeking access to new markets, such as India, Bangladesh, Vietnam and Indonesia. In north-western Ghana, a lack of proper storage facilities and road linkages, coupled with a general absence of good agronomic practices, is causing the increase of post-harvest losses (more in particular, tomatoes and watermelons), and therefore a reduction of the farmers’ incomes. Finally, some of the free school meal programs in the United States are failing to provide food for students living in low-income households.
Selected daily news on food chain disruptions and countries responses to the COVID-19 impact on food chains.
FOOD CHAIN DISRUPTIONS
The latest trade data from the Chinese Customs General Administration suggests that the trade relationship between China and Australia is deteriorating: last month, the value of Australian goods exported to China experienced the steepest monthly decline faced by any country. The Australian agricultural export sector is heavily exposed to the Chinese market, and if China keeps banning or imposing tariffs on Australia’s agricultural exports, the country will have to identify new markets, such as India, Bangladesh, Vietnam and Indonesia (which will allow up to 500,000 tons of barley, wheat and sorghum into the country duty free).
In Ghana’s Upper West Region, farmers are struggling with post-harvest losses (which amount to around USD 700,000 per year in Ghana). Watermelons and tomatoes fall under the category of perishables and therefore they are highly susceptible to post-harvest losses: poor road linkage, a lack of good agronomic practices and of storage facilities (like cold rooms or packhouses for vegetables and fruits), and an inadequate market for these products all contribute to aggravate losses in the country.
According to school nutrition leaders and anti-hunger advocates in the United States, only 15% of the children in low-income households who qualify for free school meals are actually getting those meals, even though for some of them they are the only ones they get in a day. Pickup from a few selected schools during the pandemic had been easy; however, as most parents are now back to work they often can’t go to a designated site at a designated time. That is why some school nutrition directors pledged to take the food directly to the students.
IMPACT ON COMMODITIES AND FOOD PRICES
Germany and Poland are among the few European countries that have not recorded drastic falls in wheat production, while France and the United Kingdom have witnessed respectively a decrease by 25% and by 35% compared to last year. Furthermore, according to the analysts, in case the United Kingdom does not manage to reach a final trade agreement with the European Union before the Brexit transition period ends, food prices will raise sharply. The first food products to be affected by such increases are likely to be fresh fruits and vegetables, because many are out of season in the country during the winter, and must be imported from warmer climes.
The prices for wheat futures have recently edged lower because of unfavourable weather in many of the top-producing countries, such as France (which witnessed a 25% fall year-on-year), the United Kingdom (where rains disrupted sowing and ultimately resulted in a low production), the United States and Argentina, while a few others have recorded good levels of production, like Germany and Poland. Meanwhile, because of the fear of the dwarf bunt fungus, China has restricted imports from Russia, and Paraguay’s wheat exports decreased by 42.2% to around 267,949 tons.
In case the United Kingdom and the European Union fail to reach a final trade agreement before the end of the Brexit transition period, food prices will increase sharply in January. The impact of increased tariffs, border checks and a weaker currency will vary across different ranges of products: since during winter and spring the UK is more dependant on fresh fruit and vegetable imports (last winter, around 90% of lettuces and 80% of tomatoes were sourced from the European Union, for example), these food products will probably be more affected by the tariffs.
South Africa is investing more efforts in the reduction of food losses and waste through the activities of several food redistribution organizations (the largest of which is currently working with farmers to distribute their surpluses during harvests to people in need), while Canada is still providing financial support to companies in the agri-food sector (and more in particular to food processing facilities), so that they can purchase PPE and safeguard their workers from the coronavirus. Meanwhile, the European Commission has recently unveiled a new plan that is set to ensure a stable supply of raw materials without relying on imports from third countries.
The largest food redistribution organization in South Africa has been working with farms (which generate 26% of the total food wastage in the country) within the framework of its Second Harvest program, which allows commercial farmers to donate post-harvest surplus directly from the farm. After they are collected from the farmers, fresh fruits and vegetables are then transported in refrigerated vehicles. Thanks to the activities of this and other food redistribution organizations, progress is slowly being made in the fight against hunger in South Africa.
Canada’s Ministry of Agriculture has recently announced 32 new projects under the CAD 77.5 million Emergency Processing Fund, which focuses on providing support to companies and workers in agri-food sectors impacted by the coronavirus pandemic. Thanks to these additional funds, companies and meat-processing facilities will be able to enable social distancing, purchase reusable personal protective equipment, sanitation stations and protective barriers and adopt other measures that help protect employees from the coronavirus.
Prompted by the supply chain disruptions determined by the coronavirus pandemic, the European Commission has recently presented its Action Plan on Critical Raw Materials, which aims at securing the European Union’s access to fundamental raw materials and reduce its dependency on third countries. Most of such raw materials are very important for the EU to lead the green and digital transition envisioned under the European Green Deal.
The African Export-Import Bank has recently provided funds to the Export Trading Group with the objective of improving the sourcing, processing and transportation of soft commodities in Africa, where up to 50% of all agricultural products gets lost during the post-harvest phase. In South-East Asia, on the other hand, Laos has increased its banana exports to China, despite the difficulties posed by the coronavirus pandemic and the fact that the government enforced a ban on granting land for new banana plantations and shut down companies that had violated regulations.
The African Export-Import Bank has approved a USD 400 million revolving credit facility for the Export Trading Group (ETG) to support agri-food supply chains in Africa. The ETG is an African agriculture commodities trader with operations in crop buying, warehousing, distribution and merchandising, and it will use the facility to fund the sourcing, processing and transportation of soft commodities of African origin. Since up to 50% of the agricultural products in Africa is lost every year, the credit facility will be particularly useful to improve post-harvest storage, processing and transportation facilities.
During the first seven months of 2020, Laos has exported bananas to China for a total of USD 116 million, thanks to the government’s efforts in ensuring that bananas continue to be the top earner among all agricultural exports to China. In Laos, banana farming is a long-standing practice that is mainly carried out by ethnic groups, who also use the leaves to make handmade pyramids of bananas decorated with flowers for religious rituals and to wrap confections, while the stems and branches are used to make animal feed.