Today’s media coverage highlights that the global coronavirus pandemic has aggravated several issues related to the food value chains of three different countries: in Kenya, which already in 2017 lost 1.9 million tons of food worth KES 150 billion, the pandemic has further increased the costs of production and transportation of food products, so that farmers saw their access to market worsen; in Pakistan, the wheat shortage caused by several factors is now bringing flourmills to fake transactions to regular markets while selling wheat flour to the black market; in Australia, the number of people seeking food relief has increased by almost 50%, compared to pre-Covid-19 rates.
Selected daily news on food chain disruptions and countries responses to the COVID-19 impact on food chains.
FOOD CHAIN DISRUPTIONS
Kenya has the highest costs of production and transportation for agricultural products in East Africa (specific agricultural inputs, such as seeds and pesticides, are particularly expensive). Furthermore, the country’s food system cannot balance the demand with the supply of products, which creates the paradoxical situation whereby there is a huge demand for a certain crop in one part of the country, and an oversupply of the same crop in another part, but farmers have a poor market access, and therefore they end up incurring losses and wasting agricultural products.
Since the local and central governments in Pakistan failed to promptly tackle the wheat crisis that is currently affecting the country, the shortage of grains is producing several negative effects. For example, wheat flour is being black-marketed more than it used to (due to the complicity of the flourmills, which are selling large portions of grinding wheat in the black market, while creating false reporting of dispatches to regular markets), and despite its high price, its quality is badly compromised.
The Australian demand for food relief in September 2020 was 47% higher than pre-Covid-19 levels, and charities in the country expect that they will need 41% more food to cover this increase in food insecurity. Foodbank Australia (a food relief organization that acts in times of emergency) has surveyed around 1000 Australians between June and July, and found out that 65% of the people aged 18 to 25 and 57% of those aged 26 to 40 could not afford to purchase enough food at least once a week.
IMPACT ON COMMODITIES AND FOOD PRICES
Both import prices for sunflower oil and palm oil in India and export prices for Russian wheat and barley have recently increased: in the former case, the hike was due to the supply chain disruptions caused by the coronavirus pandemic (which have limited the supply of edible oils from Malaysia and Ukraine) and by an increase in demand in the state of Andhra Pradesh, while in the latter, export prices have risen last week due to the unfavourable weather forecasts. Meanwhile, the US Department of Agriculture estimates that the Floridan citrus growers will produce the lowest orange harvest in decades this year, due to the rising costs of production.
The increased demand for edible oils (such as sunflower and palm oil) in Andhra Pradesh, coupled with reduced imports from Malaysia and Ukraine (due to the disruption in the supply chain network, caused by the coronavirus pandemic) led to a hike in edible oil prices in India, which are currently around INR 130-145 a litre (while last year, during the corresponding period, edible oil in the open market would sell for INR 85-100).
Due to low farm prices and high production costs, the citrus growers in Florida, USA, may reduce their orange harvest by 15%, and their grapefruit harvest by 7% in the 2020-21 season, according to the US Department of Agriculture. More in particular, the USDA’s initial estimate for this season reported that only 57 million boxes of oranges will be produced, which would make this crop the lowest since the 1946-47 season.
Last week, the price of Russian wheat and barley exports rose due to a high demand from the exporters and a limited supply from the farmers, who are currently concerned about the dry weather in several regions of the country. According to the Institute for Agricultural Market Studies, the Russian wheat loading from the Black Sea ports last week was sold at USD 245 a ton (up USD 8 from the previous week).
In Europe, Ireland’s government is currently providing support to the seafood processing industry, to foster innovation and to offset the negative effect of the coronavirus pandemic on the industry, while the United Kingdom’s Department of Environment, Food and Rural Affairs is financing a project that reunites the country’s largest retailers and food manufacturers and which aims at reducing food losses and waste by 1.1 billion tons. In India, on the other hand, a non-governmental organization specialised in poverty alleviation and a global food manufacturing company have recently partnered to assist 1 million farmers in improving their yields.
Ireland’s Ministry for Agriculture, Food and the Marine has recently announced a new grant worth EUR 1.4 million to eight different seafood processing companies, which is co-founded by the European Union. This grant is part of the European Maritime and Fisheries Fund 2014-2020, which is providing a total of EUR 240 million in funding to the seafood sector, including fisheries, aquaculture and seafood processing, to foster and support innovation.
A global non-profit organization and an American multinational food manufacturing company have recently partnered to support India’s farming households, which comprise more than 50% of the country’s population and face severe demand and supply-side disruptions (loss of labour, lack of access to input and output markets, logistical disruptions) caused by the global coronavirus pandemic. The partnership will assist 1 million farmers through programs focused on productivity enhancement, better post-harvest management practices and phone-based crop advisory services.
Some of the United Kingdom’s largest retailers and food manufacturers are currently collaborating under a common project to reduce the amounts of food wasted in the country across the food and drink retail and manufacturing sectors by 1.1 billion tons. While the project’s funds come from the Department of Environment, Food and Rural Affairs, the UK’s largest redistributor of surplus stock will deliver a mentoring programme for the companies involved.
Recently, the international trade in shea nuts has intensified, and despite being particularly hard to improve production (due to the difficulties that shea cultivation presents), it could represent a very lucrative opportunity for the West African countries that produce this kind of nut. In Europe, on the other hand, the coronavirus pandemic determined several logistics issues due to the restrictions to movement imposed by the governments, but two transport firms are providing daily train connections for the transport of perishables such as fresh vegetables, fruits and fish.
In the recent decades, shea has become a globalized commodity, so that international trade in shea could make a significant contribution to the revenue of the West African countries: in 2018, for example, shea nuts were the fourth best performing agricultural export in Ghana. However, shea cultivation has proven extremely difficult and production is still largely dominated by traditional methods: therefore, to support shea nut production, it is fundamental to understand the ecological services that support the fruiting of shea.
Two different transport firms in the European Union (one from the Netherlands, and the other from Italy) are collaborating to support the fresh fruit supply chain within the European Union, which has been severely hampered by the coronavirus pandemic. The companies use specific cargo units that match the need for refrigeration of several commodities, including fish, meat, fruits and vegetables.