This week’s media coverage highlights disruptions along different phases of the global food supply chain, and in different regions of the world. The main cause for such disruptions continues to be the coronavirus pandemic and its complex and widespread repercussions on food supply, but other factors have recently come into play. For example, Taiwan seems to be further away from increasing its food self-sufficiency rate, as a drastic decrease in rainfall during 2020 has caused the worst drought in the country in 56 years, and the country’s government has reacted by diverting water supplies away from farmlands to protect the production of semiconductors. In the United States, poultry producers are failing to meet the increased demand of chicken (and more specifically chicken wings), especially since it spiked between February and March. Finally, the Philippines is facing a decrease in coconut oil and banana exports that was caused by extreme weather events and by delays in shipments.
Selected weekly news on food chain disruptions and countries responses to the COVID-19 impact on food chains (19/04/2021 to 25/04/2021)
FOOD CHAIN DISRUPTIONS
Although typhoons and monsoons are common in Taiwan (one of the rainiest countries in the world), last year there has been very little rain: this has plunged Taiwan into its worst drought in about 56 years, and most of its reservoirs are now at less than 20% of their total capacity. The country’s government stopped irrigating more than 74,000 hectares of farmland (so that farmers were the hardest hit by drought), because water is needed for the production of semiconductors (around 90% of the most advanced microchips in the world are produced in Taiwan). This water crisis will have severe consequences on Taiwan’s already low food self-sufficiency rate. Furthermore, it could disrupt the country’s economic ties with major economies, such as the United States, which relies on the microchips that are manufactured in Taiwan and are key for the production of a wide range of electronics (from ventilators to smartphones).
The price of chicken has been unstable in the United States ever since the coronavirus pandemic started affecting the global food supply chain, but in the last quarter the cost on wings has increased by 56%. Restaurants first began to see a lack of chicken wings in February, but right now the country is facing the lowest wing stocks since 2011. According to the National Chicken Council, demand for chicken wings has vastly increased in 2020, due to the huge success of food delivery services brought on by the COVID-induced restrictions to movement. Moreover, the demand has seen a further surge between February and March, but vendors have not been able to supply restaurants with the volume of chicken wings they need, due to the ongoing effects of the pandemic and other events (such as the recent freeze in Texas).
According to the Philippine Coconut Authority, the local exporters of coconut oil (one of the country’s prized agricultural commodities) are booking their shipments in advance as a solution to the ongoing global container and vessel imbalance, which has already caused delays in shipments and therefore a reduction in the coconut oil exporters’ profits. In fact, according to the Philippine Statistics Authority, the total value of the country’s coconut oil exports has decreased by 9.1% in 2020, and such a reduction was also caused by the effect of the COVID lockdowns and the strong typhoons that hit the country in the second half of 2020. According to the Philippines Banana Planter and Exporter Association, for the same reasons, profits have dropped also in the Philippines’ banana export market, and Vietnam and Cambodia are gradually displacing the country as a major source of bananas.
IMPACT ON COMMODITIES AND FOOD PRICES
China’s strong demand for agricultural commodities is influencing prices and export volumes in different parts of the world: while import demand for bananas remains stable, for example, supplies are limited in Myanmar due to the fact that the production season is nearing its end; therefore, export prices for the Burmese bananas has recently increased. On the other hand, the production levels of maize in South Africa are still strong, and the country is benefiting from the increase in export demand from neighbouring African countries and from China, which is currently dealing with an enhanced internal demand for livestock feed (that is needed to restore the country’s pig herd after the African swine fever outbreaks last year). Finally, the Ramadan celebrations and the unfavourable weather conditions in Algeria are affecting the prices of potatoes, which have recently spiked.
Since the banana production season is coming to its end in Myanmar and the supply volume is limited, while demand remains stable in China, prices for the imported yellow fruit are gradually increasing. Meanwhile, as mentioned in the previous section of this weekly news digest, Cambodia and Vietnam are slowly expanding their share of the Chinese banana market at the expense of the Philippines. Banana farmers in India, on the other hand, are bearing the brunt of the coronavirus pandemic’s repercussions on the market: the current temple festival season in India (which is followed by marriage season) normally increases the demand for banana and banana leaves from April to mid-July; however, the COVID-induced restrictions to movement are negatively affecting demand, and therefore prices are gradually decreasing, to the detriment of the farmers.
South Africa’s agricultural sector managed to make it through the first phases of the coronavirus pandemic almost unscathed, with the exception of specific industries (such as wine, hunting and tobacco). In fact, during the 2020-2021 marketing season, South African maize exports increased by 93% year-on-year from 1.16 million tons to 2.24 million tons, thanks to an increase in export demand both from neighbouring countries, such as Zimbabwe, and from China. Furthermore, China’s maize imports are likely to increase to 28 million tons and hit a new record high during this marketing season, as the country is restocking its domestic reserves due to the increasing demand for livestock feed, after the country’s hog herd was decimated by the African swine fever last year.
Potato prices on the wholesale and retail markets in Algeria have recently experienced a significant and unjustified increase, which was attributed to a high demand during Ramadan and to the unfavourable weather conditions, that have hindered the harvest operations. According to the country’s National Interprofessional Office for Vegetables and Meat (ONILEV), the price increase is only temporary, as it will stop towards the end of the Ramadan, and the improved weather conditions in the western and central regions of the country will allow the harvest to resume. Furthermore, large quantities of potatoes will be restocked and placed on the wholesale market in the coming days to regulate the prices and avoid speculation around this commodity.
Two Dutch investment funds will channel EUR 1.5 million into the development of a new food quality prediction platform that will allow quality inspectors to get immediate feedback about shelf life and other quality parameters of fresh produce and to take better decisions. The Food and Biobased Research Institute of the Wageningen University, on the other hand, will assist Vietnam’ Ministry of Agriculture in identifying post-harvest hotspots in the local fresh fruit and vegetable supply chain in order to reduce food loss and waste in the country. Meanwhile, India’s government has announced that between May and June it will distribute around 8 million tons of food grains free of charge under the Open Market Sale Scheme in order to support the internal migrants that lost their jobs after the first COVID-induced restrictions. Finally, the Nigerian government has recently accepted a loan that will be used to improve the mechanization of the country’s agricultural sector and to create new jobs in the next 5 to 10 years.
This week’s media coverage highlights two initiatives undertaken by the Netherlands to tackle food loss and waste both within its national boundaries and in Vietnam. In fact, two Dutch investors have raised EUR 1.5 million in funding for a food tech company based in the Netherlands, which will be used to develop a fresh produce quality prediction platform: thanks to this platform, quality inspectors will be able to look inside fresh produce without destroying it by using infrared sensors. Furthermore, the Wageningen University’s Food and Biobased Research Institute has teamed up with Vietnam’s Ministry of Agriculture and Rural Development to produce an implementable policy on food loss and waste in the Asian country and to develop suitable interventions for post-harvest loss reduction.
Under the Open Market Sale Scheme, the Food Corporation of India (a statutory body that is run by the country’s central government and that sells surplus stocks of wheat and rice at pre-determined prices) has announced that it will distribute 8 million tons of food grains free of charge between May and June: in addition to the regular entitlement of 5 kg per person each month under the National Food Security Act, an additional equivalent amount of wheat and rice will be granted to the beneficiaries of the Scheme. What prompted this decision was the request for free food grains that came from internal migrants who returned to their home states following the imposition of the COVID-related restrictions in the big cities.
The Nigerian Senate has recently approved a EUR 995 million loan provided by the Brazilian Development Bank and Deutsche Bank for the development of Nigeria’s agricultural value chain. More in particular, this loan will be used to implement the Green Imperative Scheme, which aims at training 100,000 new extension workers, create about 5 million jobs and eventually benefit around 35 million Nigerians in a 5–10-year period. Furthermore, this financing will promote the mechanization of Nigeria’s agricultural sector by funding 632 privately-operated mechanisation service centres and 142 agro-processing service centres across the country’s 774 local government areas, and by reactivating 6 partially operational or inoperative tractor assembly plants nationwide.
Between June and August 2021, West Africa will register around 31 million more food insecure people, so that for the second year in a row, the region must prepare for a major food and nutrition crisis. In fact, the coronavirus pandemic has had a negative impact on access to pasture, the functioning of markets and pastoral mobility, and it caused significant flows of internally displaced people. The pandemic also affected the food and beverage manufacturing sectors in the Philippines and Thailand, which both witnessed a negative growth during last year, while the same industries have flourished in Vietnam and Indonesia despite the difficulties, thanks to technological innovation. In Europe, the global health crisis has brought the national authorities to look into the changes undergone by the EU food control and animal welfare protocols; therefore, new studies are being conducted in order to assess the current situations.
According to the World Food Programme, food prices are soaring in West Africa, and this could push more than 31 million people into food insecurity (a figure that is more than 30% higher than last year) as the lean season approaches. The coronavirus pandemic and especially the measures taken to contain it are one of the main factors for the approaching food crisis in the region: in fact, borders are still closed between countries, in many cases, and as a consequence the flow of food products has drastically slowed down. Another problem that explains the rise in prices is the withholding of food commodities (especially wheat and rice, which are mainly imported in the region) by producers and traders. Luckily, the agro-pastoral season 2020-21 has been generally good so far, despite the floods that caused significant losses of human life (they affected nearly 1.8 million people in the region) and agricultural damage.
A new study is using data from the Rapid Alert System for Food and Feed (a system for reporting food safety issues within the European Union) in order to understand how the coronavirus pandemic has affected food controls by European importing countries, and to detect possible changes in food safety regulations imposed by control authorities. Also, animal welfare community protocols are being currently revised with the launch of the Farm to Fork Strategy (which focuses on the impact of agriculture and farming on public health): even though EU law related to animal welfare is considered to be among the strictest and most efficient in the world, the legislation will be adapted to the changes within the livestock industry and to the heightened public consciousness.
Philippines’ and Thailand’s food and beverage manufacturing sectors shrunk amid the coronavirus pandemic last year, experiencing respectively a 7% and 4% drop, due to the weakness in demand from food distribution and to the widespread supply chain disruptions. Furthermore, African swine fever (ASF) still represents a major issue for pig production in the Philippines, while no official outbreaks have been notified in Thailand yet. On the other hand, both Vietnam’s and Indonesia’s food and beverage manufacturing sectors have witnessed a positive growth last year despite the pandemic, thanks to the improved productivity through technological innovation. Cattle production in Vietnam is currently hindered by both ASF and the Lumpy Skin disease (but a vaccine has recently begun to be administered), while new ASF cases have been reported in Indonesia only in back yard prigs in Java and Sumatra.