Venezuela is still facing the consequences of a gasoline shortage caused by the United States’ sanctions and pressures on other oil exporting countries not to ship gasoline to Venezuela, and by the country’s lack of capacity to autonomously produce gasoline (after years of underinvestment and lack of maintenance): this affects the distribution of food in the country, thus reflecting on consumers. Meanwhile, Saudi Arabia has recently suspended food imports (beef, mutton, poultry, and other products) from Turkey amid the ongoing tensions between the two countries. Finally, Ghana’s banana exporters and producers are likely to be severely affected by the consequences of Brexit, especially considering that the UK’s Secretary of State for International Trade has rejected calls from Ghana’s government to negotiate a post-Brexit trade deal.
Selected daily news on food chain disruptions and countries responses to the COVID-19 impact on food chains.
FOOD CHAIN DISRUPTIONS
The ongoing shortages of gasoline in Venezuela keeps reflecting on food prices, due to the challenges that this situation poses on food marketing and distribution. Out of fear for yield losses, farmers frequently turn to the black market, where prices are higher: this reflects on consumers, who are indirectly affected by the high prices of gasoline on the black market, and it also affects the local demand for agricultural products, which is likely to decrease.
According to Turkish exporting firms and unions and to the Saudi Food and Drug Authority, Saudi Arabia has temporarily suspended the imports of animal products (such as beef, mutton, poultry, fish, eggs and honey) from Turkey. The two countries have been at odds for some years over several disputes (including the assassination of the Saudi journalist Jamal Khashoggi), and Saudi Arabia’s largest supermarket chains had already joined a boycott of Turkish products before the import suspension began.
According to a British non-profit organization, Brexit will have substantial repercussions also on non-European countries: more in particular, it could damage the supply of bananas from Ghana to the British supermarkets, causing job losses in the country’s banana plantations. In fact, Ghanaian banana exporters will face a post-Brexit import duty of GBP 95 per ton, which would make exporting to the UK unprofitable for a fruit that is already sold on very small profit margins.
IMPACT ON COMMODITIES AND FOOD PRICES
Millions of families across India will be hit hard by the food inflation, which shot up to 11.07% in October (the highest in nine months), sending the overall retail inflation rate to 7.61%: the prices of vegetables (including basic commodities) are on the rise, because of the disruptions in supply caused by the nationwide lockdown in India, and millions of people cannot afford them as they have been laid off due to the coronavirus pandemic. Despite being less affected by the pandemic, Pakistan is also facing a hike in food inflation (allegedly the highest in South Asia), which the country’s government has not managed to limit.
After hitting a six-year high in October, India’s retail inflation is likely to remain elevated for at least three more months as heavy rains have damaged standing crops and seedlings. The high prices will especially affect the country’s millions of poor people, who are already struggling amid the difficulties posed by the coronavirus pandemic: food inflation shot up to 11% in October, which was the highest in nine months (food items such as onions, potatoes, eggs, meat and tomatoes are the most affected by the price hike).
Food inflation in Pakistan is currently said to be the highest among all South Asian countries, despite the fact that the coronavirus pandemic did not hit as hard in Pakistan as it did in other countries of the region (such as India). The country is still facing a sugar and a wheat/flour crisis, and the government has not developed an efficient strategy to deal with this situation yet (for example, providing incentives to farmers and stopping further cartelization of sugar and wheat).
In the Canadian province of Manitoba, farmers will benefit from an additional CAD 1.9 million financing provided by the Ministry of Agriculture and Agri-Food to improve the health and safety of the agricultural sector’s workers. In Sub-Saharan Africa, on the other hand, the Nigerian government has procured tons of certified wheat seeds and other agricultural inputs in order to strengthen the country’s food basket with an additional 15,560 tons of wheat, while the Agricultural Bank of Ghana has reaffirmed its commitment to increase its loan portfolio to about 50% by 2022, so as to make the agricultural sector more attractive to the middle and upper class of the Ghanaian society.
Canada’s Minister of Agriculture and Agri-Food has recently announced a new CAD 1.9 million investment under the Emergency On-Farm Support Fund in order to help Manitoba’s farmers to better protect their health and safety amid the coronavirus pandemic. More in particular, eligible activities to be funded include direct infrastructure improvements to living quarters and workstations, sanitary stations, and personal protective equipment.
The Agricultural Development Bank of Ghana (ADB) has confirmed its commitment to increase the share of agricultural loans in the Bank’s total loan portfolio to a minimum of 50% within the next three years (currently, it is at 28%). Meanwhile, the Bank has already introduced the Ghana Cedis Poultry Value Chain Programme with an amount of GHS 500 million earmarked for it, and similar programmes will be introduced starting from next year for fish, maize, cassava, potatoes, rice and palm oil.
Nigeria’s Minister of Agriculture and Rural Development has recently disclosed that the central government has procured agricultural inputs for wheat production that could increase the country’s food basket by 15,560 tons of wheat. Furthermore, the Ministry has put in place specific measures to reduce wheat’s import bill, and there have been other interventions to boost wheat production by the Central Bank of Nigeria and other institutions.
15 Asia-Pacific countries have signed a new Regional Comprehensive Economic Partnership, the world’s largest trade deal that aims at boosting trade and investment in the region and at strengthening supply chains. Australia intends to use this new trade deal to bring China to reduce the import tariffs on Australian food products that China has been imposing since April. For what concerns Africa, on the other hand, the CDC Group has provided Standard Chartered Bank with additional liquidity to support banks in Sub-Saharan Africa, while the African Development Bank will fund projects and capacity development initiatives to support young agricultural entrepreneurs from 12 African countries.
A new Regional Comprehensive Economic Partnership (RCEP) was signed between Australia, China, Japan, South Korea, New Zealand, and 10 members of the Association of South-East Asian Nations (including Indonesia and Vietnam). Starting from April, China has imposed tariffs on Australia’s food products (such as barley and wine), which resulted in disrupted exports worth AUD 19 billion. Australia will now use the RCEP to resume in-person meetings with Chinese ministers, in the hope that this will help reset the economic relations with China.
The CDC Group (a British development finance institution) has committed an additional USD 100 million to its existing master risk participation agreement with Standard Chartered Bank (a British multinational financial services company). This additional commitment will provide the Bank with sufficient liquidity to directly support trade lines to local banks in Sub-Saharan Africa at a time when the coronavirus pandemic has created severe liquidity pressures for banks across the region.
The African Development Bank (AfDB) will provide concessional funding to launch capacity-building initiatives in Africa that aim at training young agricultural entrepreneurs from 12 African countries, and to finance their projects. 62% of all applicants represent women-led businesses or businesses where women make up at least 50% of their management.