Kenya’s banana farmers have seen a good harvest this year, but they are struggling to find a market for their products, and they have been forced to sell bananas at throwaway prices, or they would have been wasted otherwise. Ecuador’s banana exporters, on the other hand, are worried that the new restrictions to movement that different municipalities across the country have recently announced will have a negative impact on their activities. Finally, the heavy rains that hit Indonesia and Malaysia in June and July have compromised the production of palm oil, allowing India to take advantage of this situation.
Selected daily news on food chain disruptions and countries responses to the COVID-19 impact on food chains.
FOOD CHAIN DISRUPTIONS
In the Trans-Nzoia County (western Kenya), banana farmers are currently struggling to find a market for their products, which are ready to be sold, meaning that most of the times they are forced to sell them off at throwaway prices. When he took office, the governor of the county encouraged farmers to diversify their products and move away from maize farming, which according to him was making them poor. That’s why 45,000 banana culture stems were distributed to farmers at subsidized prices, but this shift has not proved particularly successful.
Because of the mobility restrictions that various municipalities in Ecuador have announced to contain the spread of the coronavirus pandemic (after the state of emergency came to an end on September 12, leaving decentralized autonomous governments the competence to establish mobility conditions in their territories), the country’s banana exports may be affected in the coming weeks. That would be a blow for Ecuador’s exports, which contributed to stabilize the country’s economy during the health emergency.
A heavy rainfall between June and July affected the production of palm oil in Indonesia and Malaysia, leading to a hike in prices, despite the contracting demand due to the coronavirus pandemic. This contributed to the fact that palm oil contract has become India’s largest traded farm futures contract in the first eight months of 2020, as the volatile prices caused by the continued supply uncertainties in Indonesia and Malaysia pushed the participation of hedgers and speculators in the market.
IMPACT ON COMMODITIES AND FOOD PRICES
Food prices have recently witnessed a huge increase in many Asian countries, and in South Sudan. More specifically, Bangladesh, Malaysia, Nepal and Sri Lanka all depend on Indian imports, and that is why, after India temporarily suspended exports to these countries (in order to limit domestic price increases, as a heavy rainfall delayed the harvests), food prices increased in all of them (especially in Bangladesh, where onion prices have doubled this week). In South Sudan, on the other hand, the devaluation of the local currency discouraged imports, but since the country completely depends on Kenya, Uganda and Sudan, food prices are skyrocketing.
Onion prices have increased by almost 50% in Bangladesh this week, following a ban on exports by India, which is the country’s largest supplier. India suddenly announced this move, whose objective is to cut domestic onion prices, which have doubled during the past fortnight due to the excessive rains that delayed the harvests in the Nashik districts (in the western state of Maharashtra). Malaysia, Nepal and Sri Lanka also rely on Indian shipments, and therefore they will witness similar prices increases.
Due to the deteriorating economic situation in South Sudan, which depends significantly on essential commodities imported from Kenya, Sudan and Uganda, food prices have recently skyrocketed in the country. The devaluation of the local currency has discouraged traders from importing food products, paralyzing the supply chain network, but South Sudan’s minister of trade and industry has announced several measures that will help stabilize the cost of the basic commodities in the country.
During the coronavirus pandemic, the government of Nepal has provided substantial support to smallholder farmers, whose activities are fundamental for the country’s economy, given that more than 60% of the total population relies on agriculture. Furthermore, the ministry of agriculture set out an agriculture development plan, which includes more subsidies for agricultural inputs, an improved access to low-interest loans, increased technical services support and guarantees on minimum savings. In Malawi, on the other hand, the International Potato Center developed nine new sweet potato varieties for the country’s farmers, while Mongolian small and medium-sized businesses in the agricultural and livestock sectors will benefit from a project implemented by the International Finance Corporation.
The coronavirus pandemic has heavily impacted on the smallholder farmers in Nepal, affecting production, marketing and food supply in the country (where more than 60% of the population depends on agriculture). However, the government of Nepal has taken a few measures to provide immediate relief to the farmers, providing food items and other essentials to the crisis-affected communities and easing the lockdown measures for the agricultural sector. Furthermore, the ministry of agriculture and livestock has launched an agriculture development plan that will improve the farmers’ access to credit and agricultural inputs.
Breeders from Malawi’s department of agricultural services and the International Potato Center have developed nine new varieties of orange-fleshed sweet potato for farmers, which have higher yields, a better taste, an improved vitamin A content and good processing qualities. Sweet potato is a highly perishable crop, but the CGIAR Research Program on Roots, Tubers and Bananas has trained and equipped three producers in southern Malawi to convert the crop into a purée, so that it can be stored frozen for six months without losing its nutrients.
The International Finance Corporation (a sister organization of the World Bank) and the Mongolian Bankers Association will work jointly to improve the access to funding for 200,000 micro, small and medium enterprises in Mongolia over the next 5 years. This plan will complement the efforts of the government of Mongolia, which is trying to increase the competitiveness and exports of its agriculture value chains, since the agriculture and livestock sectors are the ones that need more support to obtain finance and create jobs.
While the European Union is currently focusing on cutting emissions by imposing stricter pollution standards on automakers and by discouraging the Europeans from consuming large quantities of meat to decrease greenhouse gases, according to the World Bank and to PwC, countries in Sub-Saharan Africa should focus on developing their agricultural sectors, because rural development is considered to be particularly beneficial for low-income countries. More in particular, they should devote efforts to expanding arable land, improving yields and reducing post-harvest losses.
The European Commission will unveil an ambitious emissions-cut plan: under a new climate target for 2030, the European automakers would need to embrace tougher pollution standards, energy will grow increasingly cleaner, and in order to cut greenhouse gases in agriculture, the Europeans would be encouraged to eat less meat. If approved, this new goal would lower emissions in Europe by 55% from 1990 levels (currently, the existing 2030 objective provides for a reduction in discharges by 40%).
In order to alleviate the high-level poverty in Sub-Saharan Africa (which, according to a recent report by the World Bank, is home to the largest population of the poorest people in the world), it is paramount to develop the agricultural sectors: growth in agriculture in low-income economies is estimated to be eleven times more effective in reducing poverty than non-agricultural growth. According to PwC, growth in agriculture in Sub-Saharan Africa is a function of three major factors: farmland expansion, yield growth and reduction in post-harvest losses.