Seasonal weather conditions have been recently exacerbated by the weather phenomenon known as La Niña, which is causing a drought in the United States, Brazil and Russia that is affecting the production of wheat and soybeans, and floods in South and Southeast Asia, which is delaying the harvests of rice in Bangladesh, Thailand and Vietnam, and is flooding palm oil plantations in Indonesia and Malaysia. Furthermore, the first wave of the coronavirus pandemic left its mark in Brazil’s low-income areas, where people do not have enough access to healthy food (due to the sudden drop in income levels) and small-scale farmers have reduced their crop areas, which will further impact on consumer supply and prices in the medium term.
Selected daily news on food chain disruptions and countries responses to the COVID-19 impact on food chains.
FOOD CHAIN DISRUPTIONS
Heavy rains and floods are delaying rice harvests in Asia, pushing up export and domestic prices. Furthermore, the unfavourable weather conditions have affected the quality of the autumn-winter harvest. This situation applies to Bangladesh (where ripening rice crops were damaged and domestic prices are increasing), Vietnam (where the recent rains in the Mekong Delta have hampered the ongoing harvest) and Thailand (which also recorded a low demand for rice).
Drought is currently damaging the production of wheat in the United States and in Russia, and of soybeans in Brazil, while torrential downpours are flooding palm oil plantations in Indonesia and Malaysia. These slowdowns in production levels are contributing to the increase of inflation rates in some countries, which could make it harder for central banks to keep providing financial aid in the aftermath of the first wave of the coronavirus pandemic.
During the coronavirus pandemic, the access to fresh and nutritious food for the residents of low-income areas in Brazil has further deteriorated (contributing to fuel the country’s deep social and food inequalities), due to the sudden drop in incomes during the health crisis. In fact, according to a recent survey conducted by UNICEF, around 63% of Brazilian families living with children and adolescents saw their income decline significantly, and around 27% faced periods of acute food insecurity.
IMPACT ON COMMODITIES AND FOOD PRICES
Global grains prices have been soaring since this summer, due to several factors, such as the re-emergence of the Chinese demand for barley and wheat, now that the country’s pig herd is recovering after the African swine fever outbreaks, and the low maize exports from South America (and more precisely, from Argentina and Brazil) and from the Black Sea Region. During the same period, South Korea’s vegetable plantations were destroyed by three typhoons in a row: more specifically, most of the country’s cabbage fields suffered severe damages, which is going to affect the production of kimchi during the winter (which is part of a local tradition that is called gimjang and was recognised as an Intangible Cultural Heritage of Humanity by the UNESCO).
Global maize prices have been increasing lately, due to the scarce maize exports from Argentina (caused by a currency crisis), Brazil (due to the strong domestic feed demand) and Ukraine (which saw a hike in domestic prices). For what concerns soybeans, on the other hand, Brazil has not imported this commodity from the United States yet (owing to the reluctance of the Brazilian soybean crushers), while the current Chinese soybean purchasing pace is leading to a strategic reserve building in the country.
A series of three typhoons have hit South Korea within a few weeks, destroying cabbage fields in the country and significantly driving up prices for cabbage and for other fresh foods. This is particularly important for South Korea, because it impacts on the Korean tradition called gimjang (recognised by the UNESCO as an Intangible Cultural Heritage of Humanity), whereby families make kimchi (a fermented dish) in November, to eat throughout the winter.
According to the Northern Ireland Grain Trade Association, since the start of the harvest in August, barley and wheat prices have gained over GPB 20 per tonne as global grain markets have surged in response to China’s massive purchases. In fact, as mentioned in a previous issue of this daily news digest, China is rebuilding its grains stocks, now that livestock number are recovering rapidly in the country (after the African swine fever outbreaks decimated its pig herd).
Today’s media coverage highlights three interesting measures to provide support to farmers and to curb food losses and waste around the world: in Peru, many coffee, cocoa, rice and plantain farmers in the San Martín region have access to virtual counselling through smartphone apps since August; in India, the local government of the western state of Maharashtra pledged to provide farmers that were hit by the recent heavy rains with INR 10,000 to INR 25,000 per hectare (according to the crops they grow); thirteen companies in South Africa’s food sector decided to sign a voluntary agreement to reduce food losses and waste in the country (which currently amounts to ten million tons of food every year).
The coronavirus pandemic has significantly altered the small-scale producers’ access to markets in Peru, and therefore their incomes. So far, the country’s government has provided financial assistance to rural families living in conditions of poverty, and it has created temporary employment opportunities to maintain the national irrigation infrastructure. More recently, the Ministry of Agriculture has strengthened the network of digital consulting services providers in the country, so that many cocoa, rice and coffee farmers can get virtual couching through the use of smartphone apps.
Ten million tons of food ends up in landfills in South Africa every year (which are equivalent to roughly 2% of the country’s GDP): in order to tackle this issue, thirteen companies in the food sector have signed the SA Food Loss and Waste Voluntary Agreement, whereby they committed to a series of measures that include the development of strategies to stop the use of edible food to generate energy and compost, and to reduce food waste and partner with non-governmental organizations that redistribute food surpluses.
The local government of the Maharashtra state in western India has announced a financial aid package for the farmers living in the areas of the state that were most affected by the recent heavy rains. More in particular, farmers that cultivate food crops will get INR 10,000 per hectare, while those engaged in horticulture will be entitled to receive INR 25,000 per hectare. Furthermore, the local government will provide compensation to the relatives of those who have lost their lives, cattle or houses.
Today’s news with a regional focus mention two calls to action from the Executive Director of the World Food Programme and from the leader of LaRouche South Africa (one of the organizations around the world that are part of the LaRouche Movement and that promote a greater commitment to science worldwide), who have both underlined that the world today has a “hunger for cooperation”, as well as a hunger for food. In Europe, the retail sales of meat and dairy alternatives have grown by 10% each year since 2010, and the plant-based food industry is estimated to reach a total value of EUR 7.5 billion by 2025. Finally, Brazil’s National Food Supply Company hypothesized that the country could start importing maize and soybeans from the United States in the near future.
According to the World Food Programme’s Executive Director, 7 million people have died already this year from starvation, and millions more could die in the coming months: to stop this trend, he called for funding of USD 6.8 billion in early 2021. While speaking during a 3-day conference at the FAO, he focused on the Sahel, but an emergency appeal was issued on October 13 also from South Africa, where the leader of LaRouche South Africa appealed to the President of the United States to give the US’ farmers the mission to produce food to feed the starving.
Meat and dairy alternatives in Europe are slowly growing in numbers as an increasing amount of companies enter the plant-based market: according to a Dutch multinational banking corporation, the market will be worth EUR 7.5 billion by 2025 (compared to EUR 4.4 billion in 2019) in the European Union and in the United Kingdom, thanks to a high level of investment and innovation in the food industry (despite weak spots of this emerging market, such as taste, costs, texture and composition).
As mentioned before in different past issues of this daily news digest, Brazil is nearly out of soybeans, due to its high export pace earlier this year (especially to China): this is why, although it has never happened in modern times, Brazil could start importing maize and soybeans from the United States. In fact, according to the country’s National Food Supply Company, the US is the only country outside of the Southern Common Market (or Mercosur) with the capacity to export maize and soybeans to Brazil at competitive prices