Guatemalan agricultural producers have called on maritime shipping lines and on cargo airlines to start negotiations with the agriculture industries in order to find a way to support the country’s rural competitiveness, which was severely hampered by the increased freight rates. In Europe, on the other hand, Poland’s agriculture industry is still struggling with the effects of the coronavirus pandemic, and many organic farmers complain that the country’s largest retail chains prefer importing food products, instead of relying on the domestic suppliers. Finally, the looming end of the Brexit transition period will bring new border controls between Great Britain and Northern Ireland, which will cause many British food firms to stop selling their products to Northern Ireland due to the increased costs.
Selected daily news on food chain disruptions and countries responses to the COVID-19 impact on food chains.
FOOD CHAIN DISRUPTIONS
While the demand for agricultural products has recently increased, Guatemalan producers of peas and vegetables have been able to work only at half their total capacity, due to the increase in production costs and to a labour shortage. Furthermore, all agriculture workers in the country are feeling the impact of the high maritime and air freight shipping rates, which hamper Guatemalan agriculture industries’ competitiveness and ability to supply the US market with fruits and vegetables.
The coronavirus pandemic and the disruptions to the food supply chain it caused have affected Poland’s agriculture sector (for example, Ukrainian farmers could not come for seasonal work in the fields in Poland due to border closures). Furthermore, most of the Polish retail chains still prefer importing products from abroad, rather than purchasing from the domestic suppliers.
According to the United Kingdom’s Food and Drink Federation, the new border controls that will be imposed after the end of the Brexit transition period between Great Britain and Northern Ireland (which will not leave the EU single market for goods) will increase costs, complexity and trade friction, which will make it unfeasible for many businesses to continue supplying goods to Northern Ireland.
IMPACT ON COMMODITIES AND FOOD PRICES
Brazilian domestic soybean prices have recently soared to unprecedented highs amid restricted supplies, after the country exported around 98% of its 2019-20 oilseed stocks to China, which has increased its imports due to food security concerns. In order to overcome this situation, Brazil cancelled import tariffs to bring in a higher flow of soybeans into the country; however, Brazilian crushers do not seem interested in increasing their purchases. Algeria, on the other hand, is waiting to import wheat from Russia after it eased its wheat tender criteria to accommodate the Russian exporters, because of the high prices of the grain.
Last week, Brazil’s government tried to increase soybean imports in order to limit further price hikes for this commodity (by cancelling import tariffs), after the country sold over 98% of its 2019-20 oilseed stocks to China. However, according to the agriculture analysts, Brazilian crushers are not interested in purchasing imported soybeans during the fourth quarter of 2020, as a weak Brazilian real versus the US dollar entails high imports costs for raw beans. Meanwhile, the high prices of the Brazilian soybeans are fuelling inflation, which reached its highest value since 2003 in September.
Towards the end of September, Russia was trying to attract Algeria away from France’s wheat exports, in order to extend its wheat exports market. Russian shippers had already been invited to Algerian tenders; however, Algeria has yet to benefit from its decision to relax its wheat tender specifications (for example, it relaxed its bug damage tolerance in order to accommodate the Russian exporters), as prices for Russian wheat have increased shortly afterwards.
Both the United Kingdom and the United States keep providing financial support to the respective hospitality industries and to food producers: for example, after the protests against the new pandemic-related restrictions of around 200 British hospitality workers in London, the UK’s Chancellor of the Exchequer has announced a series of financial measures that will provide businesses in this sector to claim cash grants of up to GBP 2100 each month. In the United States, on the other hand, Colorado’s Department of Agriculture has recently unlocked an additional USD 1 million in CARES Act grant funding, while the University of Wisconsin’s Extension Dairy Program continues to provide training and recommendations to dairy farmers despite the difficulties posed by the pandemic.
The United Kingdom’s Chancellor of the Exchequer has introduced a series of financial measures that allow businesses in the country’s hospitality sector that have been adversely impacted by the new coronavirus restrictions to claim a cash grant of up to GBP 2100 per month. Furthermore, all local authorities will receive a 5% top-up amount to these grants to cover other kinds of businesses that might have been affected by the restrictions.
Colorado’s Department of Agriculture will make up to USD 1 million in grant funding available through the CARES ACT funds for the state’s ranchers, farmers, food hubs and processors, in order to support their recovery from the devastating impacts of the coronavirus pandemic on agriculture. These grants will be administered by the independent Colorado Farm & Food Systems Respond and Rebuild Fund, which to date has provided more than USD 370,000 to food producers and intermediaries across the state.
The Extension Dairy Program is an initiative of the University of Wisconsin’s Extension Dairy Team that aims at strengthening the competitiveness of Wisconsin’s dairy industry, and that also supported the state’s dairy businesses that were affected by the coronavirus pandemic through virtual recommendations. According to Wisconsin’s Department of Agriculture, there are over 7000 dairy farms in the state, which contribute more than USD 45.6 billion to Wisconsin’s GDP every year.
It will be impossible to make progress towards the achievement of all sustainable development goals, unless the economic resilience and wellbeing of farmers is addressed first: for example, most smallholder cocoa farmers in West Africa live on less than USD 1.25 per day, despite contributing to 70% of the total cocoa production in the world. That’s why the global food companies should invest in the creation of certification programmes. In Europe, Germany has recently been selling more pork to countries within the European Union, rather than to Asian countries, because of the African swine fever outbreaks that affected wild boards in Germany towards the beginning of last month.
Smallholder farmers are the backbone of agriculture and food security in most developing countries, and they are responsible for 30-34% of the world’s total food production. However, most of them are not financially supported or incentivized for maintaining access to global markets: for example, the chocolate industry is valued at USD 100 billion, but most smallholder cocoa farmers in West Africa (that produce around 70% of the world’s cocoa) live on less than USD 1.25 per day. Therefore, all global food companies have to put the livelihoods of farmers at the forefront of their priorities.
At the beginning of September, an outbreak of African swine fever (ASF) in wild boars was confirmed in Germany and determined a decrease in pig prices by 14%. Furthermore, this confirmation brought Japan, South Korea and China to ban German pork imports. This is why Germany has been trying to export pork from parts of the country where there are no ASF outbreaks: so far, Germany’s meat processors have been sending pork chops and bacon (previously earmarked for Asia) to supermarkets across the European Union.