In West Africa, a Chinese fish-processing plant that turns wild fish into fish meal (a dark-yellow powder made by cooking and pulverizing fish) for aquaculture is creating an environmental and economic impact in Gambia: fish meal is used as a protein-rich supplement in the industry of fish farming, and West Africa is one of the world’s fastest-growing producers of it, but its production is decimating Gambia’s fish stocks (which account for 50% of the country’s animal-protein intake) and it is polluting its waters. In Nigeria, on the other hand, the long-lasting tensions between herders and farmers have recently determined a blockage of trucks carrying food products and cows that were supposed to reach the southern states of the country. In Australia, the extreme weather events triggered by the tropical cyclone Niran have destroyed hectares of banana plantations in North Queensland, which will probably have repercussions on banana prices over the next months.
Selected weekly news on food chain disruptions and countries responses to the COVID-19 impact on food chains (01/03/2021 to 07/03/2021)
FOOD CHAIN DISRUPTIONS
Over the decades, the global demand for fish has outstripped the supply, and aquaculture gradually became an alternative to fishing as wild fish stocks shrank dramatically, and it is now the fastest-growing segment of global food production. Aquaculture is less expensive, it reduces illegal fishing and bycatch, and it is an important source of jobs; however, in order to feed the farmed fish, it is necessary to produce fish meal out of about a quarter of all fish caught globally at sea. Therefore, while aquaculture is supposed to preserve wild fish stocks, the seafood industry is actually draining them by converting wild fish into fish meal. For example, Gambia exports much of its fish meal to China and Norway, which in turn use it to farm salmons, while the fish that Gambians rely on are gradually disappearing.
Recently, food trucks laden with cows, onions, peppers and tomatoes have been blocked and impounded in northern Nigeria as a consequence of the long-lasting clashes between cattle herders and farmers. Since the open grazing of cattle was outlawed by state governors in the southwest after it caused fighting over open grazing between indigent settlers and Hausas, some herders in northern Nigeria have vowed to retaliate against the south by starving the region of food supplies. The main repercussion of this is that populous cities such as Lagos are running out of beef, tomatoes, peppers and other vegetables, and as a direct consequence the prices of these food commodities are increasing.
The tropical cyclone Niran has recently devastated banana plantations in North Queensland, with crop losses spanning 20% to 100% in some farms, adding to workforce shortages caused by the coronavirus pandemic and years of low prices. Bananas are Australia’s biggest commodity sold in supermarkets, and the Queensland banana industry is worth AUD 600 million a year, therefore the losses could be between AUD 100 and 200 million. Banana prices at major supermarkets have not been affected by the damage yet, but they are expected to rise temporarily in the coming weeks or months.
IMPACT ON COMMODITIES AND FOOD PRICES
The main food commodities that have seen their prices increase recently in the Indian subcontinent are broilers and sugar in Pakistan (due to a shortage of day-old chicks determined by an imbalance between supply and demand, and to the alleged speculations of sugar dealers and wholesalers on a shortfall of this commodity), and fruits, vegetables, milk and chicken in India (due to an overall setback in production). However, the global rise in grain prices may further induce India to export wheat, rice and maize in the international market, following a good trend that started during the first phases of the coronavirus pandemic, when the country enhanced its exports of these commodities. In Kenya, on the other hand, food inflation is mainly driven by the soaring prices of cooking oil (due to a decreased production of crude palm oil in Asia) and beef (due to the farmers’ reluctance to dispose of their cows when sufficient quantities of fodder are available).
Despite a forecast of 14% increase in crop output during the ongoing marketing season, according to the Pakistan Sugar Mills Association the sugar dealers and wholesalers are responsible for an increase in sugar retail prices that was caused by their speculations on the shortage of this commodity in Pakistan: the missing link that would explain this discrepancy is the absence of relevant information related to demand-side dynamics for sugar in Pakistan. Chicken meat prices are also on the rise in Pakistan, and they have recently reached an all time high, due to a gap between demand and supply caused by a shortage of day-old chicks. In fact, a low demand during the last two years pushed poultry farmers to stop selling day-old chicks, and the coronavirus pandemic worsened this situation by determining the closure of many poultry farms and an increase in grain prices (used for the production of poultry feed).
As the COVID-related restriction measures were being imposed in India and were causing a decrease in animal protein prices, farmers became worried over the future prospects and reluctant to invest in the expansion of production, and this has recently caused an increase in the prices of fruits, vegetables, chicken and milk. On the other hand, India may take advantage of the high prices of wheat, rice and maize on the international markets (caused by supply disruptions in the major producing countries) to increase its exports of these agricultural commodities: during the first phases of the coronavirus pandemic, India has already provided its grains to other countries. More specifically, wheat prices have shot up over 48% since June 2020, while maize prices increased by 91% and rice prices by 110%.
For the seventh consecutive month, the prices of essential commodities in Kenya have increased due to a growing demand and a low supply of food. This acceleration was mainly driven by cooking oil: due to a low use of fertiliser and a shortage of agricultural workforce that was determined by the COVID-induced restrictions to travel, the production of crude palm oil in Asia has drastically decreased, leading to the surge in prices of cooking oil in Kenya. Furthermore, the recent rainfall in the country has enlarged the supply of fodder, which discouraged farmers from disposing their cows, thus generating a shortage and a possible further increase in beef prices. In fact, when large quantities of fodder are available, many farmers prefer to fatten their animals and sell them at a higher price on a later date.
The consequences of the coronavirus pandemic throughout the year have encompassed all phases of the global agricultural value chains, and especially the production and distribution of food commodities. Several companies and food distribution organizations have reacted in Europe, Africa and Asia by finding innovative solutions, such as the creation of a platform in South Africa that was developed by an agri-tech company and a non-profit organization and that offers an online match-making procedure that connects farmers with registered charity organizations to assist vulnerable communities in the country. Pakistan and Uganda have recently announced initiatives that aim at improving agricultural production and exports through the enhancement of horticulture (also thanks to the involvement of the Government of the Republic of Korea in Uganda). Finally, the EU will support Kenyan SMEs in the agriculture sector by channelling large amounts of loan and grant financing through the European Investment Bank and by providing technical assistance.
This week’s media coverage highlights several initiatives related to the reduction of food loss and waste in Europe, Southern Africa and Southeast Asia. In the United Kingdom, the coronavirus pandemic has aggravated the total waste of food in the hospitality sector, but firms with excess produce have been publicising what they have and a network of volunteers and suppliers have been searching out those in need in order to distribute such produce. In South Africa, on the other hand, an online platform is connecting farmers with feeding schemes in order to turn tons of excess produce into meals for people in need. Finally, Japan’s government has enforced a new law decree that encourages food firms to develop new technological platforms to cut food waste.
Both Pakistan and Uganda are targeting the improvement of horticulture’s productivity in order to increase farm income and boost agricultural exports. More in particular, Pakistan’s government is determined to improve the quality standards of the local fresh fruits through an enhanced packaging and preservation with an eye to attracting high-end markets (Pakistan is the sixth-largest producers of a high yield mandarin hybrid called ‘kinnow’), for example by investing in phytosanitation (a systematic approach to pest prevention). Uganda, on the other hand, will be the beneficiary of a USD 8 million grant financing from the Korea International Cooperation Agency that will be channelled into the improvement of Uganda’s seed-related research capacity and into quality seeds dissemination.
The European Union will provide EUR 120 million (EUR 100 million in loans and EUR 20 million in grant support) through the European Investment Bank to improve the access to financing at appropriate conditions for many small and medium-sized enterprises in Kenya that were heavily affected by the consequences of the coronavirus pandemic, including in the agriculture sector. Furthermore, the EU will provide technical assistance for a Kenyan financial services provider, in order to enhance its capacity to ensure long-term financing for agriculture and to assess, execute and monitor agricultural value chains investment projects.
This week’s regional media coverage highlights differing difficulties faced by the food exporters and farmers in Europe, Central America and Africa. According to the British businesses that export food to the European Union, the delays at the border posts have worsened since January, when the first post-Brexit trade regulations came into effect, which has already had an impact on their activities and their revenues. In Central America, on the other hand, coffee farmers have continuously struggled with the repercussions of climate change phenomena on their crops during last year, when two twin hurricanes have devastated hectares of land and pushed farmers to diversity their crops or take up temporary jobs to secure a stable income. Finally, women farmers in Africa are disproportionately bearing the brunt of the limitations on movements caused by the coronavirus pandemic, which are further aggravating gender inequality in the continent.
According to a new survey that was realized by the Chartered Institute of Procurement and Supply, more than half of all business in the United Kingdom have reported that the problems at the UK-EU border posts are getting worse, and therefore that delays have increased since the beginning of January, when the new post-Brexit trading procedures came into effect. Furthermore, starting from April 1st, the British government will introduce new import controls on all animal or plant products coming in from the European Union, which will require that the Irish exporters show specific health certificates before exporting, and that the UK importers pre-notify the authorities of the goods coming in. Since these delays will have a huge impact on the British farmers and food exporters, the UK government has recently sought advice on the trade policies that would be needed to secure opportunities for the British farmers and maintain the competitiveness of the sector.
Growing coffee in Nicaragua and Honduras is getting tougher and tougher for farmers, due to the increased frequency of extreme weather phenomena that uproot the bushes and spoil the berries: the last one was in November, when hurricanes Eta and Iota caused whipping winds and torrential rains that affected more than 200,000 hectares of coffee and other crops throughout Central America and destroyed an estimated 10-15% of this year’s coffee harvest. Some of the coffee farmers in the region have reacted to climate change phenomena by diversifying their crops, for example by growing cocoa, which is less labour-intensive, offers more stable prices and is better suited for warming temperatures; others chose to migrate and send back remittances to their families, or to take up temporary jobs.
Since they make up nearly 50% of the agricultural workforce and they own one-third of all small and medium-sized enterprises that produce, process and trade agricultural products in Africa, women play a fundamental role in the continent’s food and agricultural systems. However, a new survey realized by the Alliance for a Green Revolution in Africa has highlighted that female farmers are suffering disproportionately the consequences of the coronavirus pandemic on the existing social, technological and economic gender inequalities in Africa. For example, due to the restrictions on movements, most of the women that go to the markets to sell food crops could not generate a sufficient income, due to the lack of customers and to the reduced work hours.