Food and Agriculture Organization of the United Nations
    FAO Data Lab

    Selected weekly news on food chain disruptions and countries responses to the COVID-19 impact on food chains (29/03/2021 to 04/04/2021)

    10 February 2021, Niniveh Governatorate - Sheep yoghurt (laban) is very popular over Iraq providing households with cash income. FAO-EU project is supporting farmers to produce healtier products.
    ©FAO/Chedly Kayouli

    FOOD CHAIN DISRUPTIONS

    Even before last week, many countries were suffering from the consequences of port congestions and container shortages, due to an unprecedented demand for specific products. Such issues were exacerbated by the obstruction of the Suez Canal by the Ever Given, a 400m-long container ship that was traveling from Malaysia to Rotterdam in the Netherlands and prevented around 400 other container ships from crossing the Canal for six days, before it was freed on 29 March. Meanwhile, the enhanced food imports from wealthy countries are gradually increasing deforestation levels in poorer countries that free up space for the cultivation of monocultures (crops such as oil palm and soy) or for livestock farming. Meanwhile, the agricultural sector in Iraq is still hindered by long-lasting difficulties, such as international sanctions, political instability and armed conflicts, but a new study has recently identified four value chains (wheat, tomato, date and grape) that could address the challenges facing agriculture and improve the farmers’ outcomes.

    The Suez Canal obstruction will exacerbate food price fluctuations and container shortages

    Last week, the Ever Given (a 224,000-ton container ship) has blocked the Suez Canal, a crucial global trade route, for almost a week. Although the ship is no longer blocking the Canal, the fact that it stopped over 400 other carriers from passing through the Canal for days will have severe repercussions on global trade, such as container shortages and port congestions, amid an unprecedented demand for goods. In fact, even before the Ever Given blocked the Suez Canal, supply chains (including food supply chains) were stretched to the limits and shortages were already a daily occurrence. Furthermore, this setback will determine price fluctuations for several commodities: the list of affected goods is long, and it includes agricultural products, livestock, computer parts, car parts, wine and smartphones.

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    Food imports in wealthy countries are contributing to deforestation in poorer countries

    A new study published in Nature Ecology and Evolution has recently highlighted how the current consumption patterns and the rising imports of coffee, cocoa and other products (such as beef, soy, palm oil and timber) in wealthy countries drive an average loss of four trees per person each year, and are encouraging poorer countries to increase their deforestation levels. More in particular, agriculture and forestry are responsible for around 80% of the global deforestation, and the main hotspots of deforestation are Southeast Asia, Madagascar, Liberia, Central America and the Amazonian rainforest. The study also links specific wealthy countries with imported commodities from poorer countries: for example, cocoa from Cote D’Ivoire and Ghana to Germany, sesame seeds from Tanzania to Japan and rubber from Laos to China.

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    Agriculture in Iraq is hindered by concurring factors

    Due to several factors, including the displacement of entire communities and the limited access to inputs caused by the influence of armed groups in the country, to the sanctions and to the extreme weather events, Iraq went from being a smallholder-driven, food-producing country to becoming a major food importer. Many challenges remain to the present date, such as increased political tensions, military threats and the COVID-19 pandemic; however, a new study has been conducted to address the challenges that agriculture is facing in Iraq. More specifically, the study focuses on the wheat, tomato, date and grape value chains, which have a high potential market growth, an unmet demand and a certain level of support available from public, private and non-governmental actors.

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    IMPACT ON COMMODITIES AND FOOD PRICES

    The American farmers are struggling with the existing trade disputes between the United States and China; moreover, a new trade action could further hurt them in the coming months: in fact, the US Department of Commerce and the US International Trade Commission have recently found that countervailing duties (which are taxes on imports that have been subsidized by the governments of the origin countries) will be imposed on Moroccan and Russian phosphate fertilizer imports, and this will have repercussions on food prices for consumers. Taiwan, on the other hand, has recently been hit by an import ban that the Chinese General Administration of Customs has imposed on the Taiwanese pineapples (which contained pests that violated the country’s customs standards). South Africa, on the contrary, is following a positive trend for what concerns the production and export of grapes and pineapples: in fact, the country is currently dominating the grape market, especially in Germany and North America, due to a decrease in grape exports from Peru, Mexico and Chile.

    Consumer prices are likely to increase due to new countervailing duties in the US

    Due to the supply chain disruptions caused by the coronavirus pandemic in food production, food prices (and the prices of other fundamental commodities, such as gasoline) have inflated out of the reach of many in the United States, and this resulted in an increase in child hunger by 50% since the pandemic began one year ago. Furthermore, both individuals and businesses throughout the food supply chain are likely to be hit by the effects of new countervailing duties on Moroccan and Russian phosphate fertilizer imports: the American farmers will bear the initial cost of such duties (an estimated USD 1 to 1.5 billion for the coming crop year), but then the increased costs will reverberate throughout the supply chain, ultimately increasing food prices for consumers.

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    Overview of the global grape market

    The consumption of table grapes in Spain is gradually increasing, thanks to the supply of new and better varieties, as well as the promotion of this agricultural product in supermarkets: in fact, the import campaign is progressing with good sales and without excessive quality problems (especially from South Africa). The grape market in the Netherlands, on the other hand, is under pressure due to the large supply of this agricultural product in a short time frame (again, especially from South Africa), while the Australian grape season is affected by labour shortages that are mainly caused by the COVID-induced movement restrictions. Finally, the South African grape varieties dominate also the German and North American markets, due to the decrease of grape exports from Peru, Mexico and Chile.

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    Pineapple trade overview in China and Costa Rica

    Costa Rica supplies pineapples throughout the year to many countries, and the current production volumes are substantial and of good quality, thanks to the good weather that in recent months has enabled producers to guarantee a good harvest. Furthermore, demand and prices have increased somewhat over Easter, and Costa Rica is seeing an increased demand from China due to the Chinese government's halt in imports from Taiwan (but the Asian country currently remains a small market for Costa Rica). In fact, pineapple imports from Taiwan to China are temporarily banned as several batches of Taiwanese pineapples contained pests that violated the Chinese General Administration of Customs’ standards, and since more than 97% of Taiwan's pineapples go to the Chinese market, the consequences for the Taiwanese pineapple industry are huge.

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    COUNTRIES' RESPONSE

    One of the largest plant-based food companies in the world has recently closed additional funding that was granted by a fund that was created in 2016 to help achieve the Sustainable Development Goals, to scale its company into targeted key regions, such as the United States and China, and to fuel investments in plant-based innovation. Similarly, a new study in India has underlined the opportunity to utilize India’s coastline for seaweed cultivation (which represents an alternative to large-scale animal agriculture). Meanwhile, several branches of the US Government have announced financial support and technological development initiatives that will help farmers and food banks improve their resilience after the disruptions caused by the COVID-19 pandemic. Finally, a digital platform that was created in Spain in 2011 to connect customers directly to agricultural producers has tripled its sales after last year’s lockdowns, as more people turned to online grocery shopping to access fresh food.

    Advancements in plant-based food innovation

    This week’s media coverage highlights two initiatives related to the advancement of plant-based production in North America and Asia. A collective of business leaders and entrepreneurs from across the globe has recently closed a founding round of USD 335 million that will be used mainly to channel investments into plant-based innovation, and to scale the collective into key regions of the world, that include the United States and China. The Good Food Institute (a non-profit that accelerates alternative protein innovation), on the other hand, has recently highlighted the possibility to use India’s 8,100 km long coastline for the cultivation of seaweed, that could represent the foundation for the local algal protein industry in the coming years.

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    Financial support and technological advancements to improve resilience in Montana and Texas

    This week, the US Department of Agriculture has announced that billions of dollars in coronavirus relief funding will be used to bring financial assistance to agricultural producers that were affected by the coronavirus pandemic. In Montana, for example, the Pandemic Assistance for Producers program will be used to improve the resilience of the food supply chain, and to enhance the competitiveness of fruits, vegetables, tree nuts, dried fruits, horticulture and nursery crops. In Texas, on the other hand, a new project was funded by the US Department of Energy and the US Department of Homeland Security. Its objective is to produce data-driven decision-making tools that will improve the resilience and coordination of the local food banks.

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    Digital platform connects European customers directly with agricultural producers

    A digital platform that was created by two Spanish agricultural producers allows customers to pay for a field’s care in return for receiving the harvest when it is ready. Over the years, the platform has expanded beyond Spain’s national borders, and now European customers can read about the farms, who runs them and the methods they use, and also purchase boxes of surplus food (thus reducing food waste). The platform is now serving 200,000 households across Europe, and it plays an important role in “shortening” the food supply chain by offering customers more transparency about the origin of their food and by giving the farmers an opportunity to reduce the pressures of the supplying supermarkets and other intermediaries, which generally offer lower prices for their products.

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    REGIONAL FOCUS

    Central American countries such as Honduras and El Salvador were severely damaged by the combined effect of the twin hurricanes that hit them towards the end of 2020 and the period of stagnant economic growth that was exacerbated by the coronavirus pandemic: the result is that acute food insecurity levels are likely to increase in the whole region over the next months. In Africa, on the other hand, the African Continental Free Trade Area is expected to stimulate the growth of the continent’s agribusinesses, mainly thanks to the development of intra-Africa trade, that will increase the value added to traditional agricultural exports (such as coffee and cocoa) and to less traditional products, such as gardening products. Finally, a new research has found that the impact of extreme weather phenomena that are linked to climate change on crop losses in Europe is bigger than expected (especially droughts and heatwaves).  

    AMERICAS – Acute food insecurity levels expected to grow in Central America

    According to a report elaborated jointly by FAO and WFP, acute food insecurity will increase in more than 20 countries over the next few months. More specifically, in Latin America the pandemic was preceded by a prolonged period of stagnant growth and rising debt levels. As a result, the region has been the hardest hit globally in economic terms, and the recovery is expected to be slower in the coming years. In Central America (Honduras, El Salvador, Guatemala and Nicaragua), the report shows projections of an increase in acute food insecurity due to the concurring effects of hurricanes Eta and Iota and the economic repercussions of the coronavirus pandemic: large areas of farmland reported damage as a result of the hurricanes, as did the productive, livestock and fishing sectors, and declining supplies and transportation caused food prices to rise.

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    AFRICA – The AfCFTA will provide growth opportunities for Africa’s agribusinesses

    The economic fallout of the coronavirus pandemic is likely to be much worse than that of the 2008 global financial crisis in Africa, due to the continent’s economic vulnerability and over-reliance on food imports. However, the agricultural processing sector in Africa is primed to take off thanks to the launch of the African Continental Free Trade Area, which will provide development opportunities for this sector. In fact, the implementation of the AfCFTA will create new growth opportunities for Africa’s agribusinesses thanks to the improvement of intra-Africa trade, which for the moment only accounts for around 27% of the continent’s total exports and 17% of total imports of agricultural products. The AfCFTA will increase the value added of Africa’s traditional exports (cocoa, coffee, tea), and a unified single market will create new opportunities for non-traditional products, such as gardening products.

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    EUROPE – Crop losses caused by climate change in Europe have tripled over the last 50 years

    A new study has examined agricultural production in 28 European countries from 1961 to 2018 and compared it with the prevalence of extreme weather events such as floods, droughts and heatwaves, and found that crop losses caused by such events in Europe have tripled over the last 50 years. Furthermore, droughts were found to be intensifying and occurring more frequently. The crops that are most affected by intensifying extreme weather phenomena are essential crops, such as cereals, which make up 65% of the continent’s agricultural land. Drought and heatwave-induced crop losses could determine ripple effects throughout the supply chain that could trigger global price spikes.

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