In the United States, the wildfires that hit California this year may have heavy repercussions on the domestic water supply and irrigation systems, as the heating and melting of the pipes determines a release of toxins that may harm people and affect the soil. The Philippines, on the other hand, is struggling with a contraction in banana production and exports, which is determined by several factors, including disease and pests affecting the plantations, and an increasing competition from Ecuador, Cambodia and Vietnam. Finally, Cuba’s citizens are struggling amid the shortages of basic goods determined by the US’ sanctions and by the global coronavirus pandemic.
Selected daily news on food chain disruptions and countries responses to the COVID-19 impact on food chains.
FOOD CHAIN DISRUPTIONS
In the aftermath of the wildfires that have ravaged large portions of California’s territory this year, experts are studying what happens to municipal water systems after a fire. So far, they have found out that water in the pipes can become contaminated with different volatile compounds (such as benzene, naphthalene and methylene) at levels that exceed the limits set by the Environmental Protection Agency, and that plastic pipes release toxins in the soil when heated, melted or burned.
The growth of the Philippines’ banana industry is almost stagnating, due to the increasing competition in this sector and to the damages caused by the Panama disease and the fusarium wilt to banana plantations. The national production has been decreasing due to a strong competition with Ecuador, while Cambodia and Vietnam are producing the same banana varieties, with the same quality, at much lower prices. Moreover, South Korea and Japan imposed respectively a 30% and 18% tariff on Philippines’ imports.
The shortages of basic goods in Cuba, caused by the tighter sanctions imposed by the current US administration, have been exacerbated by the coronavirus pandemic. In fact, Cuba imports about 60% of its food, fuel and agricultural inputs, therefore the lockdown restrictions on the movement on goods further worsened the country’s situation.
IMPACT ON COMMODITIES AND FOOD PRICES
Two opposite weather conditions in eastern and western Australia cause similar concerns for the country’s grains production and trade, that affected the national estimates for the 2020-21 wheat and barley production, which were scaled back. An expected increase in rice production in India and Thailand, on the other hand, is driving down the prices, while Bangladesh has recently stabilized rice wholesale prices and Vietnam has seen his rice exports muted with the absence of buyers from the Philippines. Finally, food prices keep growing in Iran, due to the ripple effects of the hike in gasoline prices toward the end of last year, and the government’s poor management of the coronavirus health crisis.
La Niña normally delivers above-average rainfalls in eastern Australia, while crops in western Australia are experiencing a scarcity of rains: the concerns of a wet harvest and the deteriorating yield prospects respectively in the eastern and western regions of the country have reduced the sales of new-crop wheat and barley. Furthermore, the national estimates for the 2020-21 wheat production fell by 125,000 tons to 28 million tons.
Rice prices are decreasing in India and Thailand, thanks to an expected increase in production, while Indian export prices are more stable, due to a rising rupee. In Vietnam, on the other hand, the lower water levels in the Mekong Delta (the country’s “rice bowl”) may represent an indication of a future drought or salinization during the upcoming crop season. Finally, Bangladesh fixed wholesale prices for rice this week, after they rose due to the government’s attempt to strengthen the scarce supplies.
Not a day goes by without news about the growing prices of essential goods in Iran: in recent months, Iranians have witnessed considerable increases in the price of bread, rice, cheese, red meat, chicken and eggs. The main cause for such price increases is represented by the gasoline price hikes in November 2019 (which had a wide array of ripple effects), and the Iranian authorities’ mismanagement in containing the coronavirus outbreak in the country.
After cancelling a tender due to the high bid of USD 274 per ton and the suspicion of collusion, Pakistan’s government has recently approved the import of 180,000 tons of Russian wheat: in total, 430,000 tons of wheat have been imported so far, and another 1.1 million tons are expected to be imported by the end of December 2020. In India, the sugar industry is benefiting from an INR 50 million export subsidy from the government, which has already had positive effects on the country’s sugar exports. In the US, on the other hand, the Department of Agriculture and the Food and Drug Administration have recently partnered to streamline dairy exports by improving their support to foreign countries that are interested in purchasing American dairy products.
On Friday, Pakistan’s federal government approved the purchase of 180,000 tons of wheat from Russia at a price of USD 279 per ton, by waiving all taxes and levies on government-to-government wheat imports. Meanwhile, the Parliamentary Leader of the Pakistan People’s Party in the Senate demanded the establishment of a commission to investigate the wheat crisis in the country, which according to him has originated from the inefficiency and incompetence of the government.
The Indian government granted an export subsidy worth more than INR 50 million to the country’s sugar companies, thanks to which they were able to increase India’s sugar exports and overcome the chronic situation of oversupply in the domestic market. In fact, despite the challenges posed by the global coronavirus pandemic, sugar exports from India increased by more than 2 million tons year-on-year in August.
The US Department of Agriculture and the Food and Drug Administration have recently announced that they have signed a Memorandum of Understanding to ease the country’s dairy exports by maximizing the US government’s support for the requests of American dairy products from foreign governments. For example, foreign governments will be provided with a detailed reference of each agency’s involvement in the export of US dairy products, which will help address their questions.
Latin America and the Caribbean is one of the regions of the world were most food gets wasted or loss (around 220 million tons every year), while almost 50 million people suffer from hunger. The coronavirus pandemic has aggravated this situation, but it may also represent a drive for the transformation of the food systems in the region: new technologies that have positive repercussions on the food supply chain (like AI, cloud and blockchain) were implemented to face the difficulties posed by the pandemic on trade, and there could be an alignment of the EU’s Green Deal’s objectives for the post-pandemic recovery to sustainable development and food systems transformation in the developing regions of the world, such as Latin America.
The disruptive effects of climate change on food systems are increasing the risk of food insecurity for millions of households in the world, and this often represents a pathway towards conflict and violence. The EU’s Green Deal constitutes a great opportunity to align the objectives of the COVID-19 recovery plan in Europe to climate-friendly development and food systems transformation in the developing regions of the world, by investing portions of private capital in the achievement of the Sustainable Development Goals.
11.6% of all food goes to waste in a year along the supply chain in Latin America and the Caribbean (which is equivalent to 220 million tons and USD 150,000 million in economic losses), while around 47 million people in the region are food insecure. More in particular, 16 million tons and 10 million tons of food are wasted or lost respectively in Argentina and Colombia. While food losses occur during the first stages of the supply chain (production, processing and transport), food waste is predominant during the marketing and consumptions phases.
Latin America is one of the largest food exporting regions in the world, so that the development of the food industry is fundamental for its economic growth. The coronavirus pandemic accelerated the transformation of the food industry in the region, by leading companies throughout the food supply chain to use new technologies, such as artificial intelligence, cloud and blockchain systems, which allow for a better food production planning, soil assessment and soil monitoring.