Hapag-Lloyd (a German international shipping company) has recently been moving empty containers from the United States to Asia as fast as possible, without waiting for loads out of North America, due to a shortage of containers that was mainly caused by the sudden increase in imports (especially soybean imports in China): this affected the American agriculture shippers (especially those that operate in the interior). Meanwhile, the recent arrival of the rains in Australia (and more specifically, in Queensland and New South Wales) after a long period of drought, has caused more harm than good: the supply of cattle has tightened, and so did livestock exports to Southeast Asia, and they also slowed down the production and distribution of wheat and barley.
Selected daily news on food chain disruptions and countries responses to the COVID-19 impact on food chains.
FOOD CHAIN DISRUPTIONS
A global leader in container shipping has recently suspended the carriage of container shipments for the American exporters of agricultural products (such as soybeans), due to an acute shortage of containers in Asia. The shortage was probably caused by an unprecedented demand for the US consumer imports by containers from Asia. For most of the American grains and soybeans exporters, this suspension may represent a serious issue.
The prolonged period of drought in Australia, followed by the recent improvement in weather conditions, has led to a tighter supply of cattle as farmers continue to rebuild their depleted herds. Consequently, cattle export prices (especially for the Southeast Asian importers, such as Indonesia) have increased and export volumes have decreased 28% year-on-year.
As mentioned in the previous snippet, there have recently been widespread storms and showers in southern Queensland and northern New South Wales, Australia, after a prolonged period of drought. The heavy rains have slowed or even stopped the harvest on many farms and created difficulties to trucks transporting agricultural produce from most properties in those areas. Meanwhile, old-crop wheat and barley stocks have depleted.
IMPACT ON COMMODITIES AND FOOD PRICES
Several factors, including the implementation of policies that aim at curbing the current account deficits in Pakistan, the recent disruptions to the food supply chain caused by the coronavirus pandemic and a decreased food production (wheat, for example) in the country, have all contributed to keep the food inflation rate high since August 2019. More recently, the US pork prices have been increasing while the situation is opposite in Germany: these two trends are connected, as the emergence of a case of African swine fever in a boar herd close to Poland caused the suspension of German pork imports from Asian countries such as China and Japan, creating an opportunity for the United States’ pig market.
Despite having eased from 24% in January to around 13% recently, Pakistan has been struggling with a double-digit food inflation ever since August 2019, and the daily calorie intake of many low to middle-income families was affected especially from the increase in prices for wheat, sugar, pulses and vegetables. There are many factors behind this increase in Pakistan’s food inflation rates, including the new fiscal stabilisation policy and the pandemic-induced disruptions to the country’s food supply chain.
The American pork prices have increased since this summer, while they have declined sharply in Germany over the same timeframe. Both occurrences are due to the emergence of a case of African swine fever in a wild boar herd close to the border with Poland. In fact, many Asian countries (including China) suspended their pork imports from Germany, thus creating an opportunity for its rival exporting nations, such as the United States.
While Chinese livestock farms are focusing on adopting Internet of Things-based solutions to track their livestock and better prevent the spread of diseases in order to improve their production, the governor of the state of Indiana, in the United States, has recently announced the provision of additional CARES Act funds to the meat processing facilities that were affected by the consequences of the coronavirus pandemic. In El Salvador, on the other hand, a food packaging company has created a biodegradable protective packaging for banana bunches that allows sunlight to pass but prevents sunburns on the fruits, and keeps them protected from humidity, pests and other adversities.
More and more livestock farms in 31 provinces in China (including Beijing, Hainan and Shandong) are implementing the agricultural Internet of Things technology to cattle farming, as it improves production by facilitating the breeding and epidemic prevention processes. Thanks to this technology, farmers can track the activities of their livestock to correlate movements with specific behaviours, which improves the prevention of cattle raiding and the early detection of diseases.
After two years of research and development, a Salvadoran food packaging company has announced a new eco-friendly packaging product that protects bananas, thus helping producers achieve premium prices thanks to the enhanced quality of their products. More in particular, this new packaging solution is made of Kraft paper, which allows fruits to better resist humidity, harsh treatments, natural weather adversities and pests.
The governor of Indiana, USA, has recently announced the provision of an additional USD 4 million in Coronavirus Aid, Relief and Economic Security (CARES) Act funding for the Indiana Meat Processing Expansion and Development Grant Program, which aims at helping the local meat processing agribusinesses offset the negative effects of the coronavirus pandemic on their activities. More in particular, the funds can be used to purchase personal protective equipment and food safety equipment, and to provide employee training.
The trade relationship between China and Mongolia has strengthened in recent years, and also survived the disruptions caused by the coronavirus pandemic: for example, Mongolia announced the donation of 30,000 sheep to China a while ago, and the first batch (consisting in 4000 sheep) has recently arrived in the country. In Sub-Saharan Africa, on the other hand, an aquaculture company has developed a new cloud-based system that will enable companies to both optimize their fish production (thus supporting fish farmers) and make improvements to their environmental sustainability.
In recent years, China and Mongolia have had frequent trade exchanges, so that China has slowly become Mongolia’s largest trading partner and the second largest source of investment. Despite the global coronavirus pandemic, trade between the two countries is still active under strict prevention and control measures: for example, the first batch of 4000 (out of a total of 30,000) sheep donated by Mongolia has recently arrived in China into 30 large trucks. They will be processed along the Sino-Mongolian border, and then shipped to the Hubei province.
The first obstacle to a full realization of Africa’s aquaculture potential is the lack of appropriate technology. However, Sub-Saharan Africa’s largest aquaculture company is working for the achievement of this goal: in fact, it has recently announced the launch of a cloud-based production management and business intelligence platform that will contribute to lower production costs for fish farmers and to improve their operational efficiency, and therefore their profits and livelihoods.