A new invasive pest is ravaging vegetable and fruit crops in Florida: the brown marmorated stink bug, which is native to Eastern Asia, has already caused millions of dollars of damages in the US, by making fresh produce unusable for processed products. In Brazil, on the other hand, the efforts of few ranchers to select livestock from breeders that do not adopt unsustainable practices such as deforestation are bound to fail due to lax land registries and weak law enforcement in the country. Meanwhile, volatility in the commodities markets is increasing, and analysts expect extreme price moves in the coming months.
Selected daily news on food chain disruptions and countries responses to the COVID-19 impact on food chains.
FOOD CHAIN DISRUPTIONS
The brown marmorated stink bug, which is native to Eastern Asia, is a new invasive pest in Florida: the first specimens were found on chestnut and persimmon trees, but the species can feed on over 300 different plants. The pest has already caused millions of dollars of damages in the United States, ravaging vegetables, fruits, nuts, ornamentals and row crops. More in particular, brown marmorated stink bugs make fruits unusable for processed products and unmarketable as fresh products, and also feed on leaves, giving them a spotted appearance and interfering with photosynthesis.
When the world will emerge from the coronavirus pandemic, great uncertainty will surround the trade in commodities, which will lead to wild volatility and therefore to extreme price moves. In order to avoid unrest, uprisings and worldwide famines, ensuring a steady flow of commodities is paramount: the world still has ample inventories of agriculture products, but many factors suggest that commodities are moving from supply surpluses to demand-driven markets, and many demand drivers in the coming months create a renewed sense of urgency to ensure inventory is on hand.
One Brazilian farmer tried to push other farmers to buy cattle only from breeders who could prove they were not ranching illegally cleared land, asking a consultant to check the suppliers’ farms for deforestation by using satellite maps and a government list of embargoed properties. However, his effort failed, because nearly half of his cattle came from suppliers who committed environmental violations, such as deforestation. The reason for this are lax land registries, weak law enforcement and the informal rules surrounding Brazil’s beef business.
IMPACT ON COMMODITIES AND FOOD PRICES
The United Sates’ seafood industry has greatly suffered during the coronavirus lockdown, and now it is struggling with the disruptive effects of hurricane Laura, which has caused power and water outages, at least 12 deaths in Louisiana and 4 deaths in Texas, and it forced many fishers in these states to dock their shrimp and fishing boats during the peak season. The exports of red meat from the United Kingdom, on the other hand, have been steadily increasing over the first 6 months of the current year, thanks to the fact that it is more affordable and health concerns tend to diminish in times of crisis. In Pakistan, the local authorities are still trying to face the wheat shortage that is causing flour prices to increase.
The US seafood industry has seen some serious suffering this year, as restaurant closed in response to the coronavirus outbreaks and the pandemic threatened fishermen working in close quarters. More recently, hurricane Laura (one of the most powerful storms ever to hit some of the states, such as Louisiana) forced fishermen to dock shrimp and fishing boats, leading the industry to a halt and causing revenues to fall drastically during the peak season (the Texas Shrimp Association estimates that shrimpers lose up to USD 5000 for every night they can’t fish).
In recent months, red meat exports (especially to Japan, the Philippines, Ghana and Canada) and the domestic sales of animal-based produce in the United Kingdom have increased, despite the ongoing difficulties caused by the coronavirus pandemic. In fact, health loses its predominance in the consumers’ preferences during hard economic times, and red meat has been on average 16% cheaper than meat-free products during the first half of 2020 (when sales of red meat increased by 14% year-on-year).
In Balochistan (one of Pakistan’s four provinces), the provincial government has set up many stalls in different parts of the city of Quetta, where flour is sold at affordable prices: a 20 kg bag of flour is sold on average for PKR 930, while normally the price is set at PKR 1200. This is due to the fact that flour prices have skyrocketed recently, because the country is still facing a shortage in the supply of wheat and the floods are further aggravating this issue, hindering flour procurement.
Both Zimbabwe and Nigeria are planning to renovate fundamental characteristics of their agricultural systems: the former is trying to fight bad weather and an insufficient supply of agricultural inputs for farmers by increasing maize arable area by 1.5 million hectares in order to boost the production during the next cropping season, while Nigeria will improve the production of chemical fertilizers in order to cut food production costs, by investing in more initiatives to source natural gas (which is used as a primary raw material for the production of fertilizers). In the US, on the other hand, private carriers reacted to the difficulties posed by the pandemic on supply chains by enlarging their fleet and hiring more drivers.
So far, Zimbabwe has always been unable to produce enough maize to satisfy its local demand, because of bad weather conditions and insufficient agricultural inputs for farmers. For example, during the 2019-20 season, the country produced 1.1 million tons of maize, against the national requirement of 2.3 million tons for both human and livestock consumption. However, for the next cropping season the Ministry of Lands, Agriculture, Water and Rural Resettlement has set 1.5 million hectares for planting maize through a summer cropping program that was funded through public and private entities.
In response to the onset of the coronavirus pandemic in Nigeria, the government has immediately focused on tackling food insecurity concerns, fuelled by labour shortages, border closures, and by the fact that Nigeria is a net seeds and agricultural inputs importer. In order to help agricultural producers, the government developed strategies to facilitate the free movement of food and agricultural inputs. Furthermore, it reduced the costs of food production by improving the production of fertilizers, which are normally imported in Nigeria.
Amid a spike in e-commerce demand and in takeout orders in restaurants from consumers, which are caused by the coronavirus pandemic, some private fleet operators in the United States found themselves struggling with a surge in freight. This change in consumers’ preferences has altered the supply chains’ structures and private carriers’ operations in the whole world: for example, private commercial truck fleet grew, many new delivery drivers were hired, and business processes were changed to keep employees safe from the coronavirus.
In Latin America (and especially in Chile and Peru), e-commerce grew considerably during the early stages of the coronavirus pandemic, reaching an average increase of 230%, while efforts to tackle deforestation in Brazil have been mostly fruitless. In Colombia, on the other hand, it seems that cocoa is slowly replacing coca plantations (which are grown through illicit practices), thus also alleviating poverty and lowering conflicts. Meanwhile, the European Union is funding developing projects that aim at easing water shortages in Sub-Saharan countries, such as Zimbabwe, Zambia, Malawi and South Africa.
In Colombia, cocoa is replacing illicit coca plantations used for the production of cocaine: therefore, it is increasingly becoming a pathway out of both conflict and poverty. Furthermore, cocoa is not a driver of deforestation in Colombia like soy is in Brazil, because small producers must still adhere to zero-deforestation practices. Therefore, cocoa production in Colombia should be supported to help legal businesses develop and thrive.
The coronavirus pandemic gave e-commerce in Latin America the opportunity to thrive: in Peru, for example, revenues for this sector increased by 900% in just one month in April, while it has increased by 230% on average in the whole region. However, due to the widespread disruptions all along the supply chains, caused by border closures, it was difficult to ensure a timely and stable supply of items (including food products): in Chile, for example, 51% of all dispatches by Internet were not delivered on time.
The Stockholm International Water Institute organizes an international event that represents an annual spotlight for ongoing problems with access to safe water globally, the World Water Week. This year, it took place online during last week, and focused on South Africa, Malawi, Zimbabwe and Zambia. The European Union has worked to improve access to safe drinking water across these countries, by funding projects that target rural areas where water shortages are made worse by poverty, gender factors and government blind spots.