The European Union allocated KES 110 million to an ongoing fruit processing project in the arid and semi-arid areas of Kenya, that aims at building markets, fruit processing factories, food storage and seed production facilities; however, the construction has been delayed, and now banana farmers are suffering from its effects. Similarly, wheat farmers in Nigeria are currently unable to keep up with the country’s demand for wheat and feed grains due to the high cost of agricultural inputs, while Pakistan is still suffering from the wheat crisis that began more than a year ago. Kenyan seafood traders, on the other hand, have recently noticed that Chinese traders (who used to purchase 95% of their live lobsters) are more and more frequently buying lobsters directly from fishermen at a higher price than the normal market price, thus leaving them with no suppliers. Somaliland also has rich marine assets but cannot leverage on them due to a lack of appropriate infrastructures.
Selected weekly news on food chain disruptions and countries responses to the COVID-19 impact on food chains (05/04/2021 to 11/04/2021)
FOOD CHAIN DISRUPTIONS
Despite the urgent need for a steady banana market in Kenya, the construction of a KES 110 million European-funded banana processing plant in the Taita-Taveta county (in the southern part of the country, on the border with Tanzania) is currently overdue, as it should have been completed by January. The lack of a stable market for bananas causes a lack of standard prices, which entails that bananas either go to waste or are sold at throw-away prices. Kenyan seafood traders are also under pressure recently, due to the fact that many Chinese buyers have been cutting the traders off the supply chain as restaurants and export markets closed after the beginning of the coronavirus pandemic. For example, China is the main destination for 95% of the live lobsters that are fished in Kenya, but the Chinese dealers have recently started sourcing lobsters directly from fishermen at higher prices than the market price.
Pakistan and Nigeria are both currently going through a wheat crisis. In Pakistan, it started towards the end of 2019 and still has repercussions on wheat and wheat flour prices in the domestic market; however, the State Bank of Pakistan has recently announced revisions to its framework for bank financing for private sector wheat procurement (which seems to be one of the main sources of the difficulties that led to the wheat crisis). In Nigeria, on the other hand, wheat production is out of step with the domestic needs for this staple (mainly due to the high prices of agricultural inputs and bad weather conditions), and despite this, the country’s growing population and increased feed grains requirements are likely to drive up Nigeria’s demand for wheat in the coming years.
Somaliland has rich marine assets (an 850 km long coastline with 400 different species of fish that could be leveraged commercially), but it lacks the necessary infrastructures: therefore, the country’s fish stocks are currently exploited by foreign countries, or by piracy from neighbouring countries. More in particular, Somaliland’s cold chain infrastructure (which is fundamental to reduce food waste and to maintain food quality in the fishing industry) is practically inexistent, so that fish is generally spoiled before it actually reaches the markets. Furthermore, Somaliland lacks appropriate boats, storage facilities and nests, so that it is particularly difficult to store, process and transport fish in the country. Somaliland’s marine life would be more than enough to be exported to neighbouring landlocked countries, but due to its limitations, a country like Ethiopia imports fish from China, Belgium and Indonesia.
IMPACT ON COMMODITIES AND FOOD PRICES
Over the last year, food prices have kept increasing in the United States, and especially meat and egg prices, even though they are now below the pandemic peaks (when 40% of the US beef processing capacity was offline, with pork not far behind, and poultry producers trimmed their flocks); furthermore, according to the experts, food prices will stabilize as more and more people will get vaccinated in the country. Food prices are currently on the rise also in Ghana and in Bangladesh: in the first case, cassava, yam and plantain traders in Accra’s markets claim that the dry season is decimating the supplies of these agricultural products, which coupled with a high demand is causing sudden price increases; in Bangladesh, on the other hand, consumer spending has increased remarkably ahead of Islam’s holy month of fasting, which led the country’s consumer association to ask the government to slash import duties on some essential items, including edible oil and sugar.
The Consumer Price Index shows that food prices keep rising amid the ongoing challenges of the coronavirus pandemic in the United States: as of February, the average price of fruits and vegetables, for example, has increased by 3.4% year-on-year, while the price of meat, poultry, fish and eggs is up 5.2%. More in particular, due to a strong export demand, meat prices have stabilized above year-ago levels (though they are now below the pandemic peaks of 2020, when restaurants closed and many meat processing plants were shut down); similarly, the export demand for eggs jumped and drove egg prices up when poultry producers started reducing the egg supply. However, according to the experts, some of the rising food prices should ease soon, as more and more people will get vaccinated in the United States.
According to a survey conducted by the Ghana News Agency, food prices in some of Accra’s markets have shot up this week, due to the fact that some foodstuffs are now out of season. More in particular, cassava, yam and plantain are the most affected by the price hike, as their supplies are currently not abundant in the markets, while the demand is still quite strong. Furthermore, food traders in the capital city are complaining that the combined effect of a scarcity of plantains and of the coronavirus pandemic is slowing down their business activities: according to a plantain supplier in the Cocoa Marketing Board market, it is normally possible to supply about three cars of plantain each week, while this week it was difficult to get even just one car.
Consumer spending has vastly increased in the run up to Ramadan in Bangladesh, amid the rising prices of essential food products, such as rice, edible oil, sugar, chicken meat, milk and fish (the prices of onion, date and chickpea, on the other hand, remain stable for the moment). For this reason, the Consumers Association of Bangladesh has urged the government to cut the import duties on some of these essential foodstuffs, and especially edible oil (that is up 30-46% year-on-year) and sugar, in order to improve market monitoring in view of the impending fasting month (which will start in mid-April). For what concerns fish, on the other hand, the country’s government has recently imposed a fishing ban on major sanctuaries as a result of a fisheries management initiative that was co-led by WorldFish and the US Agency for International Development. According to traders, the initiative’s immediate effect was an 10-18% increase in fish prices.
This week’s media coverage focuses on initiatives aimed at improving agricultural productivity in America and in Western and Southern Africa. In Hawaii, the local government has set out a plan to allocate USD 1.5 million to different agricultural entrepreneurs, with the objective of improving the agricultural sector’s contribution to the state’s GDP by enhancing productivity and addressing supply chain bottlenecks (lack of infrastructure such as cold storage and processing facilities, for example). In Ivory Coast, on the other hand, an initiative that is co-led by the OCP Group and the International Islamic Trade Finance Corporation will provide Ivorian rice farmers with agricultural inputs, training and an enhanced access to market. Finally, Zimbabwe is implementing a five-year strategy that plans to guide the country through the attainment of food security by 2022 and the increase in household incomes by 100% by 2024. Meanwhile, the country’s government will also focus on capacity development, in order to turn around 18,000 small-scale farmers into agricultural entrepreneurs by 2025.
The Hawaii Department of Agriculture (HDOA) has allocated USD 1.5 million for the implementation of the Grow Hawaii Agriculture Initiative 2021, which aims at improving the US state’s commercial agricultural production in order to increase the contribution of the sector to Hawaii’s gross domestic product. Under this new initiative, the HDOA will award about six proposals from commercial agricultural enterprises (local farmers, ranchers and other operators) for up to USD 250,000. These funds will be used by the beneficiaries to implement one or more of the following strategies: Expansion (expanding the size of operations), Input Chain Enhancement (improving production), Technology (improving efficiency), Supply Chain Enhancement (addressing supply chain bottlenecks) and Value-added Products (increasing value-added potential).
OCP Africa (the subsidiary group of one of the world’s largest producers of phosphate fertilizer) has recently partnered with the Arab Africa Trade Bridges Program (a multi-organization program that promotes trade between the two regions), which will support OCP’s Agribooster initiative in Ivory Coast. This initiative aims at providing 20,000 rice farmers in the country with all the conditions that are necessary to improve their yields and incomes, including high-quality fertilizers, hybrid seeds, training in good agricultural practices and soil fertility, and an improved access to market. Furthermore, the Agribooster initiative will also undertake to protect the farmers against the health risks posed by the ongoing coronavirus pandemic by providing them with appropriate personal protective equipment.
While Namibia’s Directorate of Agricultural Production, Extension and Engineering Services periodically provides seeds to farmers that produce crops under the Dryland Crop Production Programme, Zimbabwe’s government has set out an Agriculture and Food Security System Transformative Strategy that aims at attaining food security by 2022 and increasing household incomes by 100% by 2024. In order to do so, this strategy plans to reduce Zimbabwe’s food import bill, to enhance value addition (drawing on the tobacco value chain transformation strategy that already enables the improvement of the tobacco production in the country), to create around 1 million jobs and, ultimately, to increase total exports by 60% in four years. In addition, the government aims to transform about 18,000 small-scale farmers into agricultural entrepreneurs by 2025.
One of the largest household brands and palm oil buyers in the world has recently expressed its intent to link conservation funding directly with company operations, by backing a scheme that aims to invest USD 1 billion in forest conservation and restoration across Southeast Asia over 25 years: in fact, much of the destruction of forests are blamed on the production of commodities like palm oil, as they entail the clearing of forests to make way for plantations. In Africa, on the other hand, a new study has underlined how much specific countries rely on marine fisheries, which was highly impacted by the coronavirus pandemic and is affected by fragile value chains and weak management institutions. Finally, the EU’s Farm to Fork Strategy, which is at the core of the European Green Deal (the set of policies that aim at making the continent climate neutral by 2050), contains several targets; many of them impact the dairy sector, but they are difficult to reach because they involve commitments from every stakeholder in the value chain.
According to the Global Forest Watch, last year, tropical forest losses around the world equalled the size of the Netherlands, especially due to the production of commodities like palm oil and to the construction of ranches, farms and mines. However, many big palm oil buyers are investing in technologies to monitor their supply chains and support the decrease in deforestation. For example, the largest food company in the world has recently announced that it will support the conservation and restoration of around 500,000 hectares of tropical forests in Southeast Asia, through the investment of USD 1 billion in over 25 years. These funds will be channelled through the Rimba Collective, an Indonesian impact investment firm and currently the largest private-sector forest conservation initiative.
The African fisheries sector is currently suffering from fragile value chains and marketing, weak management institutions and other serious issues related to the governance of the fisheries resources. A study conducted during the beginning of the coronavirus pandemic last year in four African countries by a department of the African Development Bank revealed that these countries’ economies depend heavily on marine fisheries. For this reason, the four countries have taken timely measures to avoid severe supply disruptions caused by the pandemic, but the study makes a number of suggestions in order to strengthen the resilience of the continent’s fisheries sector after the end of the global health crisis, such as strengthening the collection of gender-disaggregated data and establishing infrastructure and support services at landing and processing sites.
The European Union’s Farm to Fork Strategy (which aims at making Europe’s food systems fair, healthy and environmentally friendly) contains several targets related to the dairy sector: one of them consists in having at least 25% of all farmlands under organic farming in 2030, while currently only 4% of the European dairy herd is organic. An increase in organic dairy farming puts pressure on milk volumes and entails an increase in prices due to the additional costs incurred, so that the “organic target” is likely to encounter many obstacles in its realization. Other challenges include redirecting EU funds from conventional practices to sustainable farming practices, overcoming transition-related costs and ensuring consumers value sustainability-related efforts made in agriculture (currently, only one in five EU consumers is willing to charge more).