The world’s largest producers of palm oil, Indonesia and Malaysia, are suffering from a contraction in exports. Such a decrease was mainly caused by the coronavirus lockdown measures that hampered international trade, and forced Indonesia to temporarily turn to other markets to make up for the initial losses. For what concerns Malaysia, the country’s palm oil exports to the United States have been recently restricted by the US Customs and Border Protection, due to allegations of labor abuses in palm oil plantations. Meanwhile, Venezuela is suffering the fourth-worst food crisis in the world, after Yemen, Afghanistan, and the Democratic Republic of the Congo.
Selected daily news on food chain disruptions and countries responses to the COVID-19 impact on food chains.
FOOD CHAIN DISRUPTIONS
During the first six months of 2020, Indonesia’s palm oil exports decreased by 11% year-on-year, impacting on farmer and business operators in the national palm oil industry. The main factor that contributed to such contraction was the enforcement of the coronavirus lockdown measures in the European countries and in China. The domestic consumption during the same period, on the other hand, has increased by almost 3%.
In 2020, the United States has issued 13 import restrictions from specific countries and for different reasons (including for products coming from suspected mass prison camps in the Xinjiang region). More recently, the US Customs and Border Protection announced that it will bock palm oil imports from Malaysia, due to allegations of forced labour abuses in the country’s palm oil plantations, including child labour, physical and sexual violence, debt bondage, and retention of identification documents and wages.
The last blow to Venezuela’s food supply chain is represented by a gasoline shortage (in addition to the previous seeds and agrochemicals shortages, to the price controls that made raising crops unprofitable and to the government seizures of farms and food-processing plants) that is preventing farmers from carrying out their usual activities and food products from reaching the country’s markets. The condition in the country is so bad that a recent report described the country’s food crisis as the fourth worst in the world.
IMPACT ON COMMODITIES AND FOOD PRICES
While wheat prices are steadily increasing in the EU and Black Sea region since August, due to the unfavourable weather conditions (which are projected to determine a reduced production during the next harvest season) and a huge growth in demand, potato prices have recently reached their lowest level in three years in China, where the potato production capacity (which was drastically increased by farmers in May, when prices were much higher) turned out to be disproportionate to the Chinese demand for this food product.
According to China’s Ministry of Agriculture and Rural Affairs, potato prices in the country recorded a further decrease by 3.3% from last month, after they had already dropped both in June and July, and in mid-September they reached the lowest level this year. It is now the peak potato supply season in North China, but since the production capacity is way larger than the demand for potatoes (since prices were higher in May, the cultivation area for potatoes was expanded), prices are taking a hit.
Wheat prices are rising since August in the EU and Black Sea region, and a prolonged dry weather, coupled with a strong demand for the European, Russian and Ukrainian wheat, are expected to keep local prices firm, as long as the weather remains warm and dry during the winter wheat planting season. In fact, a lower rainfall is likely to impact on production in the EU and in Ukraine (which is forecasted to be respectively 12% and 7.4% lower than last year), while Russia is expected to produce 6% more wheat year-on-year.
Three measures to offset the negative effects of potential and real food chain disruptions in Southeast Asia, Europe and West Africa: four different parties in Malaysia (including an investment firm and an IoT solutions provider) have come together to improve real-time data collection in order to empower farmers and increase the yields; in the United Kingdom, several amendments to the Safe Haven certification scheme will provide additional food safety in the country’s potato industry; the Building Climate Resilience in Liberia’s Cocoa and Rice Sectors Project has been recently financed by the Adaptation Fund.
In order to improve Malaysia’s agriculture resilience, four parties are jointly collaborating to incorporate Internet of Things technologies in the agriculture industry, with the objective of maximizing the yields and reducing the waste of energy through real-time field data collection. Furthermore, data-driven decisions will also empower farmers in Malaysia, who will be able to use farm inputs more efficiently and streamline livestock management, thus maximizing their productivity.
Red Tractor’s Safe Haven certification scheme, which protects against any pest or disease than can be imported or introduced by seed, has recently been reviewed in the United Kingdom in order to cover areas such as a closer monitoring of water use and crop storage. More specifically, the amendments will come into force today, and they will further reduce the risk of outbreaks of ring rot and other bacterial diseases of potatoes (both imported and exported).
The Adaptation Fund (an international fund that assists developing countries in adapting to climate change) has recently approved a USD 9,592,082 financing to improve climate resilience in Liberia’s cocoa and rice industries. More in particular, this new initiative will be implemented by the Environmental Protection Agency of Liberia, and it will focus on post-harvest processes, livelihood diversification, rural transportation and water infrastructure.
Due to different factors, including a worsening trade relationship between China and the United States, several extreme weather events that reduced the agricultural production in China and the increasing urbanization process in the country, the Sino-Russian agricultural ties are getting stronger: in fact, last month China proposed a soybean industry alliance with Moscow, in order to make up for the decreasing supplies coming from the Western countries. Meanwhile, employment levels continue to decline in Latin America, where, according to the International Labour Organization, there will be an intensification of inequalities during the post-pandemic economic recovery.
Due to an increasing urbanization in the country and an ageing rural workforce, China is expected to face a supply gap of around 130 million tons of grains by the end of 2025, while the recent natural disasters impacted on agricultural production and on food prices. Furthermore, China’s trade volumes with the United States are progressively decreasing as a result of the trade wars: all these factors are contributing to an improvement of the Sino-Russian agricultural ties, despite the coronavirus pandemic.
Colombia’s National Administrative Department of Statistics has recently highlighted that 137,000 more people (compared with the same period last year) found a job in the country’s agricultural sector, while the general tendency for what concerns employment in almost all the other sectors in Colombia’s economy was rather negative. The same applies for other countries in Latin America, where around 34 million jobs were lost during the first half of 2020 due to the coronavirus pandemic, making this region the most affected in terms of employment in the whole world.