Uganda is currently struggling with the early sale and the theft of vanilla, which are both affecting farmers and the country’s international reputation as a key player in the vanilla industry (it is the second-largest producer of this product in the world). Meanwhile, in South Asia, Bangladesh’s poultry industry is still facing the consequences of the coronavirus pandemic, which has caused a mismatch of supply and demand that will continue for a minimum of 6 months and that is threatening the livelihoods of backyard poultry farmers and small traders, while some districts in Pakistan still find difficulties in procuring sufficient quantities of wheat to produce flour (in fact, many mills in the Tharparkar District were recently forced to shut down).
Selected daily news on food chain disruptions and countries responses to the COVID-19 impact on food chains.
FOOD CHAIN DISRUPTIONS
According to the Bangladesh Poultry Industries Central Council, the huge discrepancy between supply and demand in the poultry industry that was determined by the negative effects of the coronavirus pandemic and drove down prices to a 12-year low, has so far only partially recovered, and this situation is likely to remain unchanged for the remainder of 2020. Since around 6 million people in Bangladesh are involved in poultry production, these issues will affect the livelihoods of millions of small traders and farmers.
Uganda is internationally recognised as the most important producer of vanilla after Madagascar, but international buyers may turn their backs on Ugandan vanilla in the near future. In fact, Uganda’s Ministry of Agriculture, Animal Industry and Fisheries has recently claimed that the continued theft and early sale of vanilla is affecting farmers (who are losing significant income) and the country’s international reputation as a key actor in the vanilla industry.
The millers in the Tharparkar District, in the Sindh province of Pakistan, have recently lamented that they are not allowed to purchase wheat freely, because they are asked to buy it from remote areas of the district. After failing to procure the required quantities of wheat from the local functionaries of the food department, many flour mills were forced to shut down, and this has recently triggered a severe shortage of flour in the district.
IMPACT ON COMMODITIES AND FOOD PRICES
The production issues affecting the United States, Brazil and Argentina, together with an increasing import demand from China, are causing a hike in soybean prices; furthermore, the lower soybean stockpiles in the US are producing a rise in the demand for Malaysian palm oil, but the labour shortage that is currently affecting the country is causing a discrepancy between supply and demand that reflects on prices. Meanwhile, the increasing labour and transportation costs in Gujarat, India, and the long-term consequences of the coronavirus pandemic are keeping meat and poultry prices out of reach for the poor.
On Friday, crude palm oil prices have reached an eight-year high of MYR 3262 per tonne in Malaysia, due to the concerns that the current labour shortage will affect production at a time when unfavourable weather conditions in South America are threatening soybean crops. In fact, a drop in sunflower crops, the dry weather in Brazil and the lower soybean ending stockpiles in the United States are parallelly increasing demand for other edible oils (namely, for palm oil), thus determining a mismatch between supply and demand.
Despite the recent easing of pandemic-related restrictions in the Indian state of Gujarat, meat and poultry prices have remained very high over the last six months, due to several factors (including the rising fuel, labour and transportation costs and the reduced production). In most cities of Gujarat, for example, chicken and meat are currently sold on average for respectively INR 200 and INR 750 a kilo, while they used to cost about INR 150 and INR 500 before the lockdown was imposed.
As mentioned in this section of the Data Lab’s daily news digest, the dry weather in Brazil and a strong import demand from China led Chicago soybean futures to a four-year high. For what concerns maize, on the other hand, the dryness in Brazil and Argentina is likely to limit their capacity to meet the Chinese demand (China’s maize imports in the 2020-21 marketing year exceeded the USDA’s official forecasts), which has already eroded the United States’ maize surpluses.
Thanks to the investment of approximately USD 60 million, the world’s first large-scale kelp farm will be established off the coasts of Namibia: kelp is a fast-growing seaweed that sequesters more CO2 than terrestrial forests do, and it will also boosts the country’s marine biodiversity, thus improving Namibia’s local fish stocks and enhancing the prospects for the local fishing community. The Canadian government, on the other hand, has recently announced the creation of a new research agency that will be devoted to the improvement of the country’s pork sector by strengthening on-farm security and surveillance, for example. Finally, Guatemala has recently been hit by a hurricane, which damaged crops and affected thousands of people; therefore, the government announced initiatives to provide food assistance.
The Namibia Infrastructure Development and Investment Fund has partnered with Climate Fund Managers and other investment managers to create the world’s first large-scale kelp farm in the nutrient-rich waters 3 to 10 kilometres off the coast of Namibia over the next five years. The seaweed canopy that the farm will produce is going to be used to create alternative agri-food, bio-stimulant and textile products, while boosting marine biodiversity, countering ocean acidification and improving fish stocks.
Canada’s Minister of Agriculture and Agri-Food has recently announced the establishment of the Canadian Pork Promotion and Research Agency, which will support the competitiveness and sustainability of the pork sector in the country by enabling the implementation of promotional and research activities. For example, the agency will mitigate the potential risk of the emergence of African swine fever outbreaks in Canada, by investing in research activities that could improve on-farm biosecurity.
The tropical storm Eta has recently affected nine departments in Guatemala, destroying crops and flooding houses and streets. The National Coordinator for Disaster Reduction has announced that tons of food will be donated to the affected people in the areas that were most hit by the hurricane, and the Food and Nutrition Security Secretariat has promptly reacted by activating a national emergency plan to provide further food assistance.
India’s new season paddy rice purchases from local farmers rose by 21% by the end of October, but the amounts of rice that are available for traders are still ample and export prices have consequently decreased. Rice supplies are not so abundant in Bangladesh (due to the excessive rains that damaged the crops) and Vietnam, which has been importing more agricultural commodities (including rice) from Laos, and is likely to enhance its rice imports from the Philippines in the coming weeks. Meanwhile, banana producers and exporters from Latin America have recently protested against the decision of a German retailer to offer lower prices to banana producers.
Despite the coronavirus pandemic, Laos’ exports to Vietnam have increased in 2020. More in particular, according to the country’s Ministry of Industry and Commerce, the export value from Laos to Vietnam have increased to almost USD 758 million (while the import value decreased to USD 410 million), and the main items included agricultural products such as rubber, coffee, maize, cassava, rice and cattle.
Last week, India’s rice export prices have decreased due to the inflow of new supplies and to a weaker rupee, while Vietnam will have to strengthen rice imports from the Philippines as its domestic supplies are running low. The excessive rainfalls that caused repeated floods in Bangladesh, on the other hand, will cost the country a decreased rice production this year (down 15% year-on-year).
Banana producers and exporters in Ecuador, Colombia, Guatemala, Honduras, Panama and Costa Rica have recently condemned the decision of a large German retailer to cut the price paid to banana producers from next year. According to the Latin American exporters, this decision contradicts the German government’s position to ensure fair relations between all actors of the food chain, and the European Union’s commitment to achieve its sustainability targets.