FAO’s Big Data tool on food chains
under the COVID-19 pandemic


NEWS DIGEST 30/7/2020

Selected daily news on food chain disruptions and countries responses to the COVID-19 impact on food chains.

 Farmers working with the new cassava grater machine at the Holima Agri-business Centre in Bo District.
©Sebastian Liste/NOOR for FAO

FOOD CHAIN DISRUPTIONS

There are fewer and fewer international banks willing to process the transactions between Iran and the rest of the world, because they do not want to risk any financial penalties by breaching the US sanctions against Iran, leaving the country's food and medical supplies vulnerable to future shortages. In the US, the hospitality industry is still recovering from the heavy blow dealt by the coronavirus lockdown, which caused the closure of around 40% of all restaurants, and job losses for 8 million people. Finally, a government-funded innovation hub in Australia will implement digital solutions to revive the country's food system (the read meat industry, in particular).

Iran struggles to buy food in a world wary of touching its money

In order to avoid possible shortages caused by the coronavirus pandemic, the US sanctions and the collapse in oil sales, Iran is trying to import food and medicine; however, banks and governments have been reluctant to take Iranian money, because they do not want to risk breaching the US restrictions. In fact, such breaches could involve substantial financial penalties for banks, companies and countries. Furthermore, maize imports from Brazil have vastly decreased (from 2.3 million tons in 2019, to 339,000 tons during the first half of 2020), because Iran is facing increased competition from other buyers, like Taiwan.

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US restaurant industry, greatly hampered by pandemic, is fighting to stay alive

In the early phases of the global coronavirus pandemic, revenues in the US restaurant industry dropped to zero overnight. Disruptions were common in almost any other industry, but the hospitality sector suffered a great deal, because it is dominated by 70% independent owners and operators, unlike the airline industry, for example (which is composed of a few large firms that can band together and raise its voice for government support). After two months from the start of the outbreaks in the USA, 40% of all restaurants closed and 8 million employees lost their job; however, some of them managed to stay afloat by focusing on takeout and delivery.

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Food Agility CRC could support Australia's meat industry's recovery

A government-funded innovation hub in Australia (mentioned in yesterday's news digest) is developing some of the solutions to the difficulties posed by the coronavirus pandemic on the red meat supply onto the domestic market. More in particular, such solutions revolve around building a data and trust-driven confidence in Australia's food system. In order to do so, it is important to identify intervention points where digitalisation could be more impactful along the food supply chain, to hand data-driven tools to agribusinesses, and to digitally connect the supply chains in order to improve resilience to future shocks.

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IMPACT ON COMMODITIES AND FOOD PRICES

While China is struggling to meet the USD 36.5 billion target for US farm good imports that is envisaged under the US-China phase one trade deal (even if Chinese buyers have recently stepped up purchases of a range of farm imports, such as soybean, maize and meat), India informed the World Trade Organization that it exceeded the 10% subsidy limit for developing countries, providing subsidies to rice farmers worth USD 5 billion (against a total rice production for the marketing year 2018-19 that was worth USD 43.67 billion).

China needs to scale up imports to reach US farm goods import target

China is still lagging behind in its USD 36.5 billion target for US farm goods imports (envisaged under the US-China phase one trade deal): soybean orders from China have recently started to pick up, but a lot more are needed for the country to reach the target. Analysts already expressed reservations about the farm goods target in January, when the trade deal was sealed, and now they are even more sceptical, because of the current coronavirus pandemic, the deterioration in the relations between China and the US, and the upcoming US presidential election.    

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India breached WTO rice subsidy limit and now it has to respect specific conditions

India has recently informed the World Trade Organization that during the marketing year 2018-19 it had breached the subsidy limit fixed at 10% of the value of the food production for developing countries. More in particular, India's breach of the Agreement on Agriculture related to the production of rice, which amounted to USD 43.67 billion during that period, while India provided USD 5 billion to rice farmers (exceeding the 10% limit). Therefore, the country has invoked a peace clause, which comes with a series of conditions related to notification obligations and ensuring food security of other countries, which India will have to respect.

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COUNTRIES' RESPONSE

The US Department of Agriculture sees the fruits of two of its initiatives that were implemented to contain the negative effects of the coronavirus pandemic on consumers and on dairy businesses: the Farmers to Families Food Box Program has distributed over 50 million food boxes to hungry families whose food security was at risk, while a new loan programme has already enjoyed success among different actors in the dairy industry, which has been consolidating around large dairy farms for some years. In Japan, a new fee introduced by the government will discourage convenience stores and supermarkets from wrapping food products in plastic individually.

USDA's Farmers to Families Food Box Program reaches 50 million boxes delivered

The US Secretary of Agriculture has recently announced that the Department of Agriculture's Farmers to Families Food Box Program has distributed over 50 million food boxes in support of American farmers and families affected by the coronavirus pandemic. This initiative has the twin objectives of strengthening the agricultural workforce and supporting agribusinesses from one side, and nourishing families in need from the other, thus also decreasing food losses and waste.

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USDA-backed loan programme will support dairy industry actors

A member of the US Senate Agriculture Committee has recently introduced a USDA-backed loan programme that would provide relief to the dairy processors, packagers, merchants, marketers, wholesalers and distributors whose activities have been hampered by the coronavirus pandemic. More in particular, the programme would help all these actors in the dairy industry to access the capital they need to stay afloat during the next stages of the pandemic, avoiding the effects of the significant market volatility caused by Covid-19.

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Japanese government announces fee for plastic bags

Since Japanese retailers generally believe that it is difficult to guarantee food safety standards if items are not wrapped in plastic, it is very common to find individually-wrapped food products in Japan (such as bananas or hard boiled eggs): this translates into the fact that Japan produces more plastic waste per person than anywhere in the world (except the US). However, this month the Japanese government introduced a mandatory fee of between JPY 3 and 5 for each plastic bag, which may contribute to curb this trend in the country.  

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REGIONAL FOCUS

Nigeria is the largest producer and consumer of cassava in the world, but this crop's production costs are quite high and productivity per hectare is low. A rural development programme implemented by the African Agricultural Technology Foundation in four Nigerian states in 2013 to improve cassava crops' productivity through farm mechanisation has been so successful that it expanded also to Tanzania, Uganda and Zambia, where it increased incomes for the farmers involved. More specifically, so far the programme improved the efficiency and timeliness of the farm operations, generating a 200% increase in yields and about a 100% increase in incomes.

AFRICA - AATF's programme is improving food security levels in four Sub-Saharan countries

The African Agricultural Technology Foundation is a non-for-profit organization that supports farmers in Sub-Saharan Africa by providing technology solutions that address productivity constraints. One of its programmes, the Cassava Mechanisation and Agro-processing in Nigeria actually promoted good agronomic practices also in Uganda, Zambia and Tanzania, encouraging farmers to use improved cassava varieties, fertilisers and herbicides, and improving post-harvest management. The programme is currently increasing incomes and improving food security levels in these countries.

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EUROPE - EU's Farm to Fark Strategy criticised by US Secretary for Agriculture

The European Union argues that the coronavirus pandemic has exposed the vulnerabilities of food supply chains in Europe, with perishable goods getting stuck at the borders after the EU 27 member states have introduced lockdown measures that limited the free movement of goods across the continent. The EU's Farm to Fork Strategy tries to tackle such issue, by empowering local sourcing: this would reduce transport needs and food losses, but hamper the international supply chains. This is why the US Secretary for Agriculture criticised the Strategy, by saying that it could jeopardise trade relations with the United States by creating a new form of protectionism in Europe.  

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Contacts: FAO Datalab (ESS-datalab@fao.org)