Monday, April 06, 2020

The Global Supply Chain Breaks

Farmers cannot get their produce to consumers because of lockdowns that aim to stop the spread of coronavirus.  They can either feed their crops to animals or let them spoil.  The problem is getting plentiful supplies food to the people who need it - many of whom have suddenly lost their income. 

FAO’s  Abdolreza Abbassian, a senior economist at the United Nations Food and Agriculture Organization said. “You don’t have labor, you don’t have trucks to move the food, you don’t have money to buy the food.”

Across the globe, millions of laborers cannot get to the fields for harvesting and planting. There are too few truckers to keep goods moving. Air freight capacity for fresh produce has plummeted as planes are grounded. And there is a shortage of food containers for shipping because of a drop in voyages from China.  Exporters are grappling with a shortage of refrigerated containers to supply goods, as voyages of container ships from China to the West Coast are down by a quarter due to reduced demand because of lockdowns.  Port congestion is slowing shipments.

Hotels and restaurants that normally buy local farm produce are closed.

In India, as in many parts of the world, restrictions on population movement are wreaking havoc on farming and food supply chains and raising concern of more widespread shortages and price spikes to come. 
“Who is going to fill the grain bags and bring the produce to market, and transport it to mills?” asked Jadish Lal, a merchant in Punjab’s Khanna grain market, the country’s largest.

In America, a lack of Mexican migrant laborers to pick the harvest means growers face the prospect of rotting crops. Similar shortages of workers in Europe mean vegetable farms are missing the window to plant. Spain has a shortage of migrant workers from countries such as Morocco who cannot travel. In Italy, about 200,000 seasonal workers will be needed in the next two months. In France, Agriculture Minister Didier Guillaume has issued a rallying cry to what he called France’s “shadow army” of newly laid off workers to replace the usual migrant workers on the farms. 
“If the call is not heard, the production will remain in the fields, and the entire sector will be damaged,” said Christiane Lambert, head of France’s largest farm union, FNSEA. 

In Brazil - the world’s top exporter of soybeans, coffee, and sugar - farm lobby CNA said the industry faces a range of problems, including challenges hiring truck drivers to haul crops and a shortage of spare parts for farm equipment. In Argentina, the world’s top exporter of soymeal, exports have been delayed as the government ramps up inspections of incoming cargo ships. 

  A sharp decline in air traffic has cut deeply into capacity to move fresh produce long distances. In Canada, imports of speciality Indian vegetables such as onions, okra, and eggplant have dropped by as much as 80% in the past two weeks as air cargo space was reduced.

Clay Castelino, president of Ontario-based Orbit Brokers,  figured the sharp decline meant the food had simply gone to waste: “With perishable food, once it’s gone, it’s gone,” he said. 

Andres Ocampo,  a fruit importer, relied on commercial flights to shift papayas and other produce from Brazil.  He says volumes of the company’s imports from Brazil have dropped by 80%.
African nations - where many people spend more than half of their income on food - are among the most vulnerable to disruptions in staple food supplies. Africa is the fastest-growing consumer of rice, accounting for 35% of global imports and 30% of wheat imports. Sub-Saharan Africa alone is the third-largest rice consuming region, yet holds the smallest grain inventories - relative to demand - of all regions, because of tight government budgets and limited storage.

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