Commodity Conversations Weekly Press Summary

As the spread of the new coronavirus is expected to impact global trade flows, the US President said the government might offer farmers more trade aid in 2020 to compensate for the lack of purchases from China. The USDA said the news, announced on Twitter in all-caps, was a surprise. Meanwhile, lawmakers are looking at how the trade aid money – over USD 23 billion since 2018 – is being distributed. Critics point to the fact that foreign firms like Brazil’s JBS are receiving hundreds of millions of dollars in government funds.

The giant meat processor JBS received some more good news this week as the USDA ended a ban on raw beef imports from Brazil. The agency blocked Brazilian imports in 2017 on health and safety concerns. Otherwise, US efforts to isolate Iran have allowed it to take the position of biggest pistachio grower in the world. This deep-dive by Bloomberg looks at how geopolitics, climate change and resource mismanagement created challenges for Iranian producers, along with how investors are looking at new potential pistachio-growing countries, like Georgia, Uzbekistan, and Azerbaijan. 

China’s virus outbreak is having indirect but impactful consequences for the food industry worldwide, such as the fall in Chinese fertiliser production. India usually imports 50% of its diammonium phosphate from China but the lockdown of Hubei province is forcing India to look for alternative suppliers. In North Korea, the price of many basic goods started to fall again after a spike caused by the closure of the border with China. Sources reported that the price of imported goods dropped as distributors were forced to release their stocks.

China is also one of the largest producers of alternative sweeteners and Coca-Cola warned that the ongoing virus will lead to a shortage. Although China is the group’s third-biggest market, it expects that the coronavirus will only affect revenues by 1-2% in the quarter. Likewise, Danone said sales will be down about USD 100 million in the first quarter because of the virus. Danone also pledged to spend USD 2.2 billion over the next three years in order to “build climate change resilience” into the business. The money will go to reduce plastic waste and to lower the carbon footprint of its supply chain. 

The environment was also on the minds of British people as the UK is looking to launch post-Brexit trade talks. A YouGov poll showed that 57% of respondents thought the UK should enforce stricter environmental laws once it leaves the EU, while 37% said food safety standards should be strengthened, compared to 6% who thought they should be loosened. Moreover, farmers are worried as the environment secretary said he could not guarantee that food standards will not be lowered. British farmers are afraid they will be unable to compete amid cheap imports, funding cuts and a restriction on hiring immigrant workers. 

The Netherlands only narrowly approved the free-trade agreement with Canada, in force since 2017, amid pressure from local farmers afraid of competition from imports. Farmers across the bloc have also opposed efforts to sign new deals with Mercosur, Australia and New Zealand. Otherwise, the EU’s efforts to punish Cambodia for human rights violations are being challenged as the Cambodian Prime Minister said the state will compensate for losses faced by local companies. The EU ended about 20% of the preferential duties under the Everything But Arms scheme but the PM said he will offer tax breaks to affected exporters. 

Pakistan declared a state of emergency due to a locust outbreak that has destroyed crops, including wheat and cotton. The Prime Minister approved a plan which includes buying planes to spray pesticides. India’s agriculture ministry blamed the country for not reacting fast enough and letting the invasion spread, adding that some 400,000ha of crops in northern India had been affected. In response to a video of locusts in Xinjiang, China, the agriculture department said this was a desert variety which was unlikely to survive in China. Besides, the Himalaya provides an efficient wall against the migration of locusts, while the country has among the world’s best locust monitoring and extermination systems, it said. 

The situation is more serious in Africa, however, as locusts are devastating crops in South Sudan, having crossed over from Uganda. Locusts have also been reported in Kenya, where farmers asked the government to intervene to avoid significant crop losses. The UN warned that the locust invasion could spread to more countries which could potentially create a food crisis. Somalia has declared a national emergency and the UN is appealing for funds to fight the locusts with aerial spraying. Climate change is likely behind the outbreak, which is the worst in 25 years, the UN said.

As farmers struggle with volatile weather patterns and unpredictable trade development, a new tool appeared to help them generate more income: YouTube. The website revealed that farming videos have seen their popularity grow twice as fast as cosmetic videos. While some channels focus on sustainable or organic practices, the most popular YouTubers are young, large-scale, conventional farmers. We particularly liked this video on how to farm Rice Krispies. 

This summary was produced by ECRUU

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