Last week, we talked about the importance of supermarket workers in countries that are under lockdown; this week the emphasis has moved higher up the supply chain to truck drivers and labourers. Exporters in Brazil are saying there aren’t enough trucks to bring commodities to the ports, which in turn is causing demurrage costs. Truck drivers say they are struggling because the usual amenities they require, such as highway stops and restaurants, are closing down. In India, labourers are reportedly worried about their working conditions and refuse to work unless they are provided with proper equipment to protect them from the coronavirus. This labour shortage has forced most Indian ports to declare force majeure, while industries such as sugar mills are struggling to finish the harvest.
The global sugar market has been particularly affected by the coronavirus outbreak as Brazilian mills, which can choose whether to make ethanol or sugar with their cane, are maximising sugar output given the collapse in fuel demand. Whereas a few months ago many analysts had forecast a global deficit of sugar, the switch in Brazil means the world is likely to see a sugar surplus instead, causing a collapse in sugar prices.
The price of coffee has soared, on the other hand, with coffee roasting nations looking to bring supply forward in anticipation of further logistic disruptions. Packaged coffee sales in the US surged 25% over the past month, according to Nielsen. Coffee producers in countries such as Brazil and Colombia are getting near-record high prices for their coffee in local currency. A lack of containers, as well as labour shortages, are expected to exacerbate the situation.
The Ivory Coast said it won’t be selling any more cocoa to major exporters like Cargill and Barry Callebaut, which have already bought more than they had contracted. This is to ensure there is enough supply for smaller buyers amid a lower crop. The smaller, mainly domestic, exporters had earlier asked for support from the Coffee and Cocoa Council to help them compete as they cannot afford to pay the same level of premiums as bigger companies.
Cocoa importers in the US, meanwhile, have been asked by customs to fill in a questionnaire to identify forced child labour in their supply chain from the Ivory Coast. However, the World Cocoa Foundation said there were only few instances of forced child labour in the country’s cocoa industry, adding that potential restrictions, or even an outright ban, on cocoa imports would be counterproductive and end up hurting farmers who are already very poor.
Barry Callebaut argued that helping farmers out of poverty was key to ending deforestation. The group said it was on track with its cocoa sustainability targets, having mapped 220,000 farms it sources cocoa from in the Ivory Coast and Ghana, an area of 160,000sq km. It has also helped plant 750,000 native trees to shade cocoa trees and protect them from the weather. Similarly, Nestle said it had managed to map three-quarters of the 120,000 farms it sources cocoa from in the Ivory Coast and Ghana, with the remaining quarter expected to be mapped by October this year. It has also planted 560,000 shade trees.
Olam said it had spotted over 7,000 instances of child labour in its cocoa supply chain, following a partnership with the Fair Labor Association to monitor 7,000 suppliers in Cameroon. It said it had solved two-thirds of the issues identified by using revenues from the sustainable premium cocoa to build schools. On the other hand, Olam has been accused of failing to prevent deforestation in its palm oil plantations in Gabon. Olam denied the allegations, which will be investigated by the Forest Stewardship Council.
Environmentalists are worried that deforestation could surge in Brazil’s Amazon as Ibama, the environment protection agency, said it had to reduce enforcement personnel on the ground because of the coronavirus outbreak. Around 30% of Ibama’s workforce is in the most vulnerable age group, it explained, adding that budget cuts had not made it possible to hire younger people.
In the UK, the Global Resource Initiative Task Force is urging the government to make deforestation targets in the supply chain legally binding by 2030. The taskforce, which has the support of McDonald’s, Tesco and Cargill, among others, also recommends compulsory due diligence.
Did you know? This week marked the 128th anniversary of the birth of Coca-Cola. The drink, which was initially designed to be a hangover cure, was advertised as a “brain tonic.”
This summary was produced by ECRUU
