The UN FAO food price index dropped 2.5 per cent in June, down from a nine-year high. Prices of vegetable oils and cereals fell, offsetting gains in meat and sugar. However, the heatwave and severe drought in the U.S. Pacific Northwest continues to damage crops, including wheat, canola and fruit.
Transporting a 40-foot steel container of cargo by sea from Shanghai to Rotterdam now costs a record $10,522 – up 547 per cent on the seasonal average over the last five years. Drewry Shipping Consultants predicts that container shipping liner profits will surpass $100 billion in 2021 after posting a record EBIT in 1Q21 of $27.1 billion, beating the full-year 2020 EBIT of $25.4 bn. Drewry predicts freight rates will increase a further 50 per cent on average but warns that there is a danger that shippers will view carriers as “profiteering villains.”
The US White House has released an executive order to encourage the Federal Maritime Commission to vigorous enforce competition rules in the shipping industry. The European Union is also shining a spotlight on the sector to ensure that container shipping companies follow competition rules.
High freight rates are encouraging the world’s sugar refineries to delay shipments and run-down stocks, resulting in a 60 per cent drop in shipments from Brazil so far this year and encouraging Brazilian millers to produce more ethanol and less sugar.
The shipping industry is worried about Covid infections among vessel crews but face difficulties in vaccinating them. Some ports continue to restrict access to vessels with unvaccinated or infected crews. Sadly, shipping delays have adversely affected the welfare of live animals shipped overseas.
Reuters looks at the double whammy of rising grain prices and increased freight rates, but the FT takes a different tack, writing that commodity prices have slipped on Covid fears. Bloomberg highlights the recent collapse in lumber prices. The Guardian worries that the UK’s truck driver shortage will lead to increased food prices and shortages at Christmas. CNBC is worried about the pending ‘rubber apocalypse’ and how producers must adapt to climate change and tree disease.
The White House executive order (mentioned above) also includes measures to increase competition within agriculture, especially in the beef sector, where four large meat-packing companies dominate over 80 per cent of the market.
Following the European Commission recent commitment to table a proposal to phase out the use of cages in farming by the end of 2023 and enforce the ban from 2027, the EU’s biggest egg producer, Eurovo Group, has committed to phasing out cages for laying hens on its Italian-owned farms by 2022. Across the pond, Massachusetts lawmakers have warned of a looming egg shortage ahead of the introduction of legislation mandating that all eggs sold in the state come from cage-free hens.
Nestle SA plans to enter the cultured meat market, working on alternative meat products that blend cultivated meat with plant-based ingredients. Aleph Farms Ltd has completed a $105 million Series B funding and will use the money to commercialize its cultivated beef steaks, scale up manufacturing and expand the product range.
IHS Markit finds that the price of Brazil’s agricultural land reached the highest average value of the past 20 years. The cost of grain land gained 30 per cent in the year to April, while cane land gained 10 per cent in value.
The world’s trade ministers held a virtual meeting this week to try to hash out an agreement to eliminate or reduce the $22 billion that rich countries spend each year subsidizing fishing. In their annual report, the WTO writes that “reaching an agreement will be critical for marine sustainability and the WTO’s credibility as a negotiating forum.”
China plans to broaden its agriculture insurance policies to protect farmers and increase rice, wheat, and corn production. The government will subsidize insurance costs for farmers to cover natural disasters, pest damage and other losses. In a further move to improve food security, the Chinese government harvested its first batch of “space rice” from seeds that returned from a lunar voyage last year. Scientists hope they could help create new plant varieties.
Chinese farmers have increased corn planting this year mainly at the expense of soybeans and other crops, including sorghum and edible beans. Pig farmers in the central province of Sichuan of China are still battling severe outbreaks of African Swine Fever (ASF). The disease has been spreading in the region since early March.
In longer reads, the Maritime Executive looks at how shipping companies are experimenting with biofuels to reduce their carbon footprint. In contrast, Rolling Stone looks at how US farmers can profit from carbon capture. FoodDrinkEurope, meanwhile, has published a report that finds that farm-to-fork food production represents 30 per cent of total carbon emissions within the EU.
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