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COVID-19: How the various agri-industrial sectors are responding
27 March 2020
Earlier disruption to food and drink supplies caused by port
blockages has been exacerbated by border closures that hinder road
transport and even air mailing of vital documents. However, strong
demand for some products, such as dried fruit and nuts, is being
met by suppliers.
Suppliers around the world are battling to fill shelves
empited by panic buying
IEG Vu staff have been in personal contact with representatives
of as many processed commodity companies as possible. Responses
varied, and some declined to comment. Company and personnel names,
as well as exact locations, have been removed.
Juices and beverages
(EU, general) "What we know is that the effects in northern
Europe will come in the coming months. We are trying to keep
supplies as regular as possible but soon transport problems will
come."
(Far East, pineapple) "We are taking measures to ensure all
employees and third party operators are in a healthy condition
before entering our facilities. We will not allow them to enter if
they have flu, fever or a cough: we will escort them to our clinic
for a medical check-up. We do not see any disruption on our
business at this moment. Even some countries have locked down there
is no effect on ports or logistics. Most of our customers are
asking to expedite shipments to avoid running out of stock. We are
doing our best efforts. We all need to contribute to the business
community and we cannot afford to see the problem getting deeper.
This is a test case for all nations, to stay together, to fight
Covid-19 together.
(Middle East, general) Our government has taken some strict
measures in the last few days to avoid the spread of the virus, as
the UK is doing (work from home, extreme sanitisation processes,
maybe an announcement of curfew soon, etc) as well as some bold
decisions for economic stimulus and funds to support the devastated
sectors (tourism, aviation, catering, etc)
Frozen fruit and vegetables
(EU) "We have problems supplying Italy and neighbouring
countries such as Austria or Serbia. There are restrictions on the
borders in southern Europe. In some cases, drivers are refusing to
deliver to some countries widely affected by the virus because of
the risk of possible contamination"
Italy moves to protect agri-food exports amid COVID-19
outbreak
Italy is putting into place a plan to protect its revenue from
agri-food exports that were worth a combined EUR44.6 billion in
2019, with the aim of tackling a wide range of unexpected COVID-19
related obstacles and other challenges that the Italian food
industry needs to address in order to facilitate exports.
(EU) "Up until now we didn't have any difficulty concerning
Covid-19. This week, deliveries went smoothly, even if we don't
know how difficult it could be for trucks to cross borders as they
are apparently very busy. For next week, none of our import or
export deliveries has been cancelled, and we hope all deliveries
will arrive all right.
Otherwise we might try to sell prompt as it is a bit difficult
to plan for longer periods. We don't know what effects this whole
situation will have on our industry".
(South America) "In general, we have not had big problems for
the frozen fruit industry so far, but they will come. Several
customers are claiming that consumption is lower than expected, and
this means that they might postpone shipments. However, this is
what I can say today, but things are changing really quickly, so
tomorrow we could have a completely different situation"
Canned
(Far East) "Regarding our sales, we are not experiencing any
problem with deliveries as the confirmed cases are relatively low,
and with experience from SARS in 2003 still fresh, most people are
cautious with their daily routine.
However, I cannot say the same with my supply side. Right after
Chinese New Year, all offices were closed and were late to resume
work. So even though Tianjin port remained in operation during this
period, some shipments were delayed. It is fortunate that transport
from Xinjiang to Tianjin has been smooth so far, but we just don't
know.
As for shipments from Europe, every supplier had the same issue:
no containers and ships to ship the goods to destination. Same goes
for air freight, as major cargo operators have cancelled their
flights, so options are very limited. Therefore, major delays are
expected for shipments from Europe, we can only hope that
forwarders can secure enough slots for us.
I am not sure how the US will be. The Bay Area is in lockdown,
but logistics seems to be working so far, so we have not
experienced any difference, but the impact could be delayed. We are
closely monitoring the situation as it can change the next
hour".
(EU - tomato): "We had some issues initially for some seeds
blocked at the borders before seedling, but the issue was quickly
solved. There is a slowing down in deliveries to some
countries."
(Far East - tomato) "Our main markets are the Middle East,
Africa and Asia. Covid-19 is likely to influence a lot tomato
businesses all over the world because the crop will be late. Goods
or raw materials such packed in drums, such as apple juice
concentrate, will reduce.
Tomato paste in drums might increase inprice significantly
because this year's crop is smaller and the market demand will be
stronger. Canned foods in foodservice sizes will free-fall, but
those for the retail market might sell better."
Italy concerned about food exports blocked by border
checks
Italy has demonstrated renewed concern about potential dangers
that its' food exports could suffer from any emerging bottlenecks
on the Alpine land corridor to mainland Europe, due to increasing
border checks and travel restrictions.
(US/Europe - tuna): "Due to the panic buying, short-term grocery
demand has spiked and canned tuna buyers are asking processors to
ship future orders soonest. However, those buyers are not placing
new orders against future shipments.
I don't expect that to change much until this pandemic settles
down and future demand becomes clearer as there will be a whiplash
effect as this strong demand trend can't be maintained. So expect
the market to stall and potentially start to soften, depending on
how long we are on lockdown."
(EU - tuna): "The industry is aware of a significant demand
increase of orders, which is also influencing the processing pace
at canneries."
(EU - vegetables): "We are supplying the retail domestic market
normally thanks to the strengthening of workforce in our processing
lines and logistics at points of delivery […] In terms of raw
material supply available, we are not finding any difficulties as
our products are harvested in our contracted fields […]
Products most in demand within the canned vegetables range are
canned sweetcorn, canned peas and canned green beans […] Demand for
our frozen lines has also increased, but at a slower pace."
(South-east Asia - pineapple): "Canned fruit demand from
retailers in the US, Europe and Australia has increased
dramatically due to customers stocking up […] Some customers are
asking us to expedite shipments […] Foodservice demand, however, is
at its lowest."
Dried fruit & nuts
The Spanish Ministry of Agriculture has reported that
agricultural production and its basic inputs (fertilisers,
pesticides, medical equipment such as gloves, masks, etc.) are
considered essential under the current state of alert, and farmers
are able to work as usual.
As a result, almond plants are slowing activity but are still in
full swing.
(EU, almonds) "The 2020 crop is set to be collected in the
following months for early and delayed varieties and it is expected
a strong output due to favourable weather. In addition, all the
Spanish almond players expect a strong rise in European demand once
the Covid-19 epidemic is under control, and are trying to be ready
for this recovery."
(South America, walnuts) "The harvest is taking place right now.
Farmers are working as usual, trying to follow government
instructions since the government imposed the state of emergency
yesterday.
Administrative staff is working from home. Shipments to the
European markets are being delayed, following requests from our
clients. On the other hand, Asian markets, especially China, are
recovering importing activity, offsetting slow exports to the
EU."
(South America, walnuts) "We hope there are no road transport
restrictions to obtain basic inputs for farming and to secure
walnut supplies to our clients."
(EU, cashew trading) "Strong demand of all kind of nuts such as
hazelnuts and cashews. This demand comes from bakery and from
retailers, as many consumers are home baking due to movement
restrictions. No crystal ball to know what will happen
tomorrow…"
(EU, nut trading)
"As with most companies, we are all facing enormous challenges.
Supply chain is the key word. Nuts and dried fruits apparently are
also part of the 'dried' products customers seem to stock up on.
Demand has increased and we are trying to catch up as well as
possible. Retailers report sales are better than during the
Christmas season."
(EU, dried fruit and nut trading)
"For the moment our business is running as usual. Most people
are working from home but this is not having a big effect on our
operations and sales (yet) as we are blessed with good internet
connections and get in contact via Microsoft Teams, Skype, Zoom
meeting and WhatsApp very easily.
Germany considers special measures to ensure seasonal
farm labour
Germany's Agriculture Minister is working on measures to
guarantee the inflow of seasonal workers from Eastern Europe as the
harvest of asparagus and other vegetables is taking off.
Freight rates are increasing, with demurrage, penalties, a lack
of empty containers and skipped vessel departures (blank sailings)
all creating higher costs.
With borders being closed across Europe, it becomes an
increasingly difficult job. It was reported that courier mails with
original documents got delayed as airlines grounded their planes.
Some products require phytosanitary papers which must be presented
to the import authorities in their original form.
So far, our ports here seem to be working. However, trucks are
waiting at the borders to pass. Some transit countries like Austria
have closed through traffic totally. We heard trucks might pass via
Serbia, but only in convoy and under police supervision. This slows
things down. It was reported that 30-70% of the trucks are already
stuck somewhere, or at least delayed.
Most commodities had seen a wide fall in prices. Walnut prices
have come down significantly; almonds, too.
Chinese importers are said to be looking for macadamias and
pecans. India seems quiet so far, but the Middle East is buying.
Europe is quiet, but some retail tenders are pending and decisions
will not be taken before the end of March.
For spot product, demand is good as more consumers are buying
more snacks than usual as they cannot go out to bars, restaurants
etc."
(Australasia, general) "All our activities are slowing to fulfil
government requirements about health and hygiene in the domestic
market, delivering staple products such as flour and rice to work
hand in hand with our customers in the retail industry, where there
is panic buying, like in the EU.
We have been suffering delays in export orders to key markets
such as China, although we expect to recover international activity
to the Asian market from April onwards, once the Covid-19 epidemic
is controlled in the Chinese market."
(Australasia, dried fruit) "Export orders are very strong for
the coming months. The harvest is well under way here, so the
priority for Australia's dried fruit processors is the health and
safety of their employees and their families, growers, suppliers
and customers."
All commodities
EU, logistic companies organisation): Restrictions on hauliers
coming from Italy have been reported at the borders with Austria
and Slovenia. For the latter, the border gates are closed only for
the transport entering from Italy. Current restriction measures
have caused 18 hours of delay on the border with Croatia.
Issues were also reported in Hungary where trucks coming from
Italy were stopped at the border. Some restrictions on goods
transport have been imposed in Turkey and Ukraine, where a limited
number of crossing points are, slowing down trade with Poland. For
a complete list of the current situation click here.
Other news and actions
Malaysia announced a national lockdown and temporarily closed
the border with Singapore. This has caused panic buying in
Singapore. Malaysia has been the key supplier for fresh produce
such as eggs, vegetables and fruits. It is also a major supplier of
fish and chicken.
On the top of these, many Singaporeans do their weekly shopping
across the border. Singapore's government reassured the locals that
the country has the capability to locally produce noodles, canned
foods and other foods.
The country has stockpiled three months' worth of carbohydrates
like rice and noodles; two months' worth of proteins and
vegetables. Canned, frozen and fresh variants are all considered.
On March 17, major supermarkets in Singapore introduced
restrictions on the buying volume. Food security issues are being
debated in this city nation. Urban vertical farming is
mentioned.
In Hong Kong, imported cases are now a key concern. Compared
with the mainland, Hong Kong seems relatively relaxed and wearing
face masks in the public is not compulsory. Restaurants are open
for the public but are less busy as normal.
At the start of China's outbreak, there was a round of panic
buying for a couple of weeks as China is the major fresh supplier.
This frenzy stopped when China's supply resumed. Cash is still
being heavily used in Hong Kong, in contrast to the mainland.
Online sales of fresh grocery have not yet taken off as fresh
grocery stores are located in most residential areas and there is
little business case.
In China, Covid-19 has been under control and zero new cases
reported as of March 19. Face masks are still mandatory in public
areas and social distancing is being actively managed in public and
enclosed places. Most people have gone back to work although the
whole country is still tense.
Transport of agri related products and materials has always been
given a priority during the outbreak period. Fresh produce supply
is now back to full swing and online sales are surging, potentially
becoming a permanent shopping behaviour; however, proteins remain
high priced.
Port congestion is easing, which will help frozen meat and fresh
fruit imports. However, industry sources are concerned about the
spread in Europe and the US. Thus, global trade of agri products
remain fluid.
IEG Vu is monitoring the status day by day to see whether the
business value chain will be impacted by issues such as local fruit
sourcing, daily production, storing and certainly maritime shipping
as we have seen increases in sea freight container rates due to
blockages at many destinations. The global movement of food
products will probably slow down due to the decision taken by some
countries to stop receiving air/sea shipments.
IHS Markit has opened a special free-to-view web page which
brings the very latest updates on all aspects of the Covid-19
crisis. Please click here and
navigate the various sections via the five buttons under the main
picture.