Coronavirus may cause global food shortages: UN

HONG KONG, Mar 30, 2020, SCMP. The coronavirus pandemic could seriously disrupt global food supply chains and send prices soaring, especially for those economies with vulnerable supply structures, if major producing countries increase export restrictions, international agencies and food experts have warned, South China Morning Post reported.

China is expected to be shielded from severe supply shortages as the country has been relying on its own output of rice and wheat to feed its 1.4 billion people, but its reliance on imports for certain crops, such as soybeans, could send food price soaring and add further misery to domestic consumers.

The United Nations Food and Agriculture (FAO) said last week that it had “already seen signs that pressures due to lockdowns are beginning to impact supply chains, such as the slowdown in the shipping industry. Disruptions, particularly in the area of logistics, could materialise in the coming months.”

The UN Committee on World Food Security sounded an even stronger warning that “disruptions at borders and in supply chains may cause an echo in the food system with potentially disastrous effects”.
In recent weeks, export restrictions have been slapped on staple foods such as rice and wheat as the outbreak spreads around the globe.

“Coupled with the current locust swarm crisis [in Africa and the Middle East] that is affecting food production, it may worsen the global food market, leading to panic buying, export restrictions and disruptions in the supply chain, sending food prices soaring,” Cheng Guoqiang, a professor at the School of Economics and Management of Tongji University in Shanghai, told the state-owned Economic Daily.

“Therefore, if the outbreak cannot be effectively controlled, it may cause a serious world food crisis and directly threaten food security for China and emerging nations.”

Vietnam, the third world’s largest exporter of rice, said on Friday that it planned to stockpile the grain and suspend new export contracts until the end of the month. Thailand banned shipments of chicken eggs for a week after a domestic supply shortage caused a spike in demand and prices to double.

In Hong Kong, where Thailand and Vietnam account for 80 per cent of rice imports, long queues reappeared outside shops at the weekend as residents scrambled to stock up on essentials.

By Monday, rice had sold out at many large supermarkets and purchasing limits of up to two bags of rice and two boxes of eggs had been imposed at various stores.

Analysts expect further export restrictions, but say food shortages will be more prominent in countries that import staples from just one or two sources.

While images of empty supermarket shelves and huge queues outside stores have been broadcast across the world, the FAO does not anticipate significant shortages if global supply chains are maintained.

Disruptions to food supply could occur during April and May because of the fast spreading outbreak and containment measures, said Maximo Torero Cullen, chief economist at the FAO.

But how severe these will be depends on the development of the Covid-19 pandemic, he said in comments published on the agency’s website.

The spread of the outbreak has accelerated outside China in the past several weeks, especially in North America and Europe, both large food exporters. The disease has infected more than 727,00 and killed more than 34,000 people worldwide.

China should be able to maintain the general security of its food supply. For rice, the main grain in the southern parts of the country, China imported 2.5 million tonnes in 2019 but also exported 2.7 million tonnes, according to the agriculture ministry. The imported amount, in turn, was less than 2 per cent of China’s annual rice consumption of 140 million tonnes.。

For wheat, China imported 3.5 million tonnes last year, which accounted for a mere 2.8 per cent of the nation’s wheat consumption of 124 million tonnes.

But for some crops, like soybeans, the country had “a high degree of dependency on foreign countries”, Cheng said. China has a self-sufficiency rate of less than 20 per cent for soybeans, which are widely used in animal feed, he added.

The world’s most populous country has already been hit by surging prices for imported pork after as much as 60 per cent of the nation’s hog herd died or was culled last year because of African swine fever.

“The key concern for China animal protein production is soybeans, as China soybean usage is mainly supplied by other countries, including Brazil, the US and Argentina,” said Pan Chenjun, senior analyst for animal protein at Rabobank.

“Up to now, shipments of soybeans have been normal, but it’s hard to predict whether there could be disruptions at ports, or to logistics in exporting countries.

“For some specific foods, such as salmon, shrimp, pangasius [shark species], for which China is highly reliant on imports, the supply is currently being impacted by disruptions to logistics in those exporting countries, such as India, Vietnam and Norway.”

Rosa Wang, a Shanghai-based analyst at agricultural data provider JCI China, said some of China’s pork imports from Germany, the United States and South America could be disrupted, adding to the price of pork.

“If they have logistics problems at ports, this may reduce China’s imports [from them],” said Wang, adding that China only imports a relatively small portion of its total supply of pork, the most popular meat for Chinese consumers.

Australia, which is a net food exporter, is already facing difficulty keeping food on store shelves, as panic buying in the face of the pandemic has increased demand, social research house McCrindle said.

Despite a prolonged drought in Australia and a severe bush fire season that lasted six months to February, the country should have sufficient food supplies to see it through the crisis, said Mark McCrindle, principal of the firm.

The problem was not supply, he said, but an inflexible “just in time” distribution process coupled with a sudden spike in demand.

“Australia is geared up for the drought, production is not massively impacted,” McCrindle said. “The biggest problem is in demand, especially in the supermarkets.”