COVID-19 disrupts supply chains for grains, pulses and oilseeds
Wheat prices have gone up after a price drop in March. Rice has become more expensive, and corn has lost market due to decreased interest in biofuels. Companies are stockpiling grains and pulses, and consumers are hoarding all kinds of easy-to-store products. The COVID-19 pandemic is changing market dynamics.
Since the coronavirus became a pandemic, consumers started buying much more convenient products, such as beans, rice and pasta. Also, healthy ingredients such as chia seeds and lentils are doing well, as people are trying to stay healthy. While restaurants and bars have closed in most countries in Europe, the demand for grain products and pulses is doing well in retail. It is not uncommon to see empty shelves in the supermarkets.
In the trade of raw material, there is much speculation and instability. Some business owners think this is just another hiccup. Others, such as the International Grains Council (IGC), call the impact of the coronavirus pandemic highly uncertain, with the spiking consumer purchases and transportation restrictions. Nobody knows the effect the coronavirus will have. Industry associations seem very reserved when it comes to publishing news about the virus. The assumption is that COVID-19 will continue to cause instability over the next two to three months. It is unlikely that producers will be able to benefit from a temporary high demand for certain grains.
Disrupted supply chains
A main concern at the moment is the impact of lockdowns and trade barriers for grains, pulses and oilseeds. Supply chains get disrupted. Russia and Ukraine have taken protective measures and set an export quota for wheat. Vietnam has suspended new rice export contracts. In Argentina, grain trucks have been blocked, and soybeans are not reaching crushing plants or international markets. In many countries, lockdowns have made export simply impossible. This is the case in Bolivia, a supplier of several commodities such as soybean and speciality grains and seeds like quinoa and chia.
There is enough food in and around Europe and the production outlook for grains is positive. But, food shortage can be a real threat in the short term if logistical restrictions and protectionism increase. In the long term, global economic recessions may have a negative effect on the value of food commodities.
COVID-19 and the European grains, pulses and oilseeds sector
The EU is trying to help trade flows and has published Guidance on Customs issues related to the COVID-19 emergency. Live updates can be found on the EU Observer. Euractiv provides information on different regions in Europe. Organisations that provide more information on COVID-19 in the grains, pulses and oilseeds sector in Europe, are:
- COCERAL with the last crop forecast
- Ingredients Network with a Timeline and the impacts of COVID-19
- Food and Agriculture Organisation (FAO) with Highlights on the Novel Coronavirus (COVID-19)
- Food Navigator’s ‘Coronavirus blog for food industry updates’.
- World-Grain with news coverage of the coronavirus / COVID-19 situation
- Feed and Grain with international news and business updates on COVID-19
- International Grains Council (IGC) with almost monthly grain market reports
- The Grain and Feed Trade Association (GAFTA), which offers up-to-date news on trade policies and actions (via subscription)
The effects and response to COVID-19 for the main EU markets
Consumers have turned to small shops and local food supply as supermarkets are running out of stock. This shows the importance of smaller suppliers of basic food commodities. According to Germany’s flour millers’ association VGMS (Verband der Getreide-, Mühlen- und Stärkewirtschaft), there is sufficient raw material. However, supermarket shelves are being emptied by hoarding consumers. The food supply is not in danger. Pasta and flour producers are working overtime to meet the peak demand.
- AgrarZeitung has a Corona-Dossier with weekly news and agricultural forecasts (in German and via subscription).
The United Kingdom
The United Kingdom responded somewhat later to the coronavirus. It needs grains, pulses and oilseeds from abroad, and food shortage due to hoarding is stronger than in other European markets. The British Retail Consortium is concerned about stocks building up at some point in the supply chain. However, the course of events is impossible to predict. The country is also dealing with extra insecurity because of Brexit. With a no-deal Brexit, Britain will depend even more on non-EU suppliers in the future.
- See the government response to coronavirus on GOV.UK and visit NHS UK for health information.
- Food Manufacture is a good source of information for news on COVID-19 for food businesses.
- The British Retail Consortium has created a Coronavirus hub with news and updates for businesses.
The Netherlands is a big re-exporter and has kept the food supply chain intact as much as possible. The country is economically dependent on trade. It is now under an intelligent lockdown to reduce the economic impact of the tightening measures.
- See the Dutch government’s financial and tax measures or go to the FAQ for entrepreneurs on business.gov.nl.
- Stay informed on the Dutch national COVID-19 measures on government.nl.
The country has entered a complete lockdown. France is a large wheat producer, but for many special grains and pulses, they depend on external suppliers. Consumer sales of grain products increased dramatically. Wheat exporters tried to keep up with the increasing foreign demand despite facing logistical difficulties. French authorities have advised consumers to consume local food as much as possible.
- Gouvernement.fr provides up-to-date information about the coronavirus and public measures in France. This includes an overview of support measures and useful contacts for companies active in France.
- FranceAgriMer provides information about the COVID-19 crisis for exporters in France.
Italy and Spain
Italy and Spain are among the most affected countries in Europe. Their economic struggle will likely be noticeable for a long time to come. Both countries are in a state of alarm. Individuals must stay home, and nearly all facilities and non-essential shops are closed. The agricultural sector, however, is doing its best to keep going. Agriculture and food are essential sectors.
Wheat and pulses are very important commodities in southern Europe. Food supply chains have been maintained as much as possible. Spanish authorities have asked the European Commission for support measures for their farmers. Italy has stressed the importance of food security and wants to prevent unfair competition in desperate times. The Italian Cereal Association (ANACER) has stated that the production of pasta is under control and factories will not be closed. Italian food production is working at full speed to guarantee Italian food in and outside Italy.
- The Italian Ministry of Health offers updates in English about the COVID-9 situation.
- In Spain, official news items in the agricultural sector are published by the Spanish Ministry of Agriculture, fishery and nutrition (news items are in Spanish). News in English about coronavirus measures can be found on El País and The Local.
This news article was written for CBI by ICI Business.
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