COVID-19: How the various agri-industrial sectors are responding

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"

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(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."

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(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.

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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.

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.