December 2019 witnessed the emergence of a disease outbreak that has spread exponentially and developed into a global pandemic affecting more than 200 countries and territories. Since then, the COVID-19 disease, caused by the SARS-Cov-2 virus has created havoc due to its infectious nature in causing a wide range of symptoms including death. It has brought grave challenges to existing public health systems, food supply chains and economies of affected countries.
The aggressive nature of COVID-19 has prompted Governments to impose protective measures to control its spread, including beefing up the public health system, introducing new social norms and imposing different forms of lockdowns. Lockdowns have been particularly effective to prevent disease spread and it involves travel restrictions, strict border controls, logistics restrictions and movement controls. At the same time Governments have executed various initiatives to cushion their hard hit economies through financial stimulus packages.
Most countries have in place policies to ensure sufficient food supplies such as staples, meats and fresh produce during a major crisis, including the assurance that supply lines are intact at all times.
Despite efforts by countries to minimize impact, inevitably, the different forms of lockdowns imposed have affected the food supply chain with regard to production, distribution and market. The impact has been observed both in producing and consuming countries as well as in domestic and export markets. The food supply chain consist of an interconnected interaction of players including input suppliers, producers, traders, processors, wholesalers, transporters and retailers. As in other food supply chains, the tropical fruit supply chain is affected in its entirety during a lockdown, from the upstream to the downstream levels.
LOCKDOWNS AND SUPPLY CHAIN DISRUPTIONS
During lockdowns, disruptions in the fruit supply chain are mainly attributed to logistical constraints such as dislocation of transport links and non-operational processing and distribution centres. This is exacerbated by the unavailability or reduced worker force.
Even though most countries have implemented various measures to avoid breakdowns in fruit supply during lockdowns, keeping the chains seamless have been a challenge.
Lockdowns such as border closures have led to serious repercussions in the export business. This was observed during the early days of lockdown by China, which restricted imports of agricultural products from neighbouring countries. China is a major export market for Vietnam which accounts for 24 percent of its total farm exports, and since January 2020 it has impacted 14 percent of total exports. Fruits such as pitaya were left stranded at the China/Vietnam border which affected exporters and transport companies. Exports of mangoes and bananas from Myanmar, Cambodia and Laos were similarly affected. With the recent lifting of lockdowns and movement restrictions in China, the export of fresh produce from Vietnam is being resumed.
LOGISTICAL CONSTRAINTS
During the earlier lockdown situation in traditional importer China, top tropical fruit exporter Thailand reported that an estimated 80,000 to 1 million mtons of mangosteens, rambutans and durians, were unable to be exported due to logistical constraints. However, currently with the lockdown in China being relaxed, exports of the fruits have begun.
Pineapple growers in Costa Rica cited logistical constrains as one of the major challenges to export their produce, with a 25 to 40 percent drop in orders due to cancellations from the USA and Europe.
The impact of lockdowns have caused air and sea freight cancellations which have severely curtailed exports of high value tropical fruits. There were reports that mango exports to Europe and America from the Indian State of Andhra Pradesh were unable to materialise due to flight cancellations.
Besides this, restricted air travel has had a major impact on the hospitality industry, including the tourism and food sector causing unprecedented economic losses and diminished demand for fresh produce.
It was reported that exports of mango, pineapples and papaya from Ghana to Europe were hampered because of the cancellation of orders as a result of flight terminations.
In Costa Rica, flight cancellation affected exports amounting to 250,000 boxes of pineapple weekly to Europe.
Another report quoted that African smallholder fruit farmers, including those in South Africa have lost market access to major markets due to flight cancellations and border controls.
Reduced airfreight capacity during the pandemic has also caused increased retail prices of Brazilian papayas in the European markets. The increase in the retail price has also resulting in reduced demand.
A joint Cambodian / Korean agribusiness venture company which has been exporting mangos to Korea, Russia, Thailand and Vietnam related that the dearth of flights out of Cambodia has affected export volumes during the current season.
Mango farmers from Dominican Republic reported low demand, heavy losses and a scaling down of the workforce due to the suspension of flights to US and Europe during the peak months of March and April.
Besides this, exports of mango, pineapples and papaya from Ghana to Europe were affected due to flight cancellation of order termination. There are now attempts to source for new Middle Eastern markets once the situation improves.
Travel restrictions also stopped mango importing countries USA, Japan and Korea from flying in their inspectors to check on export protocols from exporting countries.
In addition to air freight, exports of agricultural produce through shipping freight have also taken a beating from the lockdowns. Slowdown in operations of major ports have caused backlogs at shipping container and warehousing facilities. This was reported in India as exports of main agricultural produce to import hubs in Singapore and Hong Kong were being curbed due to logistical constraints and traders being unable to resume work.
Top Asian banana producer Philippines which accounts for an estimated 20 percent of the global banana supply indicated that they anticipated a reduction of 40 percent of exports due to the lockdown which affected port operations.
In Australia, it was reported that exports of agricultural products declined because air freight spaces were very limited and extremely expensive, while shipping lines were also cancelling schedules.
Pineapple growers in Ghana which exports 79 percent to the European market were expecting lower exports due to the slowdown in port operations in lockdown imposed importing countries.
Similarly exports of Ecuadorean pitaya to the USA and Europe had been hampered because of reduced shipping operations.
Vietnam recently relaxed their lockdown, and has begun shipping fruits to Europe. An exporter of dragonfruit, passionfruit and coconut reported that shipping costs to Europe has increased substantially due to the decreased number of vessels operating, resulting in higher export prices.
DEMAND AND CONSUMPTION
In the domestic agricultural sector, workers in the production, processing, wholesale/distribution and retail are crucial in maintaining supply chains. Movement restrictions have affected the availability of workers along the chain, resulting in low productivity, wastage and inconsistencies in supplies. In some countries where agricultural systems have been largely dependent on migrant workers, lockdowns have caused wastage with growers and producers bearing losses.
During the lockdown in India it was reported that local wholesale markets had ceased operations due to transportation woes and the absence of migrant workers who returned to their villages. Furthermore, physical distancing regulations with less workers involved, affected packaging and processing efficiencies. In addition to this, increased cost of transportation has caused some businesses to cease operations.
It was observed that the demand for fresh produce during lockdowns has been varied and unpredictable due to erratic supplies. Demand for agricultural produce is not only reflected at retail or consumer level, but also at other stages of the supply chain after production, especially at the wholesaler, processor and exporter levels. Any dislocation along the chain would translate into producers bearing the brunt and holding on to unsold stocks.
Observations indicated that during the initial periods of lockdowns, there was increased demand for fresh fruits and vegetables, as supplies were still available and consumers tried to maintain their regular intake for a healthy diet. Consumers were also stocking up in anticipation of prolonged periods of movement restriction and uncertainty. Production and supplies of fruit were observed to be consistent during this period.
However, with protracted lockdowns and strict movement controls, the contagion took its toll on the demand for fresh produce both for the domestic and exports markets. It was noticed that the demand situation was mixed and unpredictable. Reduced activities in the travel, tourism and food and beverage sectors of the hospitality industry significantly limited demand. The low demand for fruits resulted in glut and low prices for local producers. Diminished purchasing power due to furloughs and increasing unemployment aggravated the situation further, caused a decline in the overall demand for produce including tropical fruits, as consumers opted for basic food items or other alternatives.
In India, the Fruit and Vegetables Merchants Association reported that the demand for vegetables and fruits declined 60 percent in the wholesale markets as hotels, markets and restaurants were closed. While production of tropical fruits were affected by logistical and workers woes, lockdowns imposed resulted in closures of retail markets, causing further decline in demand.
With limited crowds in public places and markets during the lockdown, the pineapple growers in North East India, had anticipated lower prices for their fruits with the lower demand from consumers especially in Delhi and the State of Maharashtra.
It has also been reported that lack of demand as a result of reduced export orders and less consumer spending have caused mango prices to drop in Cambodia.
Europe buys 60 percent of Brazil’s fruits, and papaya is one of Brazil’s top 10 exported fruits. There were reports of diminished mangoes and papayas exports from Brazil to Europe due to decreasing demand because of lockdowns and movement controls.
Malaysian durian exports to Singapore and China also took a dip due to low demand because of market closures and movement controls. Since February 2020, the lack of demand for Malaysian durians has caused prices to drop by 20-50% from USD 12.64 to between USD 5.52 to 7.59.
The Union of Agricultural Exporters of Non-Traditional Products of Panama recently reported that a decrease in consumption, closure of marketing channels and order cancellations, have caused substantial losses for Panamanian producers and exporters who supply watermelons and pineapples to Europe.
Noticeably, the pandemic has changed consumption patterns and the retail ecosystem. Lockdowns have boosted the use of e-commerce platforms, social media and home delivery services in the food retail business. This trend seems to be expanding and more prevalent among urban dwellers.
A Chinese Company, Xiamen Fruit City Trade Co Ltd related that while the lockdown drastically reduced demand of avocado, pineapple and grapefruit due to the closure of retail outlets, sales on e-commerce platforms expanded during this period.
Durian sales in Malaysia has seen an improvement and becoming more popular with more retailers utilizing the e-commerce platform.
ADJUSTING TO THE NEW NORM
Notwithstanding the devastating impact of the pandemic to economies and its toll on human health, it has opened up opportunities for countries seeking alternative supplies and markets. Producing countries are also looking for other export markets, while importing countries are sourcing out for new suppliers. For example, Bangladesh producers are now seeking to expand its market of fruits and vegetables to the UAE.
In a recent development, Philippines has begun exporting its first shipment of avocados to China. Producers from the Philippines have also brokered an agreement with South Korea to export fruits. Recently Vietnam was able to export their dragonfruit to China through a new entry point at the Northeastern port of Dalian.
There have been partnerships forged between Governments and airline companies to restore global supply chains. This was demonstrated by the recent Qatar Airways Cargo and Etihad Airs partnership with the Australian Government to provide air freight for products including agricultural and fisheries products from Australia to the UAE, through the International Freight Assistance Mechanism (IFAM) initiative. This initiative by the Australian Government is to ensure fast delivery of agricultural products to key markets and at the same time assist companies to market their products.
China has recently relaxed its lockdowns and slowly opening up its borders and economic sectors after effectively containing the disease. Main tropical fruit exporter Thailand, recently sent 15 mtons of mangosteens through a chartered flight to Lanzhou, Gansu province. Another five chartered flights with fresh fruits is in the pipeline as demand increases.
Vietnam exports about 100,000 mtons of lychee during the main season in June, mostly to China with lesser quantities to Japan, Australia and the US. For this year, with the borders still closed and strict 14 day quarantine regulations including tests for Covid-19 for foreign traders who usually buy the fruits direct from farmers in production areas, prices have slumped due to the reduced number of buyers. Even though the government has attempted to boost domestic consumption, farmers continue to complain of the lack of demand and low prices.
The supply and demand for fruits have been difficult to gauge during the initial lockdown periods as this was dependant on the resilience of the food supply chains and the state of readiness and capacities of countries to overcome deficiencies in the system. The disconnect at various stages of the supply chain has to be readjusted and fixed, with interventions from the government and chain players implementing measures to suit the ‘crisis stricken’ new supply and demand ecosystem. Noticeably, most countries have now adjusted accordingly and taken necessary steps to ensure that fresh produce continue to be available at reasonable prices.
Besides food supply, the pandemic has caused grave economic challenges to almost all countries affected. The economic fallout caused by business closures has exacerbated unemployment, prompting governments to come up with financial stimulus packages to prevent further economic deterioration and prepare for the post pandemic economic resuscitation process. Many countries such as Australia, China, India and Malaysia among others have provided financial packages to sustain the agricultural sector.
Beginning June, affected countries are beginning to ‘open’ up and dismantling their lockdowns in stages. It would take quite a while for countries to get back to normalcy, or rather adapt to the ‘new normal’.
To minimise the impact of the pandemic to the fruit supply chain and to bring the agricultural industry back to normalcy, Governments and the private sector should play active roles in ensuring that production is not impeded and supply chains remain minimally affected. Smallholder producers also should be given assistance to ensure their livelihoods are not affected.
Tropical fruits producing and consuming countries have experienced different levels of damage to their food supply chains. In order to remain resilient and to counter any shocks during a crises, countries need to be adroit and nimble in adapting to changing scenarios, specifically in maintaining the food supply chain. It would make sense to further strengthen the supply chain by diversifying import sources and embarking on local production for selected and viable crops, including fruit types.
For tropical fruits, supply chain disruptions which have caused unpredictable demand and consumption are unlikely to cause a collapse of the fruit industry or the overall fresh food system, as staples, other fruit types and vegetables provide alternatives to sustaining a healthy diet. However, economic losses for producers, wholesalers, exporters and others along the supply chain are evident, which would be exacerbated if the pandemic lockdown situation is protracted. A relook and reformulation of food and agriculture policies to establish and sustain a resilient supply chain by enhancing and sustaining production, providing needed infrastructural development, assuring sound logistical links, manpower availability, and improving market access by coordinated Government/private sector collaborations in alignment with ‘new normal’ regulations, are imperative to ‘ride the storm’ in the eventuality of another wave of the pandemic.