Crop prospects and food situation: impact of COVID-19

The effects of the COVID-19 pandemic, primarily channelled through economic shocks, are expected to cause a deterioration in food insecurity conditions across the globe, states the FAO Quarterly Global Report on ”CROP PROSPECTS and FOOD SITUATION”. 

Here are some noteworthy excerpts from the report: 

While agricultural production has been comparatively unaffected and supplies of staple foods are reported to be generally ample or stable, income losses due to the measures implemented to contain the spread of disease and the overall economic downturn are likely to increase the severity and prevalence of food insecurity. With different degrees, many countries have been affected by the COVID-19 pandemic and it must be considered as a factor that will trigger an increase in the need for humanitarian assistance. 

• FAO assesses that globally 44 countries, of which 34 are in Africa, continue to be in need of external assistance for food. 

The effects of the COVID-19 pandemic are causing wide-ranging and severe negative impacts on food security, particularly through the loss of income. Conflicts and weather shocks remain critical factors that underpin the current high levels of severe food insecurity. 

• Record global cereal production forecast boosts stock-to-use ratio to a twenty- year high 

(…) FAO’s latest forecast for world cereal production in 2020 has been revised upward by 9.3 million tonnes in July and now stands at almost 2 790 million tonnes, with the global output set to surpass the record high reached in 2019 by as much 3.0 percent (81.3 million tonnes). Global wheat production is pegged at 761.5 million tonnes, up 3.2 million tonnes from the earlier projection in June and now is at par with last year’s above-average outturn. 

FAO’s forecast of world cereal stocks by the close of the seasons in 2021 has been raised by 2 million tonnes compared to the figure in June to 929 million tonnes, representing a robust year‐on‐year expansion of 52.3 million tonnes (6.0 percent). At this level, the global cereal stock-to-use ratio in 2020/21 would reach a twenty-year high of 33.0 percent, highlighting the comfortable supply prospects in the new season. 

FAO’s latest forecast for world trade in cereals in 2020/21 stands at 435.0 million tonnes, representing an increase of 9.0 million tonnes (2.1 percent) from the 2019/20 volume and a new record high.

REGIONAL ROUNDUPS OF COVID-19 IMPACTS

EUROPE 

• Cereal production in 2020 forecast above average due to large maize output 

(…) The subregional wheat production, combining winter and spring crops, is forecast at a near average of 107 million tonnes, as an above-average production in the Russian Federation, the main wheat-producing country in the subregion, is expected to be outweighed by reduced outputs in Ukraine, Belarus and the Republic of Moldova. 

In the Russian Federation, despite more recent favourable rains, drier-than-average weather conditions in March and April 2020 adversely affected the winter wheat crops in the key producing Southern Federal District, curbing yield expectations. In the other main winter wheat producing North Caucasus, Volga and Central Federal districts, however, cumulative seasonal rains have been slightly above average, inferring to good yield prospects. 

Given that the total area planted with wheat, winter and spring crops, is estimated at a record high of 29 million hectares, if weather conditions remain favourable for the remainder of the season, the aggregate 2020 wheat output is expected at 79 million tonnes, exceeding the five-year average by 7 percent. Maize and barley outputs are also expected at above-average levels in 2020. As a result, total cereal production in the Russian Federation is forecast at about 122 million tonnes, 6 percent above the five-year average.

(…) Wheat exports from the Russian Federation are expected to reach 34 million tonnes, an above‐average volume, due to the overall good prospects for the 2020 domestic production and strong import demand. 

• Export and domestic prices of wheat increased 

In Ukraine and the Russian Federation, the main wheat exporting countries of the subregion, export prices of milling quality wheat rose abruptly between mid-March and April, following the introduction of COVID-19-related export restrictions and the weakening of national currencies, which triggered an uptick in import demand reflecting the decline in US dollar-denominated export quotations. Prices remained relatively stable in May as downward pressure, due to a decline in demand compared to the previous month, was offset by the production forecast downgrades following dry weather conditions in March and April. 

In these countries, domestic wholesale prices of wheat grain and flour increased in March and April 2020 due to robust demand and tightening supplies of high quality wheat. In May, prices generally continued to strengthen in the Russian Federation, while they weakened in Ukraine amid the implementation of price regulations for buckwheat, wheat flour and some other staple food commodities.

Prices of potatoes, a key food staple in the subregion, increased strongly since April 2020 in the Russian Federation and in Belarus, the main exporter in the subregion, due to strong consumer demand amid concerns over the epidemic, which exacerbated seasonal trends.

Asia 

(…) At the start of the COVID-19 outbreak, most governments implemented trade and non-trade policies to stabilize domestic supplies of staple foods and avert price increases. Export limitations were introduced in Armenia, Kazakhstan (subsequently removed), Kyrgyzstan and Tajikistan, while in Georgia and Uzbekistan the governments introduced specific measures to facilitate food imports. In addition, the governments of Georgia, Kazakhstan and Kyrgyzstan established price ceilings on food staples. Despite these measures, domestic prices of wheat and potatoes recorded sharp increases particularly in April, amid stronger consumer demand due to concerns over the effects of the pandemic.