I Believe I Can Fly: AirAsia Mulls Flying Durians in Farm-to-Table Food Line-Up

An interesting bit of news amid the coronavirus outbreak: AirAsia Group Bhd is considering flying durians into East Malaysia and Singapore as part of its plan to send fresh produce directly from farms to restaurants. Outfarm, the budget airline’s agriculture e-commerce arm, has been preparing its trucks and planes to transport food in the next three to four months, an operation which the company claims could reduce procurement costs by as much as 25%. According to Lalitah Sivanaser, the Chief Executive Officer of Outfarm:

“It’s the durian season now and we’re working very hard to get them on board… The Singaporeans, the Thais, as well Indonesians have reached out for durian exports using our platform.”

This talk of durians brings us back to our previous piece on the durian economy. In it, we discussed durians in China, as well as provided consolidated data on fruit farms and key indicators across Malaysia. Check it out here: Durians for China: A Preliminary View and Dashboard.

Oils & Fats International: The Impact of Covid-19 on Global Oils and Fats Supply, Demand, and Prices

On 9th June 2020, Khor Reports attended a webinar hosted by Oils & Fats International (OFI) on the impact of the coronavirus on global oils and fats trade. There were several interesting points made during the session:

1. The most severe immediate shock from the Covid-19 outbreak has passed. While outputs of the vegetable oils has been affected, the impact was not as bad as initially expected. Demand has, however, been adversely affected due to the lock-downs enforced globally. There is a concern that the markets may have lost sight of the longer term macro-economic shocks.

2. While soybean prices have been steadily falling due to the pandemic, the decline has also been attributed to market expectations that US will be competing with Brazil in the soybean trade (Brazil still dominates as China’s primary supplier of soybean imports) as well as the US-China bilateral agreement. Since soybean demand from China has been steady, the Asian giant will be reaping benefits from low international prices.

3. The market currently appears to be more interested in digesting positive news, with each piece of information being construed as optimistic. As such, the full impact of the damage caused by the coronavirus will only be known after the pandemic is truly well and over. It is expected that economies around the world will operate between 80-90% of their capacities by the third quarter of 2020 between July and September, and will only be optimal around late December.

Click here to watch the recording of the webinar.

Chain Reaction Research: Which Companies are Most Exposed to Deforestation-driven Fires in their Supply Chains?

Chain Reaction Research (CRR) hosted a webinar on 5 June 2020 presenting their findings of one of their most current research: identifying the companies most exposed to deforestation-driven fires in their supply chains. The research was focused on the fires that occurred in Brazil (Amazon-Cerrado transition area) and Indonesia (West Kalimantan and Southeast Sumatra) between July and October 2019. CRR replied on hotspot data obtained from NASA as well as potential buying zones maps from potential buying zones from Imazon (a Brazilian conservation NGO) and company concession boundaries.

The results of the research revealed interesting information:

• Cattle: When overlaying fire alerts with the potential buying zones, 60% of the total fires recorded were attributed to the top three meatpackers in Brazil—JBS S.A., Marfrig, and Minerva Foods—with JBS S.A. recording the highest risk exposures to fire.

Source: CRR (2020)

• Soy: More fires were found to be within the vicinity of Bunge and Cargill silos than any other main soy traders combined throughout Jul-Oct 2019.

Source: CCR (2020)

• Palm oil (companies): There were almost 15,000 fire alerts that occurred in concessions owned by the top ten companies most affected by the Jul-Oct 2019 Indonesian fires. However, it should be noted that the total number of hotspots for these ten companies comprise only 4% of all alerts recorded during the same period; CCR suggests that the majority of the fires occurred in small-scale holdings and not within company concessions.

Source: CCR (2020)

• Palm oil (traders/refiners): The total number of hotspots recorded within the concession areas of the top 10 traders/refiners in Indonesia with NDPE policies represent 77% of all alerts throughout Jul-Oct 2019.

Source: CCR (2020)

IVPA: Is COVID a Bull or a Bear for Veg Oils?

On 29th May 2020, Segi Enam Advisors attended a global webinar organised by the Indian Vegetable Producers’ Association. The webinar sought to address the effects of the Covid-19 pandemic on the supply chain of vegetable oils around the world, as well as other relevant trade and policy issues.

There were several interesting takeaways from the session:

1. In India, the demand for palm oil from the hotel, restaurant, and catering industry (HoReCa) has collapsed due to the lock-down. The pandemic has also called India’s food security into question, with suggestions for the government to enact policies to ensure smooth movement of the vegetable oil supply chain, particularly with regard to interstate logistics.

2. Total Indonesian and Malaysian palm oil exports to China and India has fallen sharply in the first quarter of 2020, although it was pointed out that sales to China are known to have recovered by April 2020. Globally, while the output of vegetable oils was not as badly affected as initially expected, demand has dipped much more significantly due to the lock-downs enforced across the globe.

3. In Argentina, there are transportation problems within the agriculture industry. The main cause is the low water levels of the Parana River, which transports approximately 96% of agriculture products, a situation further aggravated by Covid-19 (although it should be noted that these logistical issues preceded the outbreak). Experts project an improvement by Aug-Sep 2020.

4. The bilateral agreement signed by China and the US is now uncertain, especially in light of the coronavirus outbreak and recent developments in Hong Kong. It was also suggested that globalisation will not roll back but will have fewer Chinese characteristics, as supply chains are restructured and governments consider protectionist measures.

Click here to watch the video recording of the webinar.

Antimicrobial Resistance: Part #2 - Antimicrobials in Livestock

As mentioned in our previous article on antimicrobial resistance (AMR), antimicrobials are typically used in the livestock production to treat sick animals, to prevent future disease from spreading amongst livestock, and to stimulate growth, usually via the feed and water provided to the animals.

Since any and all uses of antimicrobials contribute towards the development of AMR, it is important that their use is limited to only when it is medically necessary. Unfortunately, statistics reveal a less-than-stellar practice at work—it is estimated that global antimicrobial consumption by food animals in 2013 was 131,109 tonnes (Van Boeckel et al., 2017), a whopping increase of 107% from the conservatively estimated 63,151 tonnes in 2010; Center for Disease Dynamics, Economics & Policy (CDDEP) projections further reveal a potential increase in consumption by more than half by 2030.

The CDDEP has developed an interactive ResistanceMap which helpfully shows the estimated consumption of antimicrobials in 2013 and projected change of the same in 2030 for each nation. Also featured in the map are the AMR (exposure) of chickens, pigs, and cattle.

Note: PCU, i.e. population correction unit, is a standardised theoretical unit developed by the European Medicines Agency which allows for YOY comparisons. 1 PCU = 1kg, e.g. 319mg/PCU in mainland China would mean that on average throughout 2013, 319mg of antibiotics was used for every kilogramme of body weight of a livestock at the time of treatment (United Kingdom Veterinary Medicines Directorate, 2016).

An article by Van Boeckel et al. (2015), which was cited over 1,200 times according to Google Scholar, reported that in 2010, the countries recording the biggest shares of global antimicrobial consumption by livestock were China (23%), the United States (13%), Brazil (9%), India (3%), and Germany (3%); by 2030, this ranking is expected to change to China (30%), the United States (10%), Brazil (8%), India (4%), and Mexico (2%). The graph below showcases further rankings of countries by largest increase and largest relative increase in antimicrobial consumption between 2010 and 2030.

(It is interesting to note here that livestock in China and Brazil, despite being the top consumers of antimicrobials, did not count amongst the countries with the most rapid projected increase in consumption. Van Boeckel et al. (2015) suggest that this implies that the two nations have already shifted toward intensified livestock production systems, where antimicrobials are regularly used to maintain the health and productivity of the animals.)

Van Boeckel et al. (2015): (A) Largest five consumers of antimicrobials in livestock in 2010. (B) Largest five consumers of antimicrobials in livestock in 2030 (projected). (C) Largest increase in antimicrobial consumption between 2010 and 2030. (D) Largest relative increase in antimicrobial consumption between 2010 and 2030. CHN, China; USA, United States; BRA, Brazil; DEU, Germany; IND, India; MEX, Mexico; IDN, Indonesia; MMR, Myanmar; NGA, Nigeria; PER, Peru; PHL, Philippines.

Van Boeckel et al. (2015): Antimicrobial consumption in chickens (A) and pigs (B) in 2010. Purple indicates new areas where antimicrobial consumption will exceed 30 kg per 10 km2 by 2030.

The increase in antimicrobial consumption has been attributed towards the growing global demand for meat (FAO, 2017; Van Boeckel et al., 2017; Gelband et al., 2015). This trend is clearly observed in countries within the Asian region, where regulations on antimicrobial use are still lax or in its infancy (Lo et al., 2019). Antimicrobial consumption by livestock in Asia alone is estimated to be 51,851 tonnes by 2030, with chicken and pigs expected to consume an increase of 129% and 125% of antimicrobial respectively by 2030 (Van Boeckel et al., 2015).

Consumers, particularly those in higher-income nations, however, are growing increasingly, albeit slowly, becoming aware of AMR and its adverse effects on human health. The total sales of antibiotic-free chicken in the United States, for example, increased by 34% in 2012 with a Consumer Reports survey in the same year reporting that more than 60% of respondents are willing to pay an extra five cents per pound for antibiotic-free meat.

Food producers are still slow on the uptake, unfortunately. In 2019, it was found that most fast-food chains in the US, including big names such as Burger King, Pizza Hut, Domino’s Pizza, and Chilli’s, still do not have policies or plans in place to reduce antibiotic use in their beef supply. This is worrying, especially since factory farming has been linked to the emergence of antibiotic resistant superbugs, which constitutes a serious threat to human health. In response, famed primatologist and conservationist Jane Goodall has warned that there is not much time left to “change our ways… [and] drastically change our diets and move to plant-rich foods”.

This is the second article of a multi-part series on the topic of antimicrobial use in the agri-food sector by Khor Reports. Read the first post here: Antimicrobial Resistance: Part #1 - The General Gist.

Antimicrobial Resistance: Part #1 - The General Gist

There is a growing danger as big as, but lesser known than, the looming threat of climate change: antimicrobial resistance (AMR). Defined by the Food and Agricultural Organisation of the United Nations (FAO) as “micro-organisms—bacteria, fungi, viruses, and parasites—[evolving] resistance to antimicrobial substances, like antibiotics”, AMR adversely affects food safety and security by rendering medicines much less effective or useless when it comes to treating infections. While it is difficult to quantify the full economic and health impact of AMR, the FAO estimates that global GDP will decrease by 2 to 3.5%, equivalent to USD100 trillion, by 2050, with up to 10 million human lives lost each year.

Generally, antimicrobials in agriculture are used by farmers in the livestock production and fish farming industries to treat sick animals, to prevent future disease from spreading amongst livestock, and to stimulate growth, usually via the feed and water provided to the animals. In plant agriculture, antibiotics are usually sprayed onto plants as a fine mist, although direct antibiotic application on crops is much more modest compared to its use in livestock (McManus et al., 2002); however, it should be kept in mind that indirect applications could still happen via the use of manure and wastewater already contaminated (Zhang et al., 2017).

The amount of animal consumption of antibiotics is rather eye-opening—in the United States throughout 2012 alone, 72.5% of the use of medically important antibiotics were found to have been for animals, with only 27.5% used by humans; in absolute figures, animal consumption of antibiotics was 8.9 million kg compared to human consumption of 3.4 million kg (FDA, 2012; IMS Health, 2012).

“When we have a flock and there’s a lot of sick chickens in that flock, the quickest way to get an antibiotic in them is to put it in the water. We do that through a system that proportions that water out uniformly through all of these water lines so that every drink, every drop has the correct amount of antibiotics.”

The same practices were later adopted in aquaculture, the difference being that antibiotic doses may be proportionally higher than doses in livestock (O’Neill, 2015). Residue from antimicrobials as well as undigested food and faeces containing unabsobed antimicrobials usually remain in the water and the surrounding sediments for an extended amount of time, with some studies further suggesting that 70 to 80% of antibiotics administered to fish are excreted into the water (Cabello et al., 2013; Burridge et al., 2010).

Pathways of AMR genes from closed and open aquaculture systems into the water and its surrounding environment (Watts et al., 2017).

In comparison, the antibiotic use for crops is relatively low, comprising only 0.36% of total agricultural antibiotic consumption (Smalla and Tiedje, 2014). While this resulted in much less attention given to antibiotic use in plants, the potentially extensive use of fungicide may be a source of concern since fungal diseases presents significant threat to crops (O’Neill, 2015).

It is quite undeniable that the issue of AMR is an increasingly alarming one. With news of bacteria developing new resistance to antibiotics and increasing resistance in animals such as dolphins, it is clear that, quoting author and journalist Maryn McKenna in her book Big Chicken, AMR is becoming “an overwhelming threat, created over decades by millions of individual decisions and reinforced by the actions of industries.” It would be interesting to see further developments in this area.

This is the first article of a multi-part series on the topic of antimicrobial use in the agri-food sector by Khor Reports.

Coronavirus issues for Food and Markets, Part #2

Continuing from our piece on the coronavirus impact on food and migrant workers, Pudu wet market became the one of the latest markets to be temporarily cordoned off beginning 15 May to facilitate Covid-19 check ups, while the TTDI market has been partially closed on 19 May as a precautionary measure. These closures followed a spike of 40 new Covid-19 cases on 14 May, 18 of which were from the vicinity of the Pudu market, leading to more than 500 foreign workers at the Pudu market and its surrounding areas undergoing health screenings. It is only recently that a larger portion of cases are from the migrant communities, with Malaysia recording 37 new Covid-19 cases, 22 of which involved foreign workers, on 19 May 2020. 

It is important to note that on the cumulative count, the DG has pointed out that half the Covid-19 cases originated from the Sri Petaling Mosque tabligh event. According to a Covid-19 tracker by Malaysiakini, notable clusters include the said tabligh event, the Malaysian students returning from the Al Fatah pesantren (Islamic boarding school) in Indonesia, the KL wholesale market, the Bandar Baru Ibrahim Majid tahlil and wedding event, Sungai Lui, the Good News Fellowship Conference in Kuching, Sarawak, and the Selangor Mansion. Infection cases involving migrant workers appear to be primarily linked to the tabligh event, the KL wholesale market, and the Selangor Mansion. 

Nonetheless, Malaysia’s migrant situation, although undeniably worrying, has not reached the severity it has in Singapore, where about 15% of foreign workers live in 43 massive purpose-built dormitories. This presents interesting questions: could it be that Malaysia closed its borders in the nick of time or was it because migrant workers in the country do not live in these purpose-built dormitories? That being said, Malaysia’s recent immigration raids have discouraged many migrants from voluntarily coming forward to get screened for Covid-19 since many now justifiably fear deportation should they choose to do so.

German Chancellor Angela Merkel has described the Covid-19 developments at the meat industry as “frightening news”. Source: DW.com/C. Thiel.

On the meat processing front, news from Europe, showing a disturbing mirror image of the meat packing plants in the US: an outbreak of Covid-19 cases in a slaughterhouse in Germany exposed the deplorable working conditions for migrants in the meat industry, where workers were often forced to work long hours and are housed in squalid, crowded quarters. The German Federal Labour Ministry acknowledged that the recent outbreaks in meat processing plants were most likely due to these working conditions and accommodations; Chancellor Angela Merkel further conceded that “there are considerable shortcomings, especially in housing”, stating that it was the responsibility of the local authorities to enforce occupational health and safety standards.

 It is worth mentioning again the common theme of migrant workforce, and Khor Reports had analysed Malaysia’s reliance on foreign labour in 2018 based on 2016 data. This time, an update on the analysis based on 2018 data revealed that the number of non-Malaysian citizens has increased from 3.2 million to 3.3 million—more specifically, a 92,700 increase—from 2016 to 2018.

Please include 1-2 line for each news reference:

• 18 Jun: https://www.foodnavigator.com/Article/2020/06/17/Norway-squashes-speculation-that-salmon-was-source-of-fresh-Covid-wave-in-China

• 22 Jun: Beijing is halting chicken imports from where e.g. Tyson foods have workers sick China suspends imports of poultry from US-based Tyson plant. China’s customs authority said on Sunday it had suspended imports of poultry products from a plant owned by US-based meat processor Tyson. The company confirmed a cluster of coronavirus cases at facilities in Arkansas where a total of 481 people tested positive for the virus.

  https://www.theguardian.com/world/2020/jun/22/china-suspends-us-poultry-imports-from-covid-19-affected-business

• 23 Jun: https://www.theguardian.com/world/2020/jun/22/meat-plant-must-be-held-to-account-covid-19-outbreak-germany

• 24 Jun: good list of food chain -virus worries here... https://www.taipeitimes.com/News/biz/archives/2020/06/23/2003738679

• 26 Jun: https://www.theguardian.com/world/2020/jun/25/abattoir-air-cooling-systems-could-pose-covid-19-risks-expert-warns, https://www.foodnavigator.com/Article/2020/06/26/Can-coronavirus-be-transmitted-via-meat-products, https://www.foodnavigator.com/Article/2020/06/26/Appalling-conditions-blamed-for-spread-of-COVID-19-in-meat-sector

• 28 Jun: https://www.cnbc.com/2020/06/26/this-chart-shows-the-link-between-restaurant-spending-and-new-coronavirus-cases.html

• 1 Jul: Jakarta focus on traditional markets and commuter trains to control transmission: The city administration would also deploy military, police and administration officers to supervise the implementation of health protocol at traditional markets and on commuter trains, as those places had become hotbeds of transmission.... Officers would guard every entrance and exit of all 153 city-owned markets and 150 community markets in the capital and limit the number of visitors to 50 percent of the market’s capacity at any given time. In exchange, markets were allowed to return to their regular operating hours....https://www.thejakartapost.com/news/2020/07/01/jakarta-extends-transition-phase-postponing-further-relaxation-by-14-days.html

• https://www.reuters.com/article/us-health-coronavirus-brazil-meat/mass-testing-at-jbs-brf-plants-in-center-west-brazil-town-reveals-more-than-1000-covid-19-cases-idUSKBN24423Q WSJ

• 6 Jul: U.S. farmworkers are catching the coronavirus. Virus cases are surging in the country's top regions for apple and cherry farming, despite regulations aimed at protecting farmworkers. Farms are now hiring fewer guest pickers and delaying their arrival.

• WSJ 6 Jul: Can restaurants survive a second blow? Eateries were devastated by the first round of pandemic lockdowns. As coronavirus cases surge again in the U.S., restaurants in a number of cities are bracing for another slowdown in sales, just as business had begun to pick up.

• CDC says US has 'way too much virus'to control pandemic... https://www.cnbc.com/2020/06/29/cdc-says-us-has-way-too-much-virus-to-control-pandemic-as-cases-surge-across-country.html

• 10 Jul: https://www.scmp.com/news/china/society/article/3092717/frozen-shrimp-packaging-found-positive-coronavirus-risk-food

Consequences of Oil Palm Expansions - read of an academic article

A recent study on the environment, economic, and social consequences of oil palm plantations has been published in May 2020 by Matin Qaim et al. The article is useful—it collates research findings from other studies and paints a good overview of the issues with regards to oil palm expansions.

Some of the more interesting points in the article are as follows:

1. Total deforestation attributed to oil palm expansions across the world varies between countries. During the last 40 years, oil palm accounts for 47% of total deforestation in Malaysia and 16% in Indonesia. In Nigeria between 2005 and 2015, only 3% of total deforestation was due to oil palm expansion. Globally, approximately half of existing oil palm areas have contributed toward forest loss.

2. Oil palm plantations have strong adverse effects on local and regional air and water quality, especially if the land was establish using fire (and exacerbated by weather events such as the El Niño). Oil palm plantations have also been found to emit volatile organic compounds, promoting the production of haze and aerosol, as well as lowering regional water quality via the excess use of fertilisers.

3. Oil palm plantations have contributed significantly to rural economic development, generating income for farmers, labourers, and those involved in the oil palm supply chains. Generally, farm households across the world do economically better compared to farmers not involved in the cultivation of oil palm. Likewise, rural non-farm households also benefit, mainly in the form of additional employment opportunities due to the labour intensive nature of the industry.

4. There are legitimate concerns regarding unequal distribution of the economic benefits mentioned in the previous point, i.e. some farm households may have better access to capital and hence are able to adopt oil palm much easier than others. Social and human rights issues, including forced and child labour, are also a source of great concern.

5. The article highlights the difficulties faced in the oil palm discourse—it acknowledges that while banning the use of oil palm may help solve the environmental issues the crop brings in the short run, doing so now will result in a large economic loss, which in turn may lead to even larger environmental problems, since farmers will simply replace oil palm with another vegetable oil with higher land requirements per unit of output.

Coronavirus Boosting Plant-based Meat Products

An interesting consequence of the coronavirus pandemic: a surge in demand for plant-based meat. According to Nielsen, sales of plant-based meat in the US saw a jump of 264% in the nine weeks through 2 May 2020, which was further facilitated by collapsing supply chain of the more conventional meat such as beef and pork. The fact that faux meat facilities are less susceptible to outbreak diseases compared to the usual meat processing plants (primarily due to the former relying more on machinery and less on employees, which turn means that workers are not jam packed in close quarters like the latter) as well as their ability to ramp up production without needing to rely on animals to be ready for slaughter contributed toward the considerable increase in alternative meat options. Impossible Foods is already taking advantage of this opportunity—the company recently introduced its plant-based Impossible Burger at 1,700 Kroger and Kroger-owned stores throughout the United States, increasing its retail footprint by 18-fold.

Interestingly, the data also suggests that American consumers are losing interest in pastries and confectioneries—the sales for doughnuts, cupcakes and bread rolls and dessert platters have declined in the same period, with the demand for doughnuts plummeting the most at -45%. On the other hand, beans and legumes are fair game, with dried beans seeing an increase in demand by 140% in the same period, followed by kidney beans and chickpeas.

Now that many are de-confining and heading back to work, there are restrictions and caution about eating out. What are restaurants doing for the economic recovery? The shift of the best restaurant in the world, the two Michelin-starred Noma in Copenhagen from USD500 tasting menus to c. USD25 takeout burgers is a fascinating snippet. The two burger options are a cheeseburger and a quinoa-tempeh veggie burger.

Noma’s quinoa-tempeh veggie burger. Credit: Ditte Isager

Economic Recoveries after the Coronavirus

Another bit on the coronavirus, this time focusing on economic recovery predictions after the coronavirus pandemic. A swoosh recovery scenario is added into the growing realms of possibilities, with some experts agreeing that no matter how it recovers, there is nowhere for the economy to go but up; but changes are substantial. Here are some recent notable headlines:

Economist: Has covid-19 killed globalisation? The flow of people, trade and capital will be slowed

WSJ: In April, U.S. unemployment surged to 14.7%. Among women, the rate rose to 16.2%, compared with 13.5% for men. Economic shock hits lower-income households harder. Almost 40% of households earning less than $40,000 annually experienced at least one job loss in March, compared with 19% of households earning between $40,000 and $100,000, the Fed said.... U.S. retail spending fell a record 16.4% in April from a month earlier as consumers stayed home and demand plunged…. Germany fell into recession in the first quarter, with its gross domestic product shrinking by 8.6% on an annualized basis, but is nonetheless expected to fare better than its neighbors over the balance of 2020. The eurozone economy as a whole contracted by 14.2%, while the U.S. economy shrank by 4.8%.

#CovidEconomics #Covid19 #Economics #EconomicRecovery #Demand #BehaviouralChange