BFM: Demand is the Real Issue

Last week, our principal, Khor Yu Leng, was invited to speak on BFM on whether demand is the real problem in the palm oil sector amidst the Covid-19 pandemic, and if the restrictions on foreign workers will adversely impact the supply chain. Click on the following link to listen to the podcast: Demand is the Real Issue.

“The palm oil sector supply chain, what can be considered an essential service during the many phases of the movement control order was largely not impacted by Covid-19. We ask Khor Yu Leng whether demand is the real issue here and if the restriction on foreign labour will be a problem for Malaysia’s most important agricultural export.

Produced by: Dayana Mustak

Presented by: Wong Shou Ning, Khoo Hsu Chuang.”

SIIA Haze Outlook 2020

For the second annual edition of its Haze Outlook, the Singapore Institute of International Affairs (SIIA) teamed up with Segi Enam Advisors to provide a risk assessment report on the transboundary haze incident within the ASEAN region for the year 2020. Officially published last Thursday, our findings indicate a moderate risk of a severe transboundary haze incident in 2020. While weather outlook remains favourable, the Covid-19 pandemic has raised justifiable concerns about Indonesia's preparedness to deal with the fires and haze.

As co-authors, Segi Enam Advisors collated and examined qualitative and quantitative data from relevant literature published throughout the recent years. Working on a weather-peat-people framework, we looked at the latest academic research on, inter alia, peatland management and fire prevention as well policies and efforts with regard to the same. We also collected and analysed weather data, i.e. temperature and rainfall conditions, to complete the overall risk assessment of a haze for the year 2020.

Segi Enam also provided geospatial analysis of two key areas of fires incidences in the Riau and Central Kalimantan regions (please refer to Appendix A of the report). The two case studies give a geographical overview of the aforementioned areas as well as an analysis of hotspot locations detected in 2015 and 2019.

Antimicrobial Resistance: Part #4 - Antimicrobials in Plants

Perhaps a more optimistic start to our antimicrobial resistance (AMR) series: the annual amount of antibiotics used for treating crops is relatively low compared to the amount used in livestock production, comprising only 0.36% of total antibiotic consumption in the agricultural industry (Smalla and Tiedje, 2014). This is because there are only a relatively small amount of bacterial diseases so difficult to control, antibiotics are required to compensate for the crops’ lack of natural resistance to these diseases (FAO, 2018a; McManus, 2014). It is due to this reason that antibiotic use on crops fell out of the limelight when it comes to major efforts to reduce its usage in the agri-food industry.

Nevertheless, there remain some areas of concern. In pre-harvests, antibiotics are largely administered to plants in the form of fine mists (Zhang et al., 2017). Indirect application could also still happen via the use of soil, organic fertiliser, e.g. manure, and irrigation water already contaminated with AMR bacteria (FAO, 2018b). Unfortunately, the full effects of how antibiotics interact through these methods are complex and still relatively understudied. Antibiotics applied via the usual air blast sprays to trees planted in an orchard system, for example, were found to not always reach their intended targets since sprays may drift or become lost by runoff due to external events such as rain, thereby complicating studies (Raman et al., 2020).

Pathways of antimicrobial agents (AMA) and AMR dissemination. Movement of AMA or AMR is indicated by the overlapping circles and arrows, while colours denote group reservoirs. Stars represent AMR genes and bacteria hotspots. Asterisks represent possible AMR genes and bacteria hotspots (Thanner, Drissner, and Walsh, 2016).

Data on antibiotics in the context of plant agriculture is scarce, even more so than its aquaculture counterpart. Global estimates on the antibiotic use is virtually non-existent, and the full effects of said use, including how consuming crops contributes to the spread of antibiotic AMR genes, has yet to be fully understood. Fortunately, there is gradually mounting evidence of the potentially adverse effects on public health and the environment: vegetables grown conventionally and organically to be consumed raw facilitate the spread of AMR genes (van Hoek et al., 2015); AMR bacteria transmitted from plants to humans could asymptomatically “colonise” the intestines for an extended period of time before being discharged from the body (Maeusli et al., 2020); already contaminated crops grown as feed introduces AMR genes into the animals fed with these crops, thus accelerating the spread of AMR genes into the food chain (Marshall and Levy, 2011).

This is the fourth article of a multi-part series on the topic of antimicrobial use in the agri-food sector by Khor Reports. Read the previous posts here: Antimicrobial Resistance: Part #1 - The General Gist; Antimicrobial Resistance: Part #2 - Antimicrobials in Livestock; Antimicrobial Resistance: Part #3 - Antimicrobials in Aquaculture.

Moo-re Carbon? Emissions from Dairy Giants Exceed Major Carbon Polluters

A recent study by the Institute for Agriculture & Trade Policy (IATP) has revealed interesting information: in 2017, 13 of the globe’s largest dairy corporations emitted more greenhouse gases (GHG) combined than BHP and ConocoPhillips, the two major carbon polluters of the world. The report stated that the total combined emissions released by big names in dairy industry, such as Group Lactalis, Saputo, Danone, and Amul, increased by 11% between 2015 and 2017. What is worrying is that while there is evidence to suggest that the food system is responsible for about 37% of global emissions, there is little public attention on the meat and dairy industry, unlike the mounting scrutiny received by the fossil fuel corporations.

Source: Sharma (2020)

Unsurprisingly, the meat and dairy industry have denied these claims. The European Dairy Association (EDA) has called the findings “an insult… to any rational thinking”, arguing that six of the named 13 dairy companies were based in Europe and, as such, are “fully subscribed to the EU Green Deal with [a] shared ambition to make Europe the first climate neutral continent by 2050.”

The IATP study makes a good opportunity to revisit our post on the ASEAN Vegan Map, which shows online interest in the subject of veganism across Southeast Asia. The piece compliments our previous preliminary survey findings that suggest a rise of plant-based diets, particularly among young professionals.

Antimicrobial Resistance: Part #3 - Antimicrobials in Aquaculture

Next up on our antimicrobial resistance (AMR) series: antimicrobials in aquaculture. Similar to livestock production, antimicrobials are used in fish farms to treat and prevent diseases, and are commonly administered via water medication and medicated feed. While these methods do encourage the development of AMR, they are not its only source—the use of organic fertilisers, such as farm animal wastes, also contribute toward AMR, especially if the waste was from livestock already extensively fed with antimicrobial agents (Aly and Albutt, 2014).

Aquaculture production has surpassed wild catch since 2012, with an average person now consuming almost double the amount of seafood compared to the past 50 years (Ritchie, 2019).

More crucially, while the use of antibiotics in aquaculture remains the same as their livestock counterpart, the dosage administered in the former can be much higher proportionally compared to the latter (O’Neill, 2015). This, combined with the fact that antibiotics can remain within the aquatic environment for an extended period of time—there is evidence to suggest that 70 to 80% of antibiotics fed to fish are excreted into the water (Cabello et al., 2013; Burridge et al., 2010)—has led to experts dubbing aquaculture sites as “reservoirs” and “hotspots” for AMR genes (Van et al., 2020; Watts et al., 2017; Muziasari et al., 2016).

The situation is further aggravated by the rapidly growing practice of aquaculture itself—since the stress of industrial-scale farming compromises the fish’s immune system, it justifies the widespread use of antibiotics as a way to compensate for the fish’s increased vulnerability to infections and diseases (Meek, Vyas, and Piddock, 2015). A recent study between CIRAD and French National Research Institute for Development has also shown global warming may even promote the use of antibiotics, particularly in the low- and middle-income countries—warmer temperatures almost always result in higher mortality rates of fish, which could lead to an increased use of antibiotics (Reverter et al., 2020).

Unsurprisingly, the development of AMR in aquaculture production (as with any other agri-food industries where antibiotics are used) adversely has devastating affects on the environment and public health, typically in the form of superbugs, i.e. bacteria that should have been killed by antibiotics, but instead evolved to become stronger. Yet, overall data on the amount of antibiotics used in aquaculture and how much of it is absorbed into the aquatic surroundings is still far from satisfactory. Approximately 90% of global aquaculture production is carried out in countries where regulations on antimicrobial use are either lax or non-existent, resulting in data that varies greatly from nation to nation (Watts et al., 2017).

The figure above depicts the global multi-antibiotic resistance (MAR) index calculated from aquaculture-derived bacteria. An MAR index of 0.2 indicates a high-risk of antibiotic contamination. The mean global MAR index is 0.25. 28 countries out of the 40 selected for study displayed an index of higher than 0.2 (Reverter et al., 2020).

Nonetheless, there is evidence to suggest that antibiotic use is dependant on a country’s regulations and legislation on the same. For example, in Chile, where there have been resistance from some aquaculture companies against the government’s attempts to regulate antibiotic use, approximately 300 tonnes of antibiotics is used every year in the aquaculture industry. As a comparison, Norway imposed stringent legislation on antibiotic use in aquaculture (and largely replaced with more sustainable alternatives such as vaccines) and now relies on only one tonne per annum (FAO, accessed June 2020).

There is some sliver of hope, however. Some companies are beginning to respond to the growing concern on the impacts of antibiotic use. Chilean-based Marine Harvest, one the largest marine farming enterprise in the world, has pledged to slash its antibiotic use from 450gm per metric tonne of harvested salmon to 150gm per metric tonne. Lerøy Seafood Group from Norway has stopped using antibiotics in their fish farms since 2017 (although it should be noted that as mentioned before, Norway as a whole had already enforced strict monitoring of the antibiotics use, which included measures such as a traceability system that tracks the health and harvesting details of fish products). Nevertheless, experts widely agree that much more needs to be done.

This is the third article of a multi-part series on the topic of antimicrobial use in the agri-food sector by Khor Reports. Read the previous posts here: Antimicrobial Resistance: Part #1 - The General Gist; Antimicrobial Resistance: Part #2 - Antimicrobials in Livestock.

---

In separate news, a newly found cluster of coronavirus cases from the Xinfadi meat market in Beijing recently triggered a consumer panic after traces of the virus were found on a chopping board used to cut up imported salmon. The discovery prompted China to temporarily stop salmon imports into the country as numerous eateries and supermarkets began pulling foreign fish and meat products from their menus and shelves.

In response to this incident, the Norwegian Food Safety Authority and Norwegian Seafood Council stressed that there are no cases of coronavirus infections spreading via contaminated food. This claim was later backed by the China Center for Disease Control and Prevention, who further clarified that there is currently no evidence to suggest that salmon itself could host the said virus.

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.