Covid-19 inspired grain stockpiling and export restrictions could result in hunger challenges for the developing world within six months, according the chief executive of compliance and risk management software provider Decernis.
On a Thursday conference call hosted by Decernis’ parent company FoodChain ID, which is backed by Paine Schwartz Partners, CEO Kevin Kenny said he was “very worried” about how recent changes in wheat and rice trade could impact developing countries.
“It’s been lost in the news, but there is a locust epidemic right now in the Middle East and in certain countries in Africa. That means that the rice and wheat that they had – which was meager and not enough – is getting eaten alive, literally,” he said.
“They are the ones that are going to suffer the most from all of Eastern Europe shutting off its wheat exports. They are the ones that are going to suffer from south-east Asia deciding to nationalize and keep the rice in-house. It’s going to have a dramatic impact; you are going to have a hunger problem coming in six months or 12 months in some of the developing countries.”
Kenny stressed the unprecedented and fluid nature of covid-19 related challenges currently faced by global food supply chains, drawing on feedback from clients across the ingredients, produce and consumer packaged goods sectors. Despite sentiment elsewhere that the worst of the covid-19 crisis has passed, he said, the full extent of impacts on the food supply chain remains largely unknowable.
Many of the dynamics he discussed, from weakening consumer loyalties and changes to consumer packaged goods sales and supplier payment strategies, to the lack of agricultural labor, collapsing commodity prices and economic hardship faced by families and small businesses, reflect a lack of mobility resulting from covid-19 related lockdowns worldwide.
“There are so many things going on at the exact same time that we don’t know how to deal with it,” he said, after describing complications stemming from mixed messages at local, state and federal levels of government. “Every problem that you think you’ve solved creates new problems. This is happening in the company context; it’s happening in the family context. It’s a huge challenge.”
The fact the US has seen covid-19 cases triple despite $100 million spent in worker safety investments in the past month alone, he said, demonstrates that countries around the world are likely to see food production challenges continue even after lockdowns are eased.
Though it is impossible to say exactly where the most acute supply chain problems are likely to surface, said Kenny, crops and foods that are the result of complicated production processes – such as cocoa, olive oil and coffee – are among categories most likely to see some impact in coming months.
“Anything that’s difficult to grow, anything that’s difficult to process – think meat, think poultry – is going to be at risk for some level of scarcity or some price exposure in the next six months, there’s no way around that,” he said.
Kenny predicted that prices for baking goods within the US will rise substantially between now and the end of the year.