The coincidence of the expected peak of the Covid-19 epidemic in Brazil and Argentina with the soybean export season of April and May has sparked concerns in major buyer China, as roadblocks and sickness among transport workers create logistical problems.
During a press conference on the subject in early April, Wei Baigang of the Chinese Ministry of Agriculture made it clear that the government was focusing on soybeans, one of the few essential foodstuffs that China imports in massive quantities. Imported soybeans are mainly used to feed China’s vast hog population.
“[We] will strengthen coordination with exporting countries and continue to promote plans to revitalize soya at home to ensure supply,” he said, referring to a policy released in October last year that aims to develop Chinese self-sufficiency for key crops. Mr. Wei also said China would resume imports of soybeans from the U.S., following the latest trade agreement between the two countries — which sparked concerns in Brazil.
Meanwhile, agribusiness in Brazil has moved to allay fears of supply shortages. According to Sérgio Mendes, executive director of the Brazilian Association of Grain Exporters (ANEC), coordination between the Ministries of Agriculture, Infrastructure, and Health will stop the crisis from decimating the supply chain.
“They are doing a great job, working quickly and anticipating events with decrees that would normally take weeks,” he said.
However, worries persist. In Brazil — the main supplier of China’s soybeans — truck drivers have complained about their exposure to Covid-19 and the lack of essential services on highways, as most businesses are closed under social isolation measures.
In neighboring Argentina — the world’s third-largest soybean exporter — the government’s Covid-19 containment policies have blocked access to 70 cities, alerting agribusiness to the risk of acute shortages in both the domestic and export markets over the next two months.
Shipments of soybeans, maize, and other agricultural products were also delayed at the end of last month due to sanitary inspections by the Argentinian government, which has tested cargo ship crews for coronavirus infections.
Covid-19, soybeans, and logistics
The pandemic and restrictions on movement have already affected grain exports in Argentina, which saw revenues dip 6.9 percent in March compared to the same period last year.
It was a different story in Brazil. According to the Brazilian Department of Foreign Trade, soy exports grew 37.6 percent last month compared to March 2019.
“We believe that any future specific impacts of Covid-19 could mainly reflect logistics issues related to the flow of exports,” said Herson Brandão, Brazil’s Secretary of Foreign Trade Intelligence and Statistics. “We have information that exports of goods such as soy, petroleum, and iron ore were not affected.”
Chinese media have reported that stocks of essential products are sufficient, in an attempt to quell worries about food security in a country that needs to feed a fifth of the world’s population with only around seven percent of its arable land.
As the pandemic spreads, countries such as Kazakhstan have begun to limit exports to China. But while the Chinese government may have secure supplies of wheat and rice, the same cannot be said of soybeans.
“The countries that need special attention are [in] Africa, South Asia, and Central and South America,” said Fan Shenggen, professor at the School of Economics and Administration at China Agricultural University, in an interview with China Science Daily in late March. “Because these developing countries still suffer from hunger and malnutrition, they have much less capacity to deal with crises than developed countries in Europe and [North] America.”
Government ensures flow of soybean exports, but truckers worry
Officials from Brazil’s Infrastructure Ministry wrote to Diálogo Chino claiming exports of commodities during April and May will be unaffected, and that work continues on the maintenance and improvement of highways, ensuring that soybeans and other raw materials can be shipped as normal.
The ministry has implemented a series of measures since the beginning of the coronavirus crisis, including the nationwide coordination and maintenance of services essential to truckers, such as mechanics’ workshops and tire shops, as well as roadside restaurants, many of which had closed. It has also mapped the 130 support stations that remain open on federal highways.
Truckers were also included in the priority group for the country’s flu vaccination campaign, which would serve to reduce their vulnerability to Covid-19 and enable quicker diagnosis. Drivers have also been benefitted with the temporary suspension of document renewal requirements.
But Brazil’s dependence on individual truck drivers continues to be the biggest weakness of the country’s logistics network. Drivers are subject to working conditions that are often precarious, along with extremely volatile rates for transporting cargo. When truckers revolted and went on strike in 2018, the country came to a near standstill and GDP growth was knocked back 1.2 percent.
In early April, the Brazilian Association of Truck Drivers — which represents 560,000 drivers in the country across its 92 unions — wrote to President Jair Bolsonaro to complain about conditions on the country’s highways and the lack of incentives for this sector:
“If the goal is to invest in fighting the coronavirus, it is important to take care of truck drivers as well as doctors and nurses.”
This article was originally published by Dialogo Chino and is reposted here with permission