Coronavirus, named COVID-19 by the World Health Organization, is now spreading across Latin America.
“While its late arrival has allowed the [Latin American] region’s governments to take preventative measures to limit the spread of the virus, it poses threats and challenges to a region with high migration rates, high levels of inequality, often weak health care systems, and political turbulence,” writes Emily Gregg from the Latin American Bureau.
Governments have been acting to contain the virus by closing borders, schools, and universities. However, the actions vary considerably depending on the country and region within the same country.
The leaders of two of the region’s biggest economies, Brazil and Mexico, have been criticized for flouting advice issued by the World Health Organization (WHO) that urges people to practice social distancing and governments to ban large gatherings to prevent the spread of the virus.
In recent days, both Brazilian president Jair Bolsonaro and Mexico’s Andrés Manuel López Obrador have attended mass events, shaking hands and taking selfies with supporters.
We take a look at some key developments affecting the food industry.
Coronavirus, named COVID-19 by the World Health Organization, is spreading across Latin America.
Governments have been acting to contain the virus by closing borders, schools and universities. However, the actions vary considerably depending on the country and region within the same country.
The leaders of two of the region’s biggest economies, Brazil and Mexico, have been criticized for flouting advice issued by the World Health Organization (WHO) that urges people to practice social distancing and governments to enact bans on large gatherings to prevent the spread of the virus.
In recent days, both Brazilian president Jair Bolsonaro and Mexico’s Andrés Manuel López Obrador have attended mass events, shaking hands and taking selfies with supporters.
“While its late arrival has allowed the [Latin American] region’s governments to take preventative measures to limit the spread of the virus, it poses threats and challenges to a region with high migration rates, high levels of inequality, often weak health care systems, and political turbulence,” writes Emily Gregg from the Latin American Bureau.
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In Mexico, where consumers have begun to panic buy, the business sector sought to calm the public, saying it was in “constant contact” with federal and state authorities to guarantee transport and replenish stocks.
“The country has sufficient resources to guarantee food, processed products, canned goods, cleaning and hygiene products for all Mexicans. There are sufficient inventories to supply goods to families, homes, hotels, and restaurants,” said the Business Coordinating Council (CCE) in a joint statement signed by 12 trade associations including the National Agricultural Council (CNA) and national retailers’ association ANTAD.
“We are calling on the population to remain calm and responsible, and not panic buy or stockpile products. It is not necessary or fair and it affects those who have urgent needs.
“It is of the utmost importance that we all contribute in the next weeks to contain the exponential propagation of the virus, following health authorities’ recommendations,” it added, calling on Mexicans to show solidarity amid the pandemic.
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As the number of confirmed cases in Brazil rises, ABIA, the trade association that represents food manufacturers, has been steering a crisis committee set up in partnership with ABRAS, the Brazilian Association of Supermarkets, and APAS, a retail trade group for the Sao Paolo region.
The committee has been monitoring the food supply situation in the country in order to minimize any impacts, and the three trade groups sought to calm jittery consumers.
“Supply logistics remain within the normal range, as well as stocks, and there is no immediate risk of food shortages in the country,” they said.
ABRAS added that, if necessary, supermarkets were prepared to increase supplies as they do during seasonal shopping spikes.
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In Argentina, the first Latin American country to report a death from the virus, concerned citizens have been stocking up on basic products as they get ready for extended periods of isolation which, in some cases, has led to empty shelves. However, according to Monica Ganley, principal at Buenos Aires-based agri-food consultancy firm Quarterra, the reaction has not been as severe as in Europe or the US.
“In many cases, consumers don't have enough expendable income to purchase huge amounts of product at a given time.”
Although demand spikes could well produce some supply hiccups, the fact that many of Argentina’s basic food products are manufactured locally means major disruptions over the medium term could be avoided, she added.
“Of course, manufacturing and distribution will slow as increasing numbers of employees stay home. However, I am optimistic that the supply chain and inventories will be robust enough to avert a major disaster,” she told FoodNavigator-LATAM.
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Nevertheless, Ganley said she was concerned about the pandemic's impact on the economy of Argentina and South America at large.
“[For countries] that depend heavily on commodity exports, including agricultural products, global slowdowns can deprive the economy of critical financial inflows. Furthermore, I think the negative economic impact will persist for months after the pandemic is under control.”
These concerns were echoed by Rabobank analysts, in a Global Economic Outlook report, published on 12 March.
“Emerging markets that rely on exports of raw materials such as Brazil (iron ore, oil, soy beans), Russia (oil and gas) and Chile (copper) are facing a drop in income from their principal export products, as the prices of many commodities have declined substantially since the virus outbreak,” they wrote.
The association of Guatemalan foreign trade, AGEXPORT, said the country’s agricultural sector has already been hit hard by a drop in exports of fresh fruits and vegetables, many of which are shipped to Europe and the US.
It called on the government to adopt a raft of measures to lessen the negative impact on the country’s economy and population, including a one-month Value Added Tax (VAT) exemption on basic food products and medical supplies
Soy in Brazilian warehouse. © GettyImages
According to Rabobank, the currencies of emerging countries are under pressure as negative sentiment prompts investors to reduce risk in their portfolios and, accordingly, reduce their holdings in these markets.
Serious currency depreciation could be a problem for emerging economies because products from abroad become much more expensive while countries such as Argentina may find it more difficult to service their foreign currency debt, the analysts added.
As COVID-19 continues to pull down global growth, Rabobank called on central banks and governments to implement robust responses to prevent the virus crisis becoming a financial crisis as well.
The United Nations Conference on Trade and Development (UNCTAD), estimated that COVID-19 could cause global foreign direct investment (FDI) to drop between 5 and 15%, according to a report published on 8 March.
Although the UN agency had previously predicted steady levels of investment for the 2020 – 2021 period with a possible 5% increase, it has now revised its figures, warning that investment flows could slump to their lowest levels since the 2008 financial crisis.