THE NETHERLANDS, Utrecht. European agricultural production continues. The key risks for European food supplies arising from the Covid-19 virus outbreak are: Labor availability issues that cause trouble in harvesting crops, collecting animals, and executing processing and packaging activities at food processing companies; Supply risks for grains, oilseeds, and meals from distant origins, following potential export restrictions by governments, along with hiccups at important choke points in North and South America and Indonesia/Malaysia.
Furthermore, in several markets, the collapse in demand is resulting in farmers and processors facing heavy losses. The government will have to intervene in several of these markets in order to ensure the continued supply of these products into the future, when the situation has once again returned to normal.
So far, the impact of the Covid-19 virus outbreak – along with related lockdown measures – on the growth of crops and animals at farms in Europe seems to be manageable. Primary agricultural production is continuing. In Europe, in general, the planting of crops in spring is not at risk. Inputs such as seeds, fertilizers, and crop protection chemicals are already either at the farm or in warehouses at nearby farm inputs retailers.
Livestock rearing, and milk and egg production are also continuing. Animal feed is still reaching farmers. There are however, some issues in relation to feed ingredients such as amino acids and vitamins, along with some active ingredients for crop protection products from China – all due to uncertainty of supply out of China, the main supplier of these ingredients. These uncertainties are mainly resulting in increased price volatility of these ingredients.
However, the harvest of some crops and the collection of animals at farms have become much more challenging. In sectors in which hired labor is a necessity for the harvesting of crops or collection of animals – such as vegetable harvesting and broiler collection – there are hiccups.
The social distancing requirements limit the number of people who can work together in small areas. One shift cannot replace the previous shift without some time in between to prevent the risk of shifts contaminating each other. Transport of labor to sites requires people to travel separately. Furthermore, availability of immigrant labor has declined in most regions, as immigrant workers have returned to their home countries and/or are not allowed to travel across borders. These are all issues that raise costs and reduce capacity of harvesting. In some cases, this will lead to a loss in production.
The transport of agricultural products and animals from farms to processors is continuing in most cases. European governments have exempted food logistics companies and food processors – both considered vital sectors – from lockdown measures. Some specific issues are occasionally arising with regard to transport by truck to and from areas within Europe heavily affected by the virus, leading to higher transport costs. The potential lack of drivers, following high rates of sick leave, also entails a risk for logistics.
At processors, labor issues are once more the most pressing concern. In addition to the aforementioned labor issues, many employees have been calling in sick. Sick leave percentages of 10% or higher have become common in many places. This impacts labor-intensive processing and packaging activities such as slaughtering, deboning, fish processing, and vegetable processing.