{"id":269826,"date":"2020-03-19T13:01:15","date_gmt":"2020-03-19T16:01:15","guid":{"rendered":"https:\/\/anba.com.br\/?p=269826"},"modified":"2020-03-23T18:42:17","modified_gmt":"2020-03-23T21:42:17","slug":"impact-on-food-trade-seen-as-not-as-severe","status":"publish","type":"post","link":"https:\/\/anba.com.br\/en\/impact-on-food-trade-seen-as-not-as-severe\/","title":{"rendered":"Impact on food trade seen as not as severe"},"content":{"rendered":"

S\u00e3o Paulo \u2013 Foreign trade in Brazil and the world over will take a major hit from the coronavirus crisis. However, the impact will not be even across all industries. So says Brazilian Foreign Trade Association (AEB<\/a>) chairman Jos\u00e9 Augusto de Castro, who spoke with ANBA this Wednesday (18). He believes the impact on international shipping of food items might not be as severe as with other industries.<\/p>\n

\u201cTheoretically speaking, food items wouldn\u2019t be as affected, because they are staples. People still need to eat in spite of the crisis. But they are also impacted,\u201d says Castro. Logistics will be one of the challenges to regular trade flows. \u201cAn industry that might otherwise be working well will be affected by other activities,\u201d he argues, citing problems at seaports around the world.<\/p>\n

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Food trade can’t stop<\/figcaption><\/figure>\n

Food products such as meats, soy, maize and sugar are exactly the cornerstones of exports from Brazil to the Arab countries. Iron ore is also a best-seller. \u201cThese are products that you load onto a ship which departs from Brazil fully loaded and arrives at the destination fully loaded. In theory, the logistics is simpler. Apart from meat, these items do not require refrigeration, and even a ship carrying meat can stop at a port with enough power outlets to keep the containers chilled,\u201d says Castro.<\/p>\n

According to him, a major issue in Chinese ports these days is that there are no outlets. Therefore, the product needs to be kept in refrigerated shipping containers aboard the ships, and this entails high costs as long as ships stay docked at the port. \u201cSomeone is taking on that cost,\u201d he says. But considering the profile of exports, Castro believes Brazil\u2019s trade with Arab countries will not struggle as badly as that with China and the US, for instance.<\/p>\n

For the time being, it\u2019s still business as usual in Brazil\u2019s agribusiness industry, which underpins food trade, but a distribution system is also required in order for the product to reach its buyers abroad, where much of the demand is. Jos\u00e9 Augusto de Castro notes that Brazil\u2019s annual food output is 240 million tons, and crops don\u2019t ship out entirely upon harvest \u2013 some of it is stored and then distributed via seaports throughout the year. \u201cAt that point, it\u2019s no longer about production; it\u2019s about logistics,\u201d he says.<\/p>\n

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Coronavirus: problems at ports<\/figcaption><\/figure>\n

Aside from ships docked at ports because buyers won\u2019t unload the cargo due to weak demand and inability to store, leading to port congestion, there\u2019s also the coronavirus\u2019 potential impact on the labor force. This Wednesday (18), workers at the Port of Santos were threatening to go on strike. \u201cIt compounds a scenario that\u2019s already bad,\u201d he says. The same can happen in other countries due to fear of contagion. \u201cA ship\u2019s crew members are really highly likely to contaminate other people,\u201d argues Castro.<\/p>\n

Besides logistics, foreign trade will also take a hit in case industry output slows down. Early this month, Brazil\u2019s National Motor Vehicle Manufacturers Association (ANFAVEA) said production might decrease due to a shortage of Chinese-made parts. \u201cIt\u2019s a conjunction of factors,\u201d says Castro regarding the potential impact of coronavirus on Brazilian trade. \u201cHowever, in the case of Brazil, production hasn\u2019t been affected yet,\u201d he says.<\/p>\n

Even though he expects the impact on food trade to be milder than elsewhere, the AEB\u2019s chairman believes shortages are less likely in agricultural countries. \u201cA market where access to food isn\u2019t as easy will suffer in case exporters fail to address logistical issues and get the cargo in,\u201d he explains. Still, he points out that producing countries like Brazil need to export. \u201cBrazil has a big output, but it has to ship it abroad, because domestic demand isn\u2019t enough, no matter how much consumption goes up,\u201d he says.<\/p>\n

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Arab countries are food importers<\/figcaption><\/figure>\n

Most Arab countries, especially in the Gulf, are dependent on food imports, and Brazil is a major supplier. At this time, some Arab economies are getting ready to live on less oil money, since prices slid almost 50% in the last few days. \u201cAs oil prices go down, Arab countries may also tend toward curbing demand, because oil export revenues will decrease greatly,\u201d he says. Nevertheless, eventual cuts in imports are expected to happen in industries not as crucial as foods.<\/p>\n

But even if the amount of food exported doesn\u2019t drop as much as in other industries, revenues are likely to be much weaker, since weakening demand is causing prices to drop. This means less cash coming into Brazil from farm product exports. Lower prices for other commodities, such as oil, also impacts the Brazilian trade balance, since the country both exports and imports some types of oil and oil products.<\/p>\n

\u201cWe are unable to quantify it at this point, because we\u2019re seeing a major change. The impact will surely be very great, but there\u2019s no quantifying it,\u201d Castro says. He explains that commodities account for 65% of exports from Brazil, and notes that prices and shipped volumes have already changed for oil, ores and soy. \u201cI am mentioning just three items exported from Brazil to exemplify the impact that we\u2019ll see. Statistics are not portraying this yet, because there\u2019s a lag between fact and statistics, but we\u2019ll surely have a very big impact,\u201d he says.<\/p>\n

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Soy: storage before shipping<\/figcaption><\/figure>\n

The AEB chairman believes that March figures will begin to reflect the coronavirus crisis. The first fortnight of the month saw USD 8.6 billion shipped from Brazil, down 5.6% in daily average numbers, but week two alone saw a much sharper downturn at 20%. In terms of currency, exports slid for ore, soy, soya bran, coffee, poultry, earthmoving machinery and devices, aircraft, ethanol, taps, valves and their parts, etc.<\/p>\n

Castro explains that right now, it\u2019s hard to get orders on the market due to port congestion, and companies are trying to fast-track their shipping. There\u2019s fear that the situation might worsen. \u201cCompanies are trying their best to ship whatever they can fast,\u201d he says. However, there are news of improvement in the Chinese scenario. \u201cLook: if the news that\u2019s coming out is really true, then it seems China is beginning to envision going back to normal,\u201d says Castro, noting that the country accounts for 20% of all global trade.<\/p>\n

He believes opportunities will come up for Brazil in today\u2019s foreign trade scenario, although they will be very topical, with importers seeking alternative suppliers in specific cases. Despite his personal view on how coronavirus might impact foreign trade, Castro believes it\u2019s hard to make any predictions. \u201cWe have an indication of what might happen. There are no certainties, but unfortunately we know that what\u2019s coming isn\u2019t good. Every economic indicator is weak right now,\u201d he says.<\/p>\n

Translated by Gabriel Pomerancblum <\/strong><\/p>\n

Supplied\/AEB<\/div>\n
Cristian Hernandez\/AFP<\/div>\n
Anton Raharjo\/AFP<\/div>\n
AFP<\/div>\n
\u00a9Nelson Almeida\/AFP<\/div>\n","protected":false},"excerpt":{"rendered":"

Brazilian Foreign Trade Association chair Jos\u00e9 Augusto de Castro expects food products to be the industry least impacted by coronavirus when it comes to exports, although there will be repercussions from plummeting prices and issues at seaports.<\/p>\n","protected":false},"author":1455,"featured_media":269804,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[91],"tags":[14479,14478,14480,14439,14155,3998,14481,14477],"class_list":{"0":"post-269826","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-aeb-en","9":"tag-aeb-chairman","10":"tag-castro-en","11":"tag-corona-en","12":"tag-coronavirus-en","13":"tag-foreign-trade-association","14":"tag-jose-augusto-de-castro-en","15":"tag-presidente-da-aeb"},"wps_subtitle":"Brazilian Foreign Trade Association chair Jos\u00e9 Augusto de Castro expects food products to be the industry least impacted by coronavirus when it comes to exports, although there will be repercussions from plummeting prices and issues at seaports.","_links":{"self":[{"href":"https:\/\/anba.com.br\/en\/wp-json\/wp\/v2\/posts\/269826","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/anba.com.br\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/anba.com.br\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/anba.com.br\/en\/wp-json\/wp\/v2\/users\/1455"}],"replies":[{"embeddable":true,"href":"https:\/\/anba.com.br\/en\/wp-json\/wp\/v2\/comments?post=269826"}],"version-history":[{"count":0,"href":"https:\/\/anba.com.br\/en\/wp-json\/wp\/v2\/posts\/269826\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/anba.com.br\/en\/wp-json\/wp\/v2\/media\/269804"}],"wp:attachment":[{"href":"https:\/\/anba.com.br\/en\/wp-json\/wp\/v2\/media?parent=269826"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/anba.com.br\/en\/wp-json\/wp\/v2\/categories?post=269826"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/anba.com.br\/en\/wp-json\/wp\/v2\/tags?post=269826"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}