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Effects of COVID19 on agribusiness in Colombia, Peru & Ecuador - UPDATE #1
The Covid-19 pandemic has hit Latin America and the Caribbean at a very weak moment. Ecuador would be the second most affected country in the region, only behind Mexico. The economy is expected to plummet by -6.3% in 2020, far beyond expected contractions in Colombia (-2.4%) and Peru (-4.5%).
Flowers exports during Mother's Day season fell by as much as 40%. In a traditional year, more than 600 million flowers must have been sent abroad from Colombia. Some exporters have reported a drop in orders from abroad between 30% and 40% less than a year ago. Thus, exports estimations for this season surrounded by Covid-19 could not exceed 360 million stems. In spite of this, around 30.000 orchids were commercialized in the domestic market, according to Colviveros.
After the Prosecutor General's Office opened 1,204 investigations, Colombia's Supreme Court will investigate the cases of Agriculture Minister Rodolfo Zea and 11 governors for alleged corruption with coronavirus emergency funds.\
Decree signed to impose countervailing duties on ethanol from the US for a period of two years. Ethanol producers in Colombia have been asking the government for more than a year to apply compensatory measures to biofuel arriving from the US. The request was made taking into account that the producers justified to the Ministry of Trade that a liter of US ethanol costs between USD 1 to 1.50, while the Colombian cost is at USD 2.20.
Cocoa exports continue despite the low global demand for chocolate. In Colombia, Fedecacao reported that the production and operation continue normally despite the difficulties due to the covid-19. By the end of April, the global demand for cocoa had fallen 5% compared to the same quarter of 2019, which also had an impact on Colombian exports.
Despite the disruption, food prices have largely remained stable. This can be attributed to efforts to maintain supply chains, as well as clear communication from government figures. Notably, minister of agriculture and irrigation and Lima's mayor intervened to avoid price speculation by personally overseeing deliveries at Lima's wholesale food market.
E-commerce has experienced sharp growth, especially in terms of the delivery of essential supplies such as food. Although figures for April are not yet publicly available, projections from the Lima Chamber of Commerce suggest online sales will have grown by 50% relative to March.
Peru's Minister of Foreign Trade and Tourism stated in an interview on April 27th that food exports are expected to maintain a substantial rhythm throughout 2020.
In an attempt to keep export levels stable, the Ministry of Production has issued over 8,000 certificates of origin for Ecuadorian exports to the EU, Russia and Latin American countries. Coordination is taking place with Colombia to ensure the flow of goods through the border and guarantee exports worth USD 500 million. Transport volume limits, regular logistic routes and delivery schedules are being relaxed in an attempt to provide greater flexibility during the emergency. At the same time, the export of 24 vital products (mostly medicines and equipment) has been restricted to ensure national availability. Similarly, a 0% tariff rate is being applied for medical products required for the pandemic.
Ecuadorian roses could arrive in the United States without tariffs at the end of the year, according to Ecuadorian Ministry of Production, Foreign Trade, Investments and Fisheries. For the flower sector, strongly affected by the health emergency of COVID-19, this would mean a step towards the uprising of the industry. According to data from the guild, the flower sector generates 40,000 direct jobs, and at least 55,000 indirect ones.
Dairy sector highly affected due to limitation in the mobilization schedule and the low demand by the milk processing industries. Commercialization is hampered by these situations, so in some cases farmers have given milk away to their communities or they have had to throw it away. Estimations indicate a 50% loss in this sector.