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Supply Lines: Scrambling for food

Supply Lines
Bloomberg

Across the globe, nations are racing to bulk up their food supplies with hunger on the rise and supply chains vulnerable to more coronavirus lockdowns.

Jordan has built up record wheat reserves while Egypt, the world's top buyer of the grain, took the unusual step of tapping international markets during its local harvest and has boosted purchases by more than 50% since April. Taiwan said it will increase strategic food stockpiles, and China has been buying to feed its growing hog herd.

The purchases underscore nervousness over global shipments, especially if further spikes in cases once again wreak havoc on global trade. Earlier this year, fallout from the pandemic left food stranded at ports, sparked trucking delays and created logjams at warehouses.

Read more: A 'Just-In-Case' World Is Rushing to Hoard Food as Prices Rally

Meanwhile, hunger is surging across the world. With many nations looking to start pulling back on recent stimulus measures, there's growing concern that food inequality problems will get worse.

In the U.S., for example, the government's hunger-relief plan known as the Farmers to Families Food Box program is starting to wind down. The supplemental $600 a week in jobless benefits authorized by Congress in late March expired in July, and lawmakers are still wrangling over another large stimulus bill.

"The big unknown is, on the demand side: How many people are still going to be unemployed and requiring support?" said Roberto Uchoa, a Chicago-based senior partner at McKinsey who advises global agricultural, consumer and retail companies.

McKinsey has been working with food banks to help them better meet the jump in demand. One key strategy is called lean warehousing, which involves using more automation, streamlining the organization of storage facilities, and improving efficiency in loading and unloading trucks.

Still, when stimulus starts to get withdrawn, the pressure on the food-safety net is likely to increase.

"It's going to be bad or really bad — we don't know," Uchoa said.

Catarina Saraiva in Houston and Millie Munshi in Denver

Charted Territory

American farmers are set to get one more facility to deliver their soybeans to as rising demand propels the expansion of the crushing industry that makes ingredients for livestock feed and renewable fuels. Mid-Iowa Cooperative will build a new soybean processing plant with capacity to crush 38.5 million bushels a year. The coronavirus pandemic is increasing demand for soybean oil as consumers rushing to online shopping are boosting traffic for trucks, which usually run on diesel and its renewable forms.

Today's Must Reads

  • Brexit planning | The chairman of Britain's largest supermarket has warned there could be short-term shortages of some fresh food when the transition period for Britain's departure from the European Union ends in January.
  • Farm frenzy | Of all the controversial reforms Indian Prime Minister Narendra Modi has sprung on the market, the recent laws to liberalize farm sales could turn out to be the most far-reaching.
  • In the weeds | A newly banned herbicide has become a crux for the world's second-largest soybean producer as U.S. farmers struggle with not knowing if they'll regain access to the long-trusted weed killer for next year's crop.
  • Jumpin' jackfruit | Thai food producers are betting on growing plant-based meat trends at home and abroad for future expansion.
  • Food insecurity | Latest numbers from the U.S. government showed that tighter crop supplies could worsen the food-inequality crisis that's sweeping the globe.
  • Sweet tooth | Brazilian sugar mills that have been taking advantage of a currency plunge to hedge record amounts of their supply may have a harder time as bank financing to commodity traders dries up.
  • Fear of famine | Three destructive typhoons, U.S.-backed sanctions and the global pandemic are fueling concern that North Korea's 26 million people could slip back into the devastating food shortages.

On the Bloomberg Terminal

  • Where's the beef? | Beef prices may rise over the next three to five years, driven by solid global demand and potential U.S. supply-side disruptions, according to Bloomberg Intelligence.
  • Trick-or-treat | Halloween candy sales could outperform estimates as retailers such as Walmart and Target started promotions earlier this year and self-consumption may be higher, Bloomberg Intelligence writes.
  • Use the AHOY function to track global commodities trade flows.
  • Click HERE for automated stories about supply chains.
  • See BNEF for BloombergNEF's analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
  • Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.

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