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Covid-19 'to boost ag long-term', as food security rises up agenda


The coronavirus pandemic will hand a long-term boost to agriculture, by pushing food security up the agenda, Ag Growth International said, as fertilizer giant Mosaic highlighted the sector’s resilience to economic shocks.


Ag Growth International (AGI), which makes crop storage and handling equipment, acknowledged that the Covid-19 outbreak would have “a significant adverse impact” on its business, highlighting the prospect of supply chain and production snarl-ups.


The Canada-based group has suspended operations at factories in Brazil, France, India and Italy, and said that “interruptions are possible in North America over the coming weeks as the crisis evolves”.


“Covid-19 is raising substantial uncertainties.”


‘Demand will be positively impacted’

However, while saying that its “business will be substantially impacted” by operational disruptions, AGI forecast a long-term benefit, particularly to infrastructure-related groups, from the pandemic in underlining the importance of guaranteed food supplies.


“Post crisis, demand will be positively impacted as the world builds additional redundancy into the global food infrastructure to account for similar events in the future.”


The comments follow a wave of hoarding by consumers, in the face of fears of lockdowns and supply hiccups, that prompted the UN food agency, the Food and Agriculture Organization, to warn at the weekend of raised food inflation and then risk of a “global food supply crisis”.


Prices of agricultural commodities, particularly food-related ones, have fallen far less significantly than those of industrial commodities, or of equities, during the pandemic – although this outperformance has not extended to the value of shares in agribusinesses.


‘People need to eat’

Separately, Mosaic, the US-based fertilizer group, also underlined the resilience of the ag sector to world crises, saying that “grain and oilseed demand has been largely immune from economic downturns”.


Demand had continued to grow, even during the likes of the Asian financial crisis in the late 1990s, the fallout from the dotcom collapse and the September 11 attacks in the early 2000s, and the world economic recession later that decade.


“Agriculture is critical to the global population’s well-being,” Mosaic said, noting that countries such as Australia, China, Malaysia, and the US “have prioritised agriculture and related services as critical infrastructure” even as they impose curbs on other sectors in an effort to curtail the spread of Covid-19.


“People need to eat,” Mosaic said, adding that there was an “attractive outlook for agriculture into 2020 and beyond”.


Canada setbacks

Ag Growth International’s comments came as it unveiled a narrowing of 30% to Can$8.29m in losses for the October-to-December quarter, although improvement reflected largely one-off factors - excluding which the group reported a Can$1.18m loss, compared with earnings of Can$11.77m a year before.


Although headline sales rose by 7.2% to Can229.6m, this reflected largely acquisitions, without which they would have shrunk by 6.8%, undermined by postponements to some commercial projects in Canada, where farm investment in new silos dropped too.


“Sales of storage equipment… were negatively impacted by a challenging growing and harvest season.”


However, AGI also reported a “solid performance” in India and “significantly improved results” in Brazil, while seeing an improved order book in US, and “record level backlogs” in Brazil, France and Italy.

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