The agricultural industry, like the global economy itself, has experienced many setbacks during the first quarter of the year. Lockdown measures, travel restrictions and interruptions in the supply chain have hampered profitability in some sectors. Fortunately, there are certain agriculture commodities that are performing very well so far. Let´s take a look at some of them.
As a fruit with proven antiviral properties, coconut and coconut products have seen a significant increase in demand over the course of the pandemic, and analysis shows that demand for coconut is expected to increase well into the future. In developed markets, coconut derivative products are benefiting from a high demand for processed fresh fruit and vegetable products in general, and value-added goods such as coconut water and coconut oil have seen significant gains.
Coconut water, for example, was seeing an upward surge even before the crisis. The global market for coconut water is valued at around $4.25 billion, and is expected to grow at a CAGR of 16% until 2026. According to Statista, the market’s value has nearly doubled since 2017, when it was estimated at $2.18 billion. Experts attribute this growth to a shift away from high-calorie carbonated beverages towards healthier alternatives.
Coconut oil contains lauric acid and monolaurin, which researchers believe to have strong antiviral properties. Researchers in the Phillipines have begun clinical trails to determine the effectiveness of virgin coconut oil for preventing COVID-19 which, if successful, could have huge implications for the industry.
Increasingly used for both cosmetic and culinary purposes, coconut oil is gaining awareness among consumers. Projected to reach approximately $5 billion by 2024, the market for virgin coconut oil stands to benefit from a global population that is increasing health-conscious.
Coconut is a product with numerous processed derivatives – water, milk, chips, canned coconut, desiccated coconut, oil, power, cream, etc. – and these are benefitting from an increased demand for packaged products in general. Coconuts have also benefited from the plethora of spurious health claims circulating online.
The growth of the coconut industry is by no means a consequence of COVID-19. But, as with many nutrient-rich fruits, consumers are flocking to coconut as a means of bolstering their immune systems. With a wide range of value-added products to diversify the industry’s sales base, coconuts will perform well amongst agriculture commodities.
2. Wine and Spirits
Wine and other alcoholic beverages are selling very well in spite of the current restrictions. Bars and restaurants – which typically account for a large portion of alcohol sales – are far from going back to normal. But the industry is benefitting from liquor stores being designated as an essential business.
One of the winners from this industry comes from the south of the continent. Argentinian vintners saw how their exports increased 36% during the early stages of the pandemic, with all wine categories benefiting from the boost. There was an 8.9% increase in bottled wine, 115% in bulk wine and 37.2% in sparkling wine from January to April.
The Mendoza province –where most of the Argentinian wine is produced- was lucky to have a delayed harvest. Their production suffered the consequences of climate conditions (a 20% reduction), but thankfully avoided having labor shortages. In addition, wine makers in Argentina have found new ways to ship their products by using special humanitarian flights.
The growth in Argentinian wine exports can be partly attributed to a preferential trade agreement reached earlier this year between Agrentina’s state-run airlines, local vinters, and Chinese wine buyers.
“The increased export figures are a consequence of agreements made in the second half of 2019 and the replacement of the end-of-year sale,” said Raúl Jofré, founder of Argentinian wine exporter RJ Viñedos. “The dynamics and growth of the economic activity in a market the size of China, has necessarily generated growth in the demand for wines,” Mr. Jofre told Farmfolio.
As lockdowns begin to ease across the world, Argentinian vinters are hopeful about the continued penetration of wines into new markets such as China, as well as strong demand from a quarantined population that, frankly, might need to take the edge off.
Panama’s exports did very well in the first quarter of 2020. According to the Ministry of trade and Commerce (MICI, in its Spanish acronym) there was an 11.7% increase in exports. Pineapples were responsible of 10% of that growth, and other products like coffee were in the list.
According to the MICI, four containers have been shipped to the Netherlands port to be distributed to Norway, Sweden and Denmark. European countries are one of the main destinations for this tropical fruit. Though, countries like United Arab Emirates have also received shipments during the first months of the year.
Pineapple producers are hoping to keep a steady demand. Considering that European consumers are keen to buy fruits that are high in vitamin C, in order to boost their immune systems. Hopefully this trend will continue, for the benefit of people’s health and pineapple growers across the globe.
As we can see, the scenario is quite complex for many companies these days. Coffee is adapting to new sales channels to reach consumers, wine is looking to find strengthen supply chains and citrus fruits -like the pineapple- might be benefiting from a change in consumer behavior. It is still early to know what commodities will adapt better to the new market conditions, but it will be important to keep looking at the trends in agriculture commodities.