Challenges in food trading during COVID-19

May 2020

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Challenges in food trading during COVID-19

May 2020

“Abhishek Jain, Chief Risk Officer at Export Trading Group took some time to share with us the biggest challenges they have encountered in the face of COVID-19

A conversation with Abhishek Jain

The food industry is one of the few that have maintained activity during these lockdowns across the world, what have been the main challenges faced by trading houses in this field?

The Covid crisis tested the resilience of current modes of food production and distribution and as part of value chain trading houses are also not left untouched. Going by basis supply chain dynamics countries that are heavily dependent on imports got seriously impacted however impacts are unequal. Therefore impact on trading houses has been predominantly widespread basis geographical spread and presence, trading in essential commodities or cash commodities and most importantly nature of supply chain participants.

The most obvious challenge has been supply chain disruptions on account of lock downs, ports reduced working hours, limited availability of labor workforce. The biggest challenge has been that of manpower displacement, especially for migrant workers. Unlike the West, the supply chain in Asia and Africa are not as mechanized and hence very dependent on manpower for planting, harvesting, food movement and so on. Therefore, disruptions on supply side economics resulted in pushing prices of essential commodities and trading houses couldn’t realize the full translation benefit of this increase on account of bottlenecks.

Another challenge faced by trading houses has been that of trade restrictions and bans if countries scramble to keep supply for themselves by closing borders and stopping trade, for example rice export bans like those issued by Vietnam or wheat ban by Russia. The regulatory interventions by various countries has become risk of high probability and impact.

 Ensuring health of current assets of organization, including efficient utilization of scarce available dollar has been litmus test for distinguishing companies between leaders, laggards and failure points.

Crisis can sometimes highlight flaws in the processes and procedures. What is for you at this point the main lesson learnt?

The crisis has underlined the importance of process availability and its capability for its practical implementation even for low probability event like crisis triggered lockdowns and social distancing.

This crisis has clearly helped people learn processes around business continuity, effective communications, and e-enabling the procedural part of supply chain is essential and qualifying condition for being able to envisage sustainability and growth.

Are you hopeful for the future?

Human being is social by nature and it is certain that game involving networking including financial markets play, trading or social networking shall continue however rules of the game shall change. Please bear in mind that current crisis has definitely acted as impulse to disturb current equilibrium of world order however world shall find its new state within next 12 months and of course this period shall be the time of high volatility and uncertainty. The world is getting support of enough financial liquidity and combined global efforts & optimism, so only good can happen from here on!

Why is it so important to keep on ‘gathering’ although virtually?  

As I just said that humans are social animal and they need to connect more often for social connect and professional debating. The power of ‘Gathering’ is exponential and is required to be prevailed between us, though at this juncture it can be done only virtually. Therefore, let’s keep meeting to use this accrued power for our social and professional benefit!

 

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