Demand intact, supply chains delayed

April 20202 min readSustainable FoodAgriculture, Emerging Markets

Working from her Mumbai home Suhasini Singh closely monitors our Asia-Pacific portfolio of sustainable food companies. All of them are operational even with Covid-19 posing special challenges.

How are sustainable food companies in your Asian portfolio managing the Covid-19 crisis?

Our weekly status updates show that all of them have fully activated their contingency planning and mitigation measures. By now, IT infrastructures support remote working for all of them and they are in touch with their counterparties, locally and internationally. This allows them to stay operational within the given framework of restrictions – and makes us feel a lot more re-assured than only a week ago.

Are companies actually producing sustainable food at this point?

Yes, production continues, even during the lockdown in India: As we are investing in food, our partners’ activity falls under ‘essential services’ which allows them to remain operational as long as they respect government-imposed restrictions and regulations. Companies running processing facilities need to arrange for workers to stay on their premises, which isn’t so easy. There is a general labour shortage, as migrant workers have returned to their villages. And the supply chain is not fully functional because transportation companies are slow to obtain the necessary special licenses. On the bright side, the commodity is there, demand is there, and prices are strong and stable.

“On the bright side, the commodity is there, demand is there, and prices are strong and stable.”

Suhasini Singh

In what other ways is the lockdown changing companies’ business practices?

Many of our portfolio companies export to Europe and the US. Closed ports have caused a backlog of shipments and clients are usually required to send samples of their produce via air freight which has been stopped to a large degree. Our partners work around this situation by using commercial flights and providing certification online. Some of their clients also accept old certificates during this period. As for banks servicing the agricultural sector, they have mostly moved their business online which is making processes more time-consuming in a first stage but will help in the long run.