Farmers Likely to Experience Fallout From Suez Blockage

Apr 06, 2021

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Global trade ground to a halt last week when a large cargo ship became jammed in the Suez Canal, blocking the crucial shipping route.
 
Now that the Ever Given has been dislodged and traffic has once again resumed through the canal that links the Mediterranean and Arabian seas, the global supply chain is facing a long uphill battle to recover.
 
Despite taking place thousands of kilometres away on the other side of the world, the week-long delay is likely to affect farmers and producers right here in Moose Jaw. Elyce Simpson Fraser is the Senior Vice President of Simpson Seeds Inc., a locally owned and operated family business that markets Saskatchewan lentils and chickpeas all over the world. She says the fallout from this trade disaster could last for months.
 
"Unfortunately, I don't think that this is going to be a short-term problem. We could be looking at another full year. These sorts of things are not easy to recover from."
 
Although it is difficult to say just what the ramifications of the blockage might be, Simpson Fraser is confident that it will mean shipping delays and container shortages.
 
"It's literally hundreds and hundreds of vessels that have been impacted but we probably won't know the full effects or how that will trickle down to us for another few weeks. The steamship lines have yet to tell us what cargoes are specifically affected and how much they will be delayed."
 
According to Simpson Fraser, this lack of communication highlights the already tense relationship between the agriculture sector and large shipping lines.
 
"We were already being impacted by steamship lines putting agriculture and lumber on the back-burner. They will just arbitrarily cancel a vessel with no warning. So the Suez crisis was just the cherry on the top."
 
Simpson Fraser fears that the blowback from this will even affect local producers. With the steady stream of products halted, ports will now be overwhelmed and prices will begin to fluctuate wildly as internal markets attempt to grapple with the influx. This could potentially lower the prices that farmers could get for their crops.
 
"The [overseas markets] will have to drop their prices and then they won't be able to buy our products at as good of a price. Their ability to buy the next year's crops will be affected by this."
 
Even so, Simpson Fraser believes that the price for pulses right now is still very attractive and that many producers will still choose to plant the same amount of peas and lentils.
 
"There's a lot of dynamics at play that adds levels of complexity to the market but I think that farmers still have a lot of great options. All the oilseeds, cereals, and pulse crops are paying good value right now, so they'll want to keep the pulses in rotation."
 
Overall, managing cash flow may become more difficult at every level of world trade, including for local producers. Simpson Fraser hopes that the potential disruption of the food supply chain will encourage shipping lines will stop undervaluing the agriculture sector.
 
"We need some sort of pressure put on them to return a normal level of service to the industries that they have left behind in an effort to chase profits. That's really this issue."
 
Undoubtedly, the complete fallout of this delay will only become evident with time.
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