Covid-19 has occurred during the mango harvesting season in Andhra Pradesh, Telangana, Maharashtra, Tamil Nadu, and Karnataka. The regional-wise lockdown has brought all operations to a grinding halt. While the farmers in these areas are already facing challenges due to the untimely rains and monsoons, Covid-19 has made the situation even more challenging. Covid-19 is adversely affecting the entire value chain affecting the cultivation and distribution of fruits.
Export and processing
India is a major exporter of mango pulp that shipped 1.05 lakh MT of mango pulp in the year 2018-2019. The US, UK, Australia, Europe, Singapore, and the Middle East are the major importers of Indian mangoes and mango pulp. Like last year, this is disrupted because of the covid-19 pandemic and national wide lockdown. Many mango processing industries are facing a reduction in mango supplies as the traders and farmers are not able to supply in a full swing. However, the restrictions on export have led to reduced demand from exporters and processors.
Crop Maintenance and Harvesting
Timely and appropriate harvesting with a timely arrival is vital to mango, characterized by perishable nature and seasonality. Since the second wave is spreading rapidly all over India, the labour shortage has affected harvesting, grading, and packing functions in Andhra Pradesh, Tamil Nadu, Telangana, and Karnataka. In north and eastern states, Orchard maintenance has been affected due to labour shortage and is expected to increase during the upcoming months which affects harvesting functions. This indicates a decrease in production and post-harvest losses.
Traders who are looking for a guaranteed supply of mango normally give a monetary advance to mango orchid owners and growers. Traders and farmers across the country claim that due to the uncertainty because of covid-19, such developments have not been spread much this year. This has caused a cash crunch at the farmer’s end resulting in unprecedented security. Wherever such advances are made by the traders to farmers, there is a high risk of losing the advance due to the operational issues faced during the lockdown. This leads to monetary loss and business stagnation for both the farmers and traders.
Indians are table enrichers, which are regularly used along with the main course of meals as well as snacks. Apart from the individual households, restaurants and commercial businesses are also the bulk consumers of fruit pulps. Growing demand for fruit pulp in baby food and organic food products in India boosts the revenue growth of the Indian fruit pulp market.
The shelf life of the fruit pulp is longer than fresh fruit. The fruit pulp retains all the vitamins and minerals, even after processing the fresh fruits. A longer storage life without much alteration to the natural content and flavour is the main factor boosting the global and Indian market demand for fruit pulp. The longer the shelf life, the lesser the transport and storage costs. This encourages fruit pulp manufacturers to increase pulp production. The fruit pulp possesses the same properties as fresh fruit. The fruit pulp imparts an enhanced colour and taste to the finished product. Pulp/Puree is a sweetener used in various foods, including juices, fruit drinks, beverages, nectars, and ready-to-drink smoothies. Mango pulp manufacturing industries are moving towards bulk production owing to the enhanced properties of the pulp. This factor also fuelled the revenue growth of the Indian mango pulp market.
How freight costs affecting the prices
Since the shipping rates account for a large portion of the trade costs, the recent increase in cost would add a challenge to the world economy as it struggles to recover from the pandemic. The Suez canal blockage reminded the world how much we rely on shipping. Contrary to the expectations, the demand for container shipping has grown due to the pandemic and rapidly recovering from the initial slow down.
The freight costs to the US and Europe have increased over the last quarter. We are witnessing this increase, because of the equipment shortages and a decline in vessel capacity in the Indian subcontinent. This has resulted in a rise in ocean freight rates prices, which began in early March. This is happening in India, just like the rest of the world due to the Covid-19 pandemic. Since last year, there has been a container shortage because of disruption in the supply chain caused by the global pandemic. As the demand grows, the exporters are having difficulty booking space on vessels. In addition, the fuel prices that increased at the beginning of the last year also influenced ocean rates. The freight costs to Europe and the USA have increased almost by 80%. The freight cost to the Netherlands was around $500 and now the prices have shot up to $2400. Since the fruit pulp processing industries export to Europe, Africa, and the USA will face a great challenge due to the increasing freight costs.
The sharp rise in the price of flat steel used by the metal packaging manufacturing industry, including manufacturers of steel drums for fruit pulp packaging, has worried about the price increase in the product costs. Flat steels are widely used in automotive and consumable durable industries. Since flat steels are also used in the manufacturing of steel drums which are used for fruit pulp packaging, the demand is starting to rebound due to the impact of a pandemic.
For the past few months, raw material prices have been rising. Iron ore prices, a key raw material for the steel industry, have risen by more than 100 per cent in the last few months. It is expected that prices will continue to increase in the upcoming months till the issues of the prices and raw materials shortage are addressed. Due to this, the fruit pulp processing industries will face a challenge in pricing the product.