Commodities investors, beware: there’s a host of ills plaguing various crops around the world that could play havoc with your investments—whether they’re directly in the crop itself or in the companies that rely on it further down the supply chain.
Investors in a range of products from olives and their oil to bananas, chocolate, coffee, wheat, canola and citrus should be cognizant of the challenges facing growers, processors and users of the crops they depend on for their businesses. Here’s a look at some of the most notorious problems growers are facing at the moment.
1. A blight on olive trees in Europe could also threaten French vineyards:
An essential ingredient in a host of dishes too numerous to mention, the olive is under attack—from a bacterial disease transmitted by insects. And the bacteria, which has already done serious damage in Italy to ancient olive groves, poses an even more serious threat to the French wine industry.
Xylella fastidiosa, more commonly known as leaf scorch, is thought to originate from South America. While it’s been wreaking destruction in Italian olive groves, now it is been found outside Paris, thanks to some imported ornamental plants that were imported from Honduras. There’s no known treatment for Xylella, and if that news isn’t bad enough, it also affects vineyards, citrus groves and other fruiting trees such as almond, peach and grapefruit.
According to the European Food Safety Authority’s report on Xylella, its “[e]stablishment and spread in the EU is very likely. The consequences are considered to be major because yield losses and other damage would be high and require costly control measures.”
The EU is considering measures to try to contain the spread of the disease, which looms not only over olive groves and vineyards—which means France’s wine industry, the exports from which are worth 7.6 billion euros ($8.4 billion) annually—but has already done serious damage to American grapes and citrus crops.
One recommendation issues by the EFSA was the use of screened greenhouses. In the meantime, research continues into ways to combat the disease and its spread. Considering that 2014 was a “black year” for olive crops—bad weather, insects and blight reduced harvests in some parts of Italy by 40–50%; Spain suffered from weather woes, as did Morocco and Tunisia; and civil war in Syria took its own toll, leading the International Olive Council to say production would be its lowest in 15 years, with prices up by 121% in December compared to December of 2013—a solution had better emerge.
2. Wheat woes:
A new strain of yellow rust, a wheat disease caused by the fungus Puccinia striiformis f. sp. tritici (PST), has emerged in the U.K., presenting what researchers call a “serious threat to wheat production in the U.K.”
Yellow rust is not just found in the U.K., but in places across the globe where wheat is a major crop. And new strains are developing that can survive in warmer temperatures, are more aggressive and to which wheat has developed little resistance.
In research published in Genome Biology, lead author Diane Saunders of the John Innes Centre and The Genome Analysis Centre (TGAC), U.K., said: “Our research shows that in the U.K. we have a newly emerging population of wheat rust fungus that could be the result of an influx of more exotic and aggressive strains that are displacing the previous population.”
Yellow rust, according to the National Farmers Union, could affect as much as a quarter of the British wheat crop. But the Warrior strain is “potentially even more serious,” said Guy Gagen, chief arable advisor at the NFU, in a statement.
3. Australians battle banana fungus:
The Americas seem to be a source of a host of crop troubles. Australian banana producers are considering a voluntary levy to support producers whose farms have been hit with Panama tropical race 4 disease.
The Australian Banana Growers Council proposed the idea in April, as growers hit with the fungus try to survive. In the 1990s, the disease wiped out the banana industry in the Northern Territories. Now Queensland finds itself facing the same soil-borne disease as the council considers potential protocols that could allow the infected farms to stay in operation.
An industry conference in June will host two international experts on the disease, Professor Altus Viljoen from South Africa and Dr Chih-Ping Chao, director of the Taiwan Banana Research Institute.
4. Canada’s canola crop in trouble:
Canada is dealing with two different threats to its canola crop: clubroot and blackleg. Both are manifesting themselves in new pathotypes, with clubroot in particular seen as a looming threat, and canola crops have only poor resistance to these new strains.
That’s not good news for an industry worth $19 billion to the Canadian economy in 2013.
And then there’s Verticillium longisporum, which has been found for the first time in North America in a field in Manitoba, Canada. This disease has caused such damage to some European canola crops that it’s cut yields by up to 50%.
5. Extinction for coffee?
Researchers at the U.K.’s Royal Botanic Gardens, Kew, ran some computer modeling in 2012 to see how environmental changes would affect Arabica coffee—which makes up 70% of coffee production—for the rest of the century. And the picture wasn’t pretty.
Wild Arabica, they found, would experience an 85% decrease in the number of locations where it could grow by the year 2080. And, believe it or not, that’s the optimistic view—the worst-case scenario sees those Arabica-friendly sites decreasing by 99.7%.
While those researchers haven’t been sitting on their hands—indeed, far from it; they’ve been researching sites in Ethiopia where the coffee can be grown, to see how climate change is already affecting the plants—time’s a-wasting. If the picture is grim for wild coffee, say researchers, it’s far more so for commercial coffee, and not solely due to environmental factors.
“Wild species have much greater genetic diversity—anything happening in the wild populations is usually amplified in commercial varieties where the genetic diversity is so much less,” said Justin Moat, Kew’s head of spatial analysis, in a BBC report.
They’d better hurry. Coffee in Central American plantations is suffering from climate change and also from—you guessed it—rust (in this case, Hemileia vastatrix, the coffee rust fungus). Rust used to leave coffee plants alone at altitudes above 1,300 meters (4,265 feet), where temperatures fell below 50°F. Now it’s decimating them; coffee harvests in Central America’s producing countries have fallen by 30% or more each year for the past two years.
6. Chocolate’s cost is rising:
It’s not headed for extinction—at least not yet—but chocolate isn’t in for an easy time of it, either. West Africa, which produces 70% of the world’s supply of chocolate, is experiencing a dry year.
But Ghana, the second largest cocoa exporter in the world, is in an all-out drought—plus it’s dealing with another nasty fungus that attacks cocoa pods, and that could spell real trouble for the world’s chocolate lovers. As a result, its production is down a good 20%, and that’s not good—especially with demand rising elsewhere in the world, like China and India.
Cocoa prices are expected to continue to rise in September, at the end of cocoa season, and the trend is expected to continue as climate change makes the crop tougher to grow. Farmers are further handicapped by such colorful names as Witches’ Broom and Frosty Pod Rot—not names for specialty Halloween and Christmas chocolates, but for fungal diseases that also take a toll on crop yields.