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.