In some agricultural regions, droughts and plagues of locusts add further complexity.
One of our engagement priorities for 2020 is around ‘sustainable food systems’. In scope of this equity and fixed income engagement are retailers, traders and food producers. The pandemic has made this focus even more relevant.
Whilst the pandemic is beyond the scope of any normal contingency planning exercise, it reinforces the case for supply chain stress testing and effective business continuity plans, as well as for strong relationships with suppliers rather than relying on third parties. We also welcome steps taken by some companies to recognise the financial strains their suppliers are under, for instance by ensuring early or at least prompt payment of invoices due.
A key focus area of our engagement will be worker protection. The food chain is labour-intensive, and characterised by badly paid, often physically demanding jobs. We will use our engagement to address and further investigate the additional challenges that the pandemic has brought, such as the difficulties in implementing physical distancing in environments such as factories and food stores. Where good practices have emerged, such as paid sick leave, we will seek to encourage these to be made permanent.
Further engagement options include financial institutions, through encouraging their support of commercial clients in the food business, including grants, mortgage holidays and debt relief discussions. Sovereign debt engagement could feature discussions around minimisation to restrictions on export and trade, as well as on responsible stockpiling.