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Blog 2: COVID-19 and food supply: A four-pronged battle plan for countries

In blog 2of our blog series on opportunities for building back better food systems and nutrition, Maximo Torero, the Chief Economist and an Assistant Director General at FAO, discusses the need to keep food supply chains alive in the face of the response to COVID-19. He should know as he was at the helm of IFPRI’s Trade and Markets Division during the food price crisis of 2008. He says we need to (1) enhance emergency food assistance and social safety nets, (2) keep global trade alive, (3) keep food supply chains gears moving and (4) support smallholder farmers to increase production. Read on to find out why and how.

-- Lawrence Haddad, Executive Director, Global Alliance for Improved Nutrition

Across the globe, countries are shutting down the economy to slow the spread of the coronavirus and keep their health systems functioning. Thankfully, supermarket shelves remain stocked and the food supply chains are holding up. But as pressure mounts due to lockdowns and rising number of cases, there could be disruptions to food supply chains in coming months.

As countries wage full-on war on the coronavirus, they should also have a battle plan to lessen the shocks to their food supply chains. This is first to protect the most vulnerable people and the rest of the population, too.

The food supply chains must be kept alive. Here’s how countries can do it.

 

Enhance Emergency Food Assistance, Safety Nets for Vulnerable Populations

As businesses lay people off, families are struggling to put food on the table. Schools have closed worldwide, leaving 300 million children to miss out on school meals. These families need cash more than anything else. A one-off or multiple cash transfers could soften the full-blown impact of the crisis when it arrives. Vulnerable households also need breaks on tax and mortgage payments.

Italy, which has borne the brunt of the pandemic in Europe, has done exactly this, helping workers with layoffs and putting a moratorium on personal and business mortgage payments, as part of a $28 billion relief package dubbed “Heal Italy.” The program includes $53 million to distribute food to poor and vulnerable people. Food banks, charities and non-governmental organizations need to be mobilized everywhere to deliver food as families stay home and practice social distancing. 

France is offering sick leave to people who are under self-quarantine. Hong Kong and Singapore are giving universal, one-off cash payments to all citizens. China has accelerated payments of unemployment insurance and expanded social assistance programs to cover families falling into poverty, while suspending social security contributions for businesses. As of this writing, the U.S. was working on a $1 trillion economic stimulus plan, following a $100 billion aid package that includes emergency paid leave for workers.

 

 

Keep the Global Trade Alive

While food availability hasn’t suffered, there will be a supply shock in terms of logistics due to port closures and strict government mandates. The slowdown is already noticeable in the global shipping industry.

Countries that depend on imported food are especially vulnerable as shipments slow and their currencies plunge against the dollar. Food price is likely to rise in every country, and excessive volatility (sudden and extreme food price shocks) could happen amid drawn-out lockdowns. This is why countries should immediately review trade and taxation policy options and their likely impacts, and work in concert with one another to create a favorable environment for food trade.

Cooperation among countries can help prevent beggar-thy-neighbor policies, which popped up during the 2006-2008 food crises with large countries increasing export taxes and adopting export restrictions. They made things worse for everyone, not just for smaller trading partners. Sharp price increases disproportionately burdened poor people everywhere, negatively affecting human development and economic productivity in the long term.  

Keeping the global food trade open is critical to keep the food markets functioning. Governments should eliminate existing export restrictions, like export bans. If one country starts doing it, all others will follow, and it would be disastrous for the markets. Countries also have to eliminate harmful import tariffs and nontariff trade barriers, and should temporarily reduce VAT and other taxes. Such actions will help stabilize world food markets.

 

 

Keep the Food Supply Chain Gears Moving

The food Supply chains are a complex web of interactions involving farmers, agricultural inputs, processing plants, shipping, retailers and more. A shock like a global pandemic can quickly strain them. Every effort must be made to keep the food supply chains moving efficiently to prevent food shortages.

Countries should put measures in place to assure safety of workers, social distancing and delivery mechanisms. Companies are rightly revising their sick leave policies to encourage employees to stay home when they are sick. Governments should expedite migrant workers’ visas to prevent labor shortages on farm and plants, even if it seems counterintuitive right now. Onsite healthcare professionals can ensure workers are not ill. The U.S. Department of Agriculture has safety inspectors checking workers’ temperatures at its facilities. If possible, workers should be tested for the coronavirus.

Growers and warehouses should eliminate visitors. Supermarkets have begun reducing their hours and rotating the staff. Shops are doubling down on delivery services through contact-free drop-offs and same-day delivery.

 

Support Smallholder Farmers to Increase Food Production

Restriction of movements and road closures are curbing farmers’ access to markets to buy inputs and sell products. It’s also shrinking the availability of migrant workers on the farm. Fresh produce is accumulating at farms, resulting in food loss. All leads to loss of earnings. The Ebola outbreak in 2014 disrupted the agricultural market chains in West Africa for the same reason. Africa is especially vulnerable, as the continent’s food supply is already threatened by desert locust infestations.

The demand for canned food and dried produce has shot up. China saw more than 20 percent increase in food prices, highest since the 2008 financial crisis, because of panic buys. In Italy, demand for flour spiked by 80 percent and canned beans by 55 percent, leading to difficulties to sell fresh produce. In the meantime, online food delivery increased five folds.

BBC Newshour interview
Listen to Maximo Torero's BBC Newshour interview on the coronavirus and global food trade

 

Cash handouts for poor farmers are essential, as well as grants to restart production. Banks should wave fees on farmers’ loans and extend payment deadlines. A capital injection in the agricultural sector can help small and medium agri-businesses, their salaried staff and temporary workers stay afloat. During emergency, governments can purchase agricultural products from small farmers to establish strategic emergency reserves, especially for non-perishable commodities, to boost food supply. 

What China has done is worth noting. During the lockdown, it lessened the virus’s impact on smallholder farmers and also kept food shortages to a minimum by adopting the Vegetable Basket project from 1988, which increased urban access to fresh produce by expanding vegetable farms in the suburbs and establishing reserves. Under this scheme, farmers and merchants in nine provinces worked together to supply grains, oil, meat and vegetables to Hubei province, the epicenter of the outbreak. Some local governments have centralized animal slaughtering and are paying for refrigeration costs, including electricity.

“Heal Italy” serves as a model, too, allocating $106 million to support farming, fisheries and aquaculture enterprises to cover the interests of loans and mortgages.

The past week has seen countries rushing to shut their borders. Slowing the virus is critical, as we must survive the coronavirus pandemic. But we must also understand the enormous damage the current measures will be inflicting on our global food systems. We have to work together to get through this.

Enacting the above domestic measures and actively seeking international cooperation can ready countries for the battle ahead.

 

 

This blog was originally published on MaximoTorero.com, and reproduced here with permission from the author. 

 

 

 

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