The global food system will be tested, supply disruptions will begin in April - UN FAO
25.03.2020, Source: UN FAO
With the spread of the virus and the increase in the number of cases, as well as measures to curb the spread of the virus, in the next few weeks and months the global food system will undergo countless trials and pressures. This was reported on March 25 by the press service of the UN Food and Agriculture Organization (FAO).
Will COVID-19 have negative consequences for world food security?
The dangers of this pandemic are not only life, but also sources of livelihood.
The disease spreads rapidly. It has ceased to be a regional issue – it is a global problem requiring a global response.
We know that sooner or later it will recede, but we do not know how quickly this will happen. We also know that this shock is not quite ordinary, as it affects important components of both the demand and the supply of food at the same time: (a) the supply is disrupted not only because of the impact of the disease on the life and well-being of people, but also because of efforts to curb the spread of the virus, which limit mobility, as well as due to rising costs of doing business as a result of restrictions in supply systems and tightening credit policies; (b) demand will also fall due to increased uncertainty, increased precautions in behavior, efforts to contain, and increased financial costs, which lead to a reduction in people’s ability to spend.
As we know, as a result, border closures, quarantines, and the disruption of markets, supply chains, and trade can limit the availability of sufficient / varied and nutritious food sources for people, especially in countries that are most affected by the virus or are already experiencing high levels of malnutrition food security.
We are facing an impending food crisis if measures are not immediately taken to protect the most vulnerable populations, support the functioning of global food supply chains and mitigate the effects of the pandemic throughout the food system.
Whose food security and livelihoods are most at risk from the pandemic?
Currently, nearly 820 million people worldwide are suffering from chronic hunger – the energy calories they consume are not enough for a normal life. Of these, 113 million are experiencing severe food shortages – such a severe hunger that it poses an immediate threat to their life or livelihoods and forces them to be dependent on external assistance for survival. These people are unlikely to cope with the further possible destabilization of their livelihoods and access to food due to COVID-19.
If cases of COVID-19, which are already present in more than 100 countries, begin to spread in those 44 countries that need external food assistance, or in those 53 countries where the same 113 million people are living with acute hunger, in which, in many cases, health systems will run out of resources and opportunities, the consequences can be dire.
Of particular concern to the FAO are the effects of the pandemic on vulnerable countries that are already struggling with hunger or experiencing a different crisis – for example, the invasion of desert locusts in the Horn of Africa or security problems in Yemen or the Sahel – and countries that are heavily dependent on food imports, such as small island developing states, as well as countries that depend on the export of commodities, such as oil.
Vulnerable groups include smallholder farmers who may be unable to work on their land / gain access to markets to sell their products or purchase seeds and other necessary resources, or face difficulties due to increased food prices / reduced purchasing power, as well as millions of children and adolescents, now deprived of school nutrition, which has become a great help for them.
For example, in Latin America and the Caribbean, FAO-sponsored school feeding programs reach 85 million children and adolescents. About 10 million children depend on them, because for them, school meals are one of the most reliable sources of daily food. The suspension of school feeding programs due to the pandemic poses a threat to food security and nutrition for vulnerable groups of children and weakens their ability to fight diseases.
From our past experience with food crisis situations, we know that they can have dire consequences for food security, especially for vulnerable communities.
For example, quarantine and panic during the outbreak of the Ebola virus in Sierra Leone (in 2014-2016) led to a sharp exacerbation of hunger and malnutrition. The situation only worsened due to the fact that restrictions on movements led to a shortage of labor during harvesting, as well as the inability for other farmers to bring their products to the market. The systemic effect was similar to the effects of an earthquake, once again highlighting the particular importance of a risk prevention and mitigation strategy.
What are the implications of the COVID-19 virus situation for food production, supply chains and agricultural markets?
The food supply chain is a complex network including producers, agricultural factors of production, transport, processing plants, consignments, etc.
With the spread of the virus and the increasing number of cases, as well as measures to curb the spread of the virus, in the next few weeks and months the global food system will undergo countless trials and pressures.
At the moment, disruptions are minimal, as food supplies are sufficient and markets are still stable. Grain stocks in the world are at an acceptable level, and species for wheat and other major crops in 2020 are not bad.
Although it is already possible to expect a decrease in the production of high-value commodities (for example, fruits and vegetables), this is not yet noticeable due to the closure of borders and the violation of the supply chain.
However, we are already seeing difficulties in the logistics associated with the movement of food (the inability to deliver food from point A to point B), as well as the impact of the pandemic on the livestock sector due to reduced availability of animal feed and reduced throughput of slaughterhouses (due to logistical restrictions and labor shortages), as happened in China.
Due to all of the above, starting from April and May, interruptions in food supplies can be expected.
The closure of transport routes is especially unfavorable for the supply of fresh produce and can lead to increased losses and food waste.
Transport restrictions and quarantine measures will impede farmers’ access to markets, reducing their productive capacity and hindering product sales.
Labor shortages can lead to disruptions in food production and processing, especially for labor-intensive crops.
You can’t expect surges in prices for basic food products where supplies are maintained, stocks and capital-intensive production, but they are possible with respect to high-value commodities and especially meat in the short term and perishable products.
The greatest danger is for developing countries / Africa, as the disease can reduce labor and affect labor-intensive industries (agriculture), and also because most countries affected by the food crisis are located in sub-Saharan Africa.
How will the pandemic affect food demand?
The financial crisis of 2008 showed us what can happen when declining incomes and uncertainty make people spend less and lead to less demand. Sales are down. Production is also declining.
At the beginning of the COVID-19 outbreak, there was a significant increase in demand.
Food demand is generally inelastic and its effect on total consumption will be limited, although nutrition patterns may change. There is the possibility of a disproportionate reduction in meat consumption (as a result of fears – not scientifically based – that animals can be carriers of the virus) and other high-value foods such as vegetables and fruits (which will lead to a drop in prices).
In less affluent countries, food demand is more related to income, and there the loss of earning opportunities can affect consumption.
Fear of getting infected can result in a reduction in visits to food markets, and we expect to see a shift in how people purchase and consume food – reduced restaurant visits, increased delivery through e-commerce (as evidenced by China) and more frequent food consumption at home.
After the outbreak of coronavirus, countries around the world have begun to introduce a number of measures to prevent the further spread of the disease.
However, such measures may affect production and trade in agriculture. For example, many countries are introducing increased control measures for cargo ships, which creates a risk of traffic disruption.
Measures affecting the freedom of movement of people, such as seasonal workers, can affect agricultural production and thereby global market prices.