The coronavirus has focused the world’s attention on the woeful lack of ventilators, respiratory masks, and intensive care unit beds available in many countries. Far less attention has been paid to another pandemic-driven shortage lurking over the horizon: food.
As trade walls go up and governments panic about preserving their own food sources, the coronavirus threatens to disrupt global supply chains. Russia, the world’s largest wheat exporter, is limiting grain exports from April to June. Egypt, the world’s biggest wheat importer, has ramped up grain purchases and stopped exports of legumes.
The looming food shortage has an echo of the financial crisis of 2008, when large exporters that were worried about food supplies limited exports, causing a global price surge. In response, other countries began importing food like there was no tomorrow. This bolstered demand, pushing prices up even further.
As prices shot up, the result was devastating for the world’s poor. Insufficient food increased malnutrition, especially in children, and plunged already poor people deeper into poverty.
Today, trade restrictions and panic hoarding will only intensify the crisis and further disrupt supply chains. Municipalities in Argentina, the world’s largest exporter of soybean products, closed the roads in major soybean production areas—ignoring a federal government order to keep them open. This resulted in the country’s grain supplies shrinking by half until the municipalities loosened restrictions. With planes grounded, Canadian imports of onions and eggplants from India have plummeted over the past two weeks.
Unlike previous food crises, this one stands to be exacerbated by global restrictions on movement. Millions of migrant workers involved in agriculture and food production are now immobile because of border crackdowns. This has left produce unharvested and much-needed food left to rot in fields. Seasonal laborers from Eastern Europe are missing on the farms of Spain, Germany, Italy, and France. The U.K. government, desperate for farm labor, has looked to tap its reservoir of unemployed to pick strawberries or cut asparagus. India has limited rice exports due to labor shortages.
The production of staple crops such as wheat, corn, and soybeans has been less affected by lockdowns, as their harvests are largely mechanized. But the availability of fresh fruits and vegetables depends on people, not machines, to harvest, process, and package them. Fruits and vegetables are also perishable, so logistical problems pose even more threat to their supply.
Shipping accounts for 90 percent of all global trade, including food trade. Due to border closures, commercial ships can’t freely access ports or change crews. This makes no sense, as ports can be maintained with a small staff, whereas their shuttering would have a catastrophic effect on trade.
No country is immune, and consumers are already feeling the impact. Wheat prices have gone up by 8 percent and rice prices by 25 percent. In Nigeria, Africa’s biggest economy, rice prices jumped by more than 30 percent just in the last four days of March. Poorer countries will be hit hard, because people there simply can’t eat when food costs more. Countries that usually import more food than export them will suffer most because of price increases and weaker currencies.
But the situation is very different today from what it was in 2008, and a global food shortage need not be inevitable. The global stocks of food staples are significantly higher now, with more than double the amount of what it was back then. The U.S. Department of Agriculture expects record-breaking wheat harvests this year. China, Russia, and the United States are among the countries that have good stockpiles at the moment. So hoarding food will only cause panic in the food market. Countries and investors have more transparency and information on market conditions, from production and consumption to stocks and prices. This can encourage countries to not resort to the misguided and nationalistic beggar-thy-neighbor policies of 2008.
It is imperative, too, that trade channels stay open. Both exporters and importers of foods should agree not to impose trade barriers in response to the coronavirus pandemic. Countries should eliminate existing export restrictions, including export taxes and export bans. There is no reason for ports and global shipping to not continue operation as long as they practice preventive measures for the virus, making sure that their workers are healthy and the vessels transporting food are safe.
Countries should temporarily reduce tariffs and taxes, as well. Lower import tariffs can facilitate imports, for example, which means they can address immediate concerns about low food supplies and high prices caused by currency fluctuations. It’s also high time to facilitate regional trade and transport. For example, in Africa, if countries can’t buy fruits and vegetables from international markets due to slowing trade, they could find them in other African countries. It’s the same in Latin America, where the region’s countries can meet the region’s food demand. The potential for regional trade is enormous.
These measures will stabilize food markets worldwide and prevent massive food shortages. Trading in cereal futures can help exporters. Importers can reduce import tariffs or value-added tax to neutralize the effects of high prices, but each country has to make its own call, taking trade-offs and revenues into account.
Governments have to work together quickly to move food from where it is produced to where it is needed most. On April 1, the United Nations’ maritime agency called on nations to declare seafarers, port staff, and other maritime workers as essential personnel to ensure trade flows. Some have done so, including the United States and the United Kingdom, but to have maximum impact, every country has to follow suit as soon as possible. They also need to protect the health and safety of essential workers by providing health checks and protective gear.
A key to implementing these measures is to reduce uncertainties. Countries are throwing up trade walls because they don’t know what to expect. Greater transparency and real-time data on stocks, production availability, and logistical issues can provide clarity. Lessons from the past, including how wrong policies can cause more harm than good, can goad them to right action.
When countries realize that it is in their best interest to work in concert, they do come together. Earlier this month, the agriculture ministers of 25 Latin American and Caribbean countries signed an agreement to join forces to ensure food supply for the region’s 620 million consumers.
The spring growing season is in full swing in the Northern Hemisphere, so governments will have to move fast to keep food production going while containing the virus. The United States has deemed agricultural laborers as an essential labor force with special responsibility to continue working during an emergency. It has allowed farmworkers from Mexico to enter the country and travel. These laborers also need onsite health checks, protective gear, working and living arrangements that promote social distancing, and paid sick leave.
The crushing economic toll of the pandemic has people scared. Global job losses are expected to be in the hundreds of millions. In the United States alone, almost 17 million people lost their jobs just in the past three weeks. Some have argued that widespread death may be preferable to the economic depression that follows from containing the virus. That is outrageous. But it doesn’t mean that governments cannot strike a balance between keeping the food supply flowing and protecting the public’s health.
Food supply is part of the immediate health response to COVID-19. With unemployment rates skyrocketing, it is crucial that vulnerable people have access to nutritious food. The strain on food banks makes it even more important for governments to stabilize the food market.
On top of a public health crisis and pandemic, the last thing the world needs is a food shortage.
Source: Thanks https://foreignpolicy.com/2020/04/14/how-to-stop-food-crisis-coronavirus-economy-trade/