Tue, Apr 21, 2020

Earth Day 2020 call for action: Mitigating the global food crises associated with COVID-19

GeoTech Cues by Sara-Jayne Terp, Sahil Shah (Guest Author), and Molly Jahn (Guest Author)

Related Experts: David Bray, PhD, Peter Brooks, PhD, Corina LJ DuBois,

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While reflecting on Earth Day 2020, world leaders also should reflect how the Earth nourishes and feeds us all – and how tenuous that relation can be during times of crisis. The effect of COVID-19 on food security will be unique, as the pandemic simultaneously impacts food affordability, agriculture supply chains and agricultural trade. A full-blown global food crisis, multiple famines, or prolonged food system problems as a result of COVID-19 could create larger humanitarian damage over the next two to five years compared to direct damage from the virus itself. Yet such follow-up crises can be prevented.

At the beginning of April, the Atlantic Council GeoTech Center published an data-driven analysis examining “Global food security during COVID-19”. This follow-up report dives into three specific food security concerns informed by that data and presents three solutions that world leaders can implement now to get ahead of the negative impacts of COVID-19 on the global food supply.

gtc a field of corn high against a blue sky

COVID-19 Concern #1: Food Affordability

COVID-19 related lockdowns and industry closures deprive informal-sector workers, paid on a day-to-day or week-by-week basis, of their livelihood. This lack of purchasing power has rendered food unaffordable for these works.

The impact of food affordability is compounded with rising food prices; for example, in Addis Ababa, prices of key staples rose between 50-100% between February and March 2020.

Lockdown measures, which encapsulate one-third of the world’s population, have been especially damaging for those least developed countries (LDCs) with a large share of unbanked workers in the informal sector, as they are especially difficult to provide aid to. If we see rising prices coupled with a loss of purchasing power, mitigating this would require further subsidy, food vouchers or other solutions at the governmental level.

Solution #1: Implement Social Protection Measures

Social protection measures are required to protect purchasing power and ensure affordability of food. As of March 27, 2020, a total of 84 countries had introduced or adapted social protection and jobs programs in response to COVID-19, with 97 out of 150 schemes as cash transfers.

However, implementing these measures has challenges. According to Jan Sahas, direct rations from the government are on the wishlist for 80% of India’s daily labourers, but only 60% have cash transfers on their wishlist. Providing rations instead can dampen inflationary pressures that could arise from cash transfers. However, it is important this is purchased from farmers/wholesalers to ensure that agricultural supply chains have the money to continue functioning.

Direct bank transfers have led to long ATM queues (providing dense environments for viral spread), with some violence across parts of India, so there are trade-offs between providing cash, bank transfers, or rations. Food vouchers are an alternative solution that solve many of the trade-offs above.

The role of credit unions, cooperatives and village community banks can help provide protection for those unbanked, and in countries where mobile money is highly prevalent (e.g. Kenya), providing cash through telecommunications infrastructure could be effective. Military mobilisation and electoral commissions can also be an effective tool to distribute cash and/or rations to isolated communities.

gtc cargo ships at sea

COVID-19 Concern #2: Disruption of Global Supply Chains

COVID-19 has already disrupted global supply chains and has the potential to do so further. Large amounts of seeds, fertilizer, and agro-chemicals are shipped between ports. As a result, ports can form a single point of failure in a complicated system, particularly where a country or region is heavily reliant on freight through a specific port. We have already seen effects on global ports from the virus, and this situation is developing daily:

  • China has had issues obtaining migrant labor due to travel restrictions, affecting the ability to plant. Hubei is also the main phosphate fertilizer producer in China and the epicenter of the virus. The restrictions imposed to contain the virus which prevented workers from producing fertilizer right before the rice fertilization season, also exacerbated an existing fertiliser shortage
  • A Qufu Normal University survey of village officials in 1,636 counties found that 60% of respondents were pessimistic about the planting season, and China plans to increase imports of key staples.
  • A number of ports worldwide have seen their operations disrupted by the virus. Exporters in India have struggled to secure enough workers to continue to load ships during the lockdown, leading to force majeure being declared on a number of contracts
  • Workers at Port Santos in Brazil, vital for the global trade in a number of crops including sugar, maize and soybeans, threatened large scale industrial action over concerns over safety around the virus. While employees have returned to work for the moment, the issue remains active, and it is possible other ports worldwide will see similar issues.
  • India, following China’s lead, has announced a 14 day quarantine for ships coming from COVID-19 affected regions, slowing down vessel traffic. Other nations have followed suit. The marine insurer North has a real-time list of impacts here.

Disruptions to shipping and the global food supply affect not only food importers, but also the shipping of seeds, fertilizer, agro-chemicals, and food shipped with a low shelf life (fruits and vegetables) more than core grains.

Moreover, many smallholder farmers lack storage to hold their harvests. If buyers are delayed due to lockdown or supply chain disruption, one rain can destroy full yields, post harvest.

Solution #2: Keep Ports Open

90% of global trade volumes are from shipping, so it is critical to keep ports and vessels functioning. Graphical representation of impacts on shipping logistics include the COVID-19 Global Port Restrictions Map

Threats to the steady functioning of ports include:

  • Staff sickness. One sick staff member can infect many others in close proximity, leading to a number of workers in a particular area of a port falling sick at once. If these workers are skilled (as is the case with several container operations), it may be hard to replace them with other workers at short notice.
  • Fear of sickness, lockdown measures or a staff strike may also lead to disruptions, leading to workers staying away from their workplaces during the virus.
  • If the virus leads to food insecurity or other social problems within the local population around a port, the normal flow of freight may also be disrupted. 
  • Ship quarantines may delay the operations of ports if vessels must wait for a certain period before unloading/loading. These measures may be adopted in ports other than the one receiving goods, but would still disrupt its operations.
  • Delayed port operations and increased pressure on internal transport.

Potential mitigation measures to keep ports open include:

  • Recognition from governments that the port and associated operations are vital to food security, and all workers involved are essential. Associated operations”, defined by governments, should extend all the way to those working in ship repairs/maintenance, as delays in this could create bottlenecks further down the line.This means they must be able to access their place of work despite lockdown measures. In addition, lockdowns, when enacted by governments, should ensure that associated logistics operations are also not interrupted, such as road and rail freight, getting to and from ports. 
  • Try to reduce staff sickness at the port. If possible, isolate workers within the port so that the spread of the virus among the key workers is reduced and operations can continue. Workers could be given accommodation on site, good food and bonus pay for the next three months, and would be isolated from the broader population to prevent infection. This would require discipline and a public health/infection control expert would need to design the isolation. An army medical service may have the required skills to operate such a system. It would not need to be high-tech or expensive, just strict and well organized. 
  • Preventative measures for seafarer infection prior to departure, implementing self isolation for seafarers 14 days prior to departure, pre-departure screenings and / or temperatures to prevent potentially affected individuals from starting a voyage.
  • Ensure that there are reserve staff so that even if workers fall sick, key operations can continue. This will most likely involve training new staff, and will require flexibility and initiative from management and workers.
  • Adopt strict hygiene standards at the port, so that the spread of the virus can be contained and offices/workplaces disinfected if workers with the virus are discovered.
  • Medical agreements with destination port authorities, communication and agreements with destination port countries to determine offloading and treatment of sick or suspected infected personnel, along with the ability to obtain replacement personnel through air travel. 
gtc harvester in a field of wheat

COVID-19 Concern #3: Trade Policy

As of 20 April 2020, at least 16 countries have already issued food export restrictions or bans in a bid to bolster national stocks and keep domestic prices low. IFPRI’s real time tracker shows that 3.8% of global calories are already restricted in binding and nonbinding measures. This is similar to 2007/2008, when 4.7% of global calories were affected, rice prices increased by 216%, wheat by 136% and maize by 125%. Other countries, including Russia, have also threatened to escalate measures, and these measures are subject to daily review. 

In addition, a number of countries have increased their grain import volumes recently, in response to the crisis and likely global shortages. Typically these have been countries with large existing deficits in one or more key staples, such as Algeria, Turkey, Saudi Arabia and Egypt. While raising stockpiles helps to hedge against the risk of future disruptions to shipping, and provides reassurance for domestic consumers, it also places further pressure upon global trade, with upwards stresses on prices and scrambles for contracts.

Unlike the financial crisis of 2008-2009, recent harvests across most key grain producers have been good, and the current outlook for the coming 2020-2021 harvest is positive. However, the risk remains that individual concerns over food availability lead to countries scrambling to adopt protectionist measures, particularly as disruptions to trade from the virus rise and as governments wish to be seen to act. 

With the core grain trade dominated by a handful of exporters, a cascade of bans could have major price repercussions, particularly for net grain importers. There is strong evidence that restrictions of exports from key suppliers contributed to the food price spike of 2008/9, with the fear of shortages potentially creating exactly the global price elevation that countries fear despite ample underlying stocks. Because of this, should export bans start to increase global food prices, it is possible that existing measures will be ramped up and further countries will impose bans in order to protect their own consumers, triggering a further rise in prices. 

On top of export bans potentially inflating crop prices, most emerging market currencies have been depreciating relative to the U.S. dollar due to the virus, exacerbating the impact of price rises in local currency terms. Due to the economic stress of COVID-19, there is a real risk that the poorest countries will struggle to afford the added cost of imports. Where governments are resource constrained, this suggests rising prices will have to be passed on to consumers at exactly the time that they are losing purchasing power, causing many to lose food access.

However, it is important to stress to governments that none of this price rise is necessary from market fundamentals, with global crop production currently healthy as long as measures are taken to insulate systems from the virus. 

By adopting heavy-handed trade measures, major exporters run the risk of alienating key partners at a time of great global stress via unnecessary export bans/restrictions, and undermining their own long-term export markets. In turn this could affect traditional political allegiances, and could shift power dynamics where there are existing geopolitical tensions.

Solution #3: Mitigating a food shortage

The World Bank predicts a 2.6% to 7% decline in agricultural production due to COVID-19 across Sub-saharan Africa. If this decline in production cannot be avoided, imports may need to be increased to cover the shortfall, or an increase in production (e.g. cassava crops on imperfect land). This will even be the case for households and regions that were previously self-sufficient or surplus in key crops.

This may present a problem for a number of reasons:

  • African consumers will be forced to import additional food from the world market at a time when trade is disrupted by the virus and their currencies have depreciated, as discussed above. This suggests prices across African markets may rise significantly in local currency terms if extra imports are needed, hurting affordability for both urban and rural consumers.
  • This impact will be particularly severe if a previously surplus country or region moves to a deficit due to the shock. This is because when importing, prices must rise to cover the cost of world prices plus freight into the region, whereas before when exporting they reflected world prices minus this freight cost. This can cause large swings in local prices from a comparatively small change in output.
  • Additionally, if export bans begin to be adopted by key world market exporters, there is the potential for world prices to rise sharply at exactly the moment that African countries will need to import more food. Export bans in this case could place a large number of additional people into food insecurity across the continent.

Already Ethiopia and Tanzania have warned of food shortages, and as the crisis develops it is likely that others will follow. The following measures could help prevent food shortages from developing:

  • Minimize shocks: Efforts must be made to minimize the shock to agriculture in the first place. In particular, at-risk African countries  must continue to suppress the ongoing outbreak of locusts and make sure that, despite COVID-19 lockdowns, farmers can continue to plant and market their crops, and have confidence in measures in the coming months:
    • Bilateral and multilateral development funding and expertise are necessary to support African countries with locust spraying, as they are currently facing multiple crises with constrained resources.
    • To give farmers the confidence to plant, governments could either purchase futures contracts for local crops themselves, issue insurance, or underwrite the purchases/insurance issued by a partner.
    • In extreme cases governments could also issue contracts to commercial agriculture to switch areas under cash crops to food staples, in order to supply domestic strategic stocks or to be sold onto the domestic market. However, a number of cash crops are grown on multi-year cycles under existing contracts, and it may be difficult to switch areas at short notice.
    • Finally, it may be possible to bring previously fallow land into agricultural use. Simple-to-grow crops, such as cassava shoots that can be grown on a wider variety of land would be ideal.
  • Reduce tariffs: A number of African countries impose strict quotas or high tariffs on food imports. For example, the East African Community (Burundi, Rwanda, Kenya, Tanzania and Uganda) imposes a tariff of at least 50% on maize imports and 35%, or at least US$200/tonne, on rice (whatever is higher). These measures have been adopted to raise revenue or protect local farmers under normal market conditions.  However, in the event of regional shortages these measures could be temporarily relaxed, with assurances to farmers given, and governments flexible with their trade policy.
  • Food rations/coupons: If these measures are ineffective, the government may need to start issuing food rations, either from its own stocks or purchased from private traders or the provision of coupons. The amount, composition and distribution of rations would need to be carefully considered by governments. A number of countries already do this worldwide, most notably Egypt, and in general governments have tried to move away from rations as they have generally proven expensive, cumbersome and open to abuse over time. However, in the short term they may be necessary during the crisis, especially if lockdowns are implemented and incomes are disrupted.
  • Macroalgal production: Another possibility would be rapidly scaling up macroalgal production in coastal areas, where it could be used both as animal feed and as a high nutritious food additive. This is especially important as fruit/vegetable production will be disproportionately affected by COVID-19 due to rapid spoilage and labor intensive planting and harvesting. Macroalgae can be grown through vegetative propagation, has a fast growing cycle, and doesn’t need any land, fresh water or fertilizer.
gtc contains ready for shipping in port

Concluding thoughts

The COVID-19 pandemic will simultaneously impact food affordability, agriculture supply chains and agricultural trade. While reflecting on Earth Day 2020, world leaders also should reflect how the Earth nourishes and feeds us all. This report presented three specific food security concerns informed by earlier data analyses, and recommended three solutions that world leaders can implement now to get ahead of the negative impacts of COVID-19 on the global food supply.

As an umbrella solution to these concerns, world leaders could implement Data Trusts – something the Atlantic Council GeoTech Center has had several events advocating both public and private sector organizations implement – focused on food supply, logistics, and trade during the COVID-19 pandemic. This Data Trust would provide a federated approach to making sure timely data to inform decisions is available in a transparent, trust-building framework that benefits the global public.

Furthermore, world leaders should not assume if their country’s average intake exceeds 2000 calories/day, per the analyses performed earlier in April, that their nation is immune from the COVID-19 impacts to their national food supply. Within countries there undoubtedly will be problems with appropriate distribution to cities and local areas that need food. Food may be present, just not where it is needed most by people during the pandemic. As a result, all countries must rally together to think locally and act globally together on these issues now – to ensure everyone who can be fed during this pandemic is fed.

The Atlantic Council GeoTech Center would like to thank Sahil Shah and Molly Jahn, PhD as Guest Authors for contributing to this publication. Sahil is a specialist advisor to the Alliance to Feed the Earth in Disasters (ALLFED), a Director at seaweed cultivation company Sustainable Seaweed, and an Honorary Fellow at the Jahn Research Group. Molly is a professor at the University of Wisconsin-Madison where she holds appointments in the Department of Agronomy, the Nelson Institute, and the Global Health Institute.

A global food crisis, multiple famines, or prolonged food system problems as a result of COVID-19 could create larger humanitarian damage over the next two to five years compared to direct damage from the virus itself. Yet such follow-up crises can be prevented.

Atlantic Council GeoTech Center

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