COVID-19 and Global Trade Implications for Food Systems and Healthy Diets

Shocks to the food system currently rippling across the globe offer an opportunity to reflect and adapt.

Food systems exist at local, regional, and global scales that are inextricably linked. The size of industries that support our global food systems have created incredible efficiencies characterized by highly complex supply chains, honed through fierce competition. Even amid the Covid-19 pandemic, the cost of the food borne by the consumer is perhaps the lowest it has ever been in history. The economies of scale and specialization necessary to produce food at such a low cost means that it is often cheaper to buy food products that have been shipped around the world than through local or regional food systems. This creates a significant barrier to growth for businesses in emerging economies who do not have the same access to capital (both human and financial), infrastructure, and technology. And, while efficient and resilient in the face of localized shocks, particularly in developed economies, food systems may not have the flexibility to adapt to the shock of a pandemic with varying consequences across the globe. According to a recent assessment, Africa, particularly sub-Saharan countries, will be impacted by trade restrictions, whereas the countries in South Asia are more likely to be impacted by the loss of productivity. In this blog we focus on how the pandemic will have rippling impacts on trade as food system actors experience loss of income and supply chains, including agricultural production, food processing, and food retail, close or are seriously disrupted.

Immediate impact of COVID (infection and unemployment)

The COVID-19 pandemic is poised to have both direct and indirect impacts on multiple aspects of food systems. The outbreak undoubtedly will create an additional shock to the resilience of global, regional, and local food systems, through increased disease incidence and reduction in productivity as households care for themselves and family members and miss out on income opportunities due to COVID-19 distancing restrictions. As the spread of this virus continues, longer term impacts to the food system will cause major disruptions to both supply and demand in the global economy. At the time of this writing, cross-border and international trade has been limited, as 91 countries have imposed restrictions on the export of goods, including food, medical supplies and hand sanitizer, among other items. According to expert opinion, these restrictions will only exacerbate the food security impacts of the pandemic, creating shortages in many countries who rely on imports, despite adequate global stocks. Compounding the likely food shortages, the UN Economic Commission on Africa is reporting profound impacts across the continent from the loss of export revenue and corresponding employment, forcing close to 27 million people into extreme poverty, despite relatively few reported cases per capita on the continent.

Impact of COVID on trade and digital opportunities

The effects of the COVID-19 pandemic will have immediate and long-lasting impacts on the way we do business. Interpersonal interaction to facilitate trade, commerce, exchange of goods and services will be limited. In many places this has resulted in a shift to digital platforms to facilitate no-contact transactions. While the digital economy is lagging in many developing countries, the pandemic will likely serve as an accelerator for emerging digital strategies that were gaining popularity before the pandemic. One such application that was recently launched in Senegal, Niger, and Democratic Republic of Congo, called Pickant App, facilitates business services and solutions such as deliveries, transport, storage, equipment, purchasing, and sales. User data of the Pickant App indicates that youth aged 21-35 are the most common users

Global trade impacts local and regional food systems: example from Bangladesh

In Bangladesh, with global trade in the ready-made garment sector effectively shut down, manufacturers have already received cancellations of orders worth US$3.17 billion, directly impacting the lives of nearly 2.2 million workers, with likely, even more profound knock-ons affecting several million more individuals in the informal garment sector and supporting industries. Because of this disruption in the global supply chain for ready-made garments, sustained wages for millions of workers in Bangladesh are now uncertain. Combined with a decline in remittances from the diaspora, the loss of livelihoods and reduction in purchasing power at the global level will only exacerbate shocks to regional and local food systems. This is particularly true and worrisome for the rural-urban connections that support access to nutritious foods. The glut of commodities in rural areas and shortages in the urban areas driven by traders’ lack of mobility and a dietary shift to cheap calories, in the face of hardship, creates a need for extended post-harvest storage, but making this change could potentially lead to an additional public health crisis: there were reportsbefore the pandemic of tannery waste such as chromium being used on animal sourced foods like chicken and beef, formalin use on fish, fresh fruits and vegetables, and even a cocktail of multiple pesticides used on commodities considered relatively shelf-stable such as dried fish. The speed with which COVID-19 has brought global commerce to a halt leaves little opportunity for local and regional food systems to adapt, resulting in potential consequences to public health beyond the virus itself.

Export-oriented impact of supply and demand

Continued disruption to the demand side of global supply chains will have rippling effects to export-oriented producers whose food security depends on agriculture revenues. For example, many coffee farmers in Guatemala are just now recovering from the concurrent shocks of low international prices and coffee rust. With so many coffee consumers confined to their homes and coffee shops closed around the globe, a supply glut is poised to drive coffee prices to levels that could not be fathomed a few weeks ago. The impacts will not only affect the incomes of the farmers who have based their farm landscapes around coffee production, but, since coffee is a keystone agroforestry species, a large number of producers shifting from forest crop production to annual field crops would  have deleterious effects on biodiversity, soil quality, and carbon sequestration.

Solution space

While we must act quickly to address the food system shocks currently swelling across the globe, this situation offers an opportunity to reflect and adapt to ensure more resilient systems moving forward. It is important to note that the virus itself does not affect existing systems and structures. Rather, it is our response to the virus that creates a catalyst for future actions that can either create improved conditions or worsen the impact of COVID-19 on national economies, communities, and families. The COVID-19 pandemic offers an opportunity to pose some critical questions: What are the priorities of a food system? What are our values as a global community? Where does the power lie and who benefits from the chain of transactions?

The disruption to our global economy places us at a crossroads. It allows us a moment to reset and consider what a resilient, food system could look like, and then take action to create it. For example, in a recent blog, the Rockefeller Foundation advocates for building resilience through more local and regional connections. We have the opportunity to review current agriculture and food policies and to orient them toward production of more diverse and local food that can meet nutrient needs more sustainably. Finally, we can take advantage of entrepreneurial solutions being created by the private sector, such as innovative technologies and platforms that connect food retail and consumers. Many of these innovations come from younger food system actors and might therefore also stimulate youth employment.

We are in an unprecedented moment in history, to be sure, which brings us unprecedented challenges and opportunities. The choices we as local, national, regional, and global actors make at this crossroads will have long lasting impacts on our health, wellbeing, and the future of our food systems.

This article was originally published in Agriculture for Nutrition and Health on May 20, 2020

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