1. Almost two decades now since the outbreak of the Severe Acute Respiratory Syndrome (SARS) in China in 2003 which infected close to 10,000 people and claimed about 1000 lives across 26 countries of the world, the city of Wuhan, the economic and commercial nerve center of China, has appeared to be another cog in the wheel for the global economy following the outbreak of Coronavirus which causes the eerie Covid-19 disease in the city. Early January 2020, after only two months since the first reported case in Wuhan, the virus reportedly spread to more than 80 countries. However, on the 12th of March 2020, The World Health Organization (WHO) declared the Covid-19 a pandemic after recording over 20,000 cases and 1000 deaths worldwide. Currently, there are more than 500,000 confirmed cases and over 20,000 deaths have been recorded worldwide. The alarming spread of this disease makes it the most important global health scare.
2. As the Covid-19 pandemic escalates to record higher mortality and severity outside the frontiers of China, ubiquitous concern about the fate of the world economy, especially the global food security continue to grow in intensity. Today, as world markets and countries are more integrated and interlinked than independent, no nation can afford to pay lip service to the misfortune of another nation. With the Chinese economy contributing 16 percent to the global Gross Domestic Product, it is apparent that any shock that affects China now has far greater consequences on the world economy.
3. While nearly all economic activities are on lockdown, the global food supply chain which is a complex web that involves production, agricultural inputs, transportation, processing plants, shipping etc. is encumbered.
4. In media interviews with the BBC and the Guardian UK, Maximo Torero, a chief economist at the Food and Agriculture Organization of the United Nations (FAO) analyzed the implication of the pandemic on the global food demand and supply. His analysis featured in the FAO’s “Q/A: Covid-19 Pandemic — Impact on Food and Agriculture” which is the principal reference to this article.
Will Covid-19 have negative impacts on global food security?
5. On the implication of the Covid-19 pandemic on the global food security, experts have it that the situation is no doubt a frightening one as both lives and livelihoods are at great risk. Given the alarming spread of the disease, it is no longer a regional issue — it is a global problem calling for a global response. As the virus spreads, cases mount and measures tighten to curb the spread of the virus, there have appeared many ways that the global food system will be impacted. The chief economist of the FAO had to say this:
We know that it will eventually retreat, but we don’t know how fast this will happen. We also know that this shock is somewhat unusual as it affects significant elements of both food supply and demand. We risk a looming food crisis unless measures are taken fast to protect the most vulnerable, keep global food supply chains alive and mitigate the pandemic’s impacts across the food system.
Border closures, quarantines, and market, supply chain and trade disruptions could restrict people’s access to sufficient/diverse and nutritious sources of food, especially in countries hit hard by the virus or those already affected by high levels of food insecurity.
6. Economists have advised against panicky buying which has transpired into overstocking and hoarding of food items. According to Torero, there is enough food for everyone globally, and policymakers around the world need to be careful not to repeat the mistakes made during the 2007-08 food crisis by turning this health crisis into an entirely avoidable food crisis.
7. As it stands now, disruptions are said to be minimal as food supply has been adequate and markets have been stable so far, although challenges in terms of logistics bottlenecks (not being able to move food from point A to point B) are becoming visible, and likely, there is less food of high-value commodities (i.e. fruits and vegetables) being produced and the impact on livestock sector have diminished in capacity due to reduced access to animal feed and slaughterhouses.
By April or early May, it is speculated that there may be massive disruption in the food supply chains due to reactions to the pandemic. For example: restrictions of movement, as well as basic aversion behavior by workers, may impede farmers from farming and food processors from processing. Shortage of fertilizers, veterinary medicines and other input could affect agricultural production. More so, Closures of restaurants and less frequent grocery shopping diminish demand for fresh produce and fisheries products, affecting producers and suppliers.
Whose Food Security and livelihood are most at risk due to the pandemic?
8. Currently, some 820 million people around the world are experiencing chronic hunger – not eating enough caloric energy to live normal lives. Of this, 113 million are coping with acute severe insecurity – hunger so severe that it poses an immediate threat to their lives or livelihoods and renders them reliant on external assistance to get by. These people can ill-afford any potential further disruptions to their livelihoods or access to food that COVID-19 might bring. Thus, “if COVID-19 cases which is already present in more than 100 countries, proliferate in the 44 countries that need external food assistance, or in the 53 countries home to 113 million people experiencing acute hunger, many of whose public health systems may face capacity constraints, the consequences could be drastic” Tarero observed.
9. Developing countries, particularly African nations that depend greatly on labour-intensive production are at risk as the disease can lead to a reduction in labour force. More so, because most of the food crises countries are in Sub-Saharan Africa, the region is open to a more severe shock.
10. Vulnerable groups also include small-scale farmers, who might be hindered from working on their lands or accessing markets to sell their products or buy seeds, and other essential inputs, or struggle due to higher food prices/limited purchasing power.
11. Several millions of indigent children who rely on the school free-meal program are already feeling the hit. The suspension of the school meals programs due to the pandemic puts vulnerable children’s food security and nutrition at risk whilst weakening their capacity to cope with diseases.
How will the Pandemic affect Food demand?
12. Maximo Torrero hinted that the 2008 financial crisis should be a reference as to what can happen when reduced income and uncertainty make people spend less and result in shrinking demand. Sales declined, and so did production.
13. According to Torrero, at the onset of the COVID-19 outbreak, there has been a significant increase in demand. ‘’Food demand is generally inelastic and its effect on overall consumption will be likely limited, although dietary patterns may alter.’’ He observed that there is a possibility of a disproportionately larger decline in meat consumption as a result of fears that animals might be hosts of the virus and in other higher-valued products like fruits and vegetables which are likely to cause price slumps. In the economist words;
Food demand in poorer countries is more linked to income, and, here, loss of income-earning opportunities could impact on consumption. And Fear of contagion can translate in reduced visits to food markets, and we expect to see a shift in how people buy and consume food – lower restaurant traffic, increased e-commerce deliveries (as evidenced in China), and a rise in eating at home.
What is the Pandemic’s Impact on the global economy?
14. There are several sources of effects over the global economy. These as mentioned in the FAO’s questions and answers are enumerated hereunder;
- As markets are more integrated and interlinked, with a Chinese economy that contributes 16 percent to the global gross domestic product. Thus, any shock that affects China now has far greater consequences for the world economy.’’
- The supply shocks due to morbidity and mortality, and also the containment efforts that restrict mobility and higher costs of doing business due to restricted supply chains and a tightening of credit will affect economies leading to a reduction of economic growth.
- The global demand will also fall due to higher uncertainty, increased precautionary behavior, containment efforts, and rising financial costs that reduce the ability to spend.
- There is a significant devaluation of the exchange rate with respect to the US dollar, which will also affect the import dependent countries.
15. According to a recent (March 2020) report by Agricultural Market Information System (AMIS) — Market Monitor also referenced in the FAO’s Q/A, the Global food markets are not immune to the effects of Covid-19 pandemic. However, they are likely to be less affected than other sectors that are more exposed to logistical disruptions and weakened demand, such as travel, manufacturing and energy markets. But given the complexity of the food value chains and the importance of trade and transportation, these could make them extremely vulnerable.
16. While COVID-19 may likely represents a deflationary shock for the global economy, reflected in early moves by the FAO Food Price Index, in the short term the real cost of a healthy diet may rise because of the increase in the cost of perishable commodities, which would have a particularly adverse impact on lower-income households and raise the price of progress towards the Sustainable Development Goals.
17. The Covid-19 pandemic has a far-reaching effect on the global economy and politics, and has continued to excite worries over global food security. The escalation of the disease to over 100 countries of the world and the higher morbidity and mortality recorded due to this disease in Italy, Spain and America than in China where the disease emanated only explains it to be another cog of globalization.