A third of the world’s population is tasked to stay at home, over 90 percent live in a country with travel restrictions and many border controls have been tightened. The consequences of the corona measures can already be clearly felt in the most basic branch of the economy: the food supply. From asparagus cultivation in Western Europe to rations in refugee camps, the corona virus is disrupting the path from field to plate everywhere.
A motley crew of academics, food industry CEOs, agricultural lobbyists and NGOs has called on world leaders to take coordinated action to prevent a global food crisis. That crisis could lead to widespread hunger, they warn, especially in Africa. Eight questions about the influence of Covid-19 on the food supply.
1 Is the corona crisis causing acute food shortages?
There is currently no macroeconomic, measurable problem with crop production, although this may change quickly. However, the Food and Agriculture Organization (FAO) of the United Nations sees a problem in logistics: agricultural products have to go from the field to the wholesale trade, then often to a processing factory and so on to the market or shop. Lockdowns, social distance rules and closed borders can cause problems at every step in the chain.
There are already groups of people for whom it is difficult to get enough food. In Rwanda, the government had to set price ceilings because rice, sugar and oil were in danger of becoming unaffordable. Not because of absolute scarcity, but because of human behavior: consumers hoarded, sellers overgrown with prices and that reinforced each other.
Food can also become prohibitive due to loss of income. On March 24, India went into a poorly prepared lockdown, causing millions of people to abruptly lose work and now have to cut meals. Refugees from the Muslim Rohingya minority can no longer work as day laborers. “I think we’ll die of hunger rather than coronavirus,” one of them told Al Jazeera.
In Afghanistan, shops and markets are empty due to the food supply from Pakistan stagnating. Truck drivers refuse to cross the border because they fear they will have to be quarantined.
2 What are the consequences for the harvests?
Asparagus in Germany and the Netherlands, strawberries in Spain, Italy and France. The first crops of the European growing season are ripe for harvest, but the pickers and pickers from Poland, Bulgaria and Romania will be kept away. In normal years they come with hundreds of thousands to the west, now the asparagus start to rot on the fields. Polish workers have difficulty reaching the Netherlands, because Germany is practically closing the border with Poland.
As the season progresses, the need for labor only increases. Seasonal migrants worldwide account for 27 percent of the total number of working hours in agriculture. In Italy, 90 percent of the workers are seasonal workers, the majority of whom are Romanian. The prospect of being quarantined for two weeks on arrival and unable to keep their distance in their temporary housing keeps many at home. And while this is the time to plant vines.
It leads to creative solutions. In many European countries, initiatives have been launched to have work taken care of by students or citizens who are out of work due to the corona crisis. In the UK it has been called for one country army, a reference to the women who took over the work of mobilized farm workers during the Second World War. The Italian Minister of Agriculture is calling for residence permits for asylum seekers so that they can help. All these interventions are not simply arranged. In the meantime, strawberry growers try to delay ripening by extra ventilating their tunnels.
Many seasonal workers also stay away in the United States. Mexicans who are willing to harvest despite the large Covid-19 outbreak are struggling to obtain a visa because US consulates are closed.
3 Can’t the European Union solve this?
With the closure of the external borders, the EU hoped to persuade Member States to remove internal border blockades. That has not worked. In addition, countries are free to decide whether to establish quarantines; public health has always remained a national concern. However, Brussels has promised that farms can receive support of up to 100,000 euros, for example to pay more expensive domestic workers.
4 Is border traffic more flexible for goods than for people?
Many food producers and transporters are severely affected. Half of the employees in Kenyan green bean cultivation, who supply a lot to Europe, were sent on leave because they were unable to get deliveries from customers.
The EU has called for “green corridors” within Europe: controls at key border crossings should be organized so that they, including drivers’ health checks, take no longer than 15 minutes. For example, traffic jams at border crossings must come to an end.
The worldwide transport of fresh products that have become so common in recent decades is now not only more difficult, but also a lot more expensive. Prices for air transport have risen due to the scarcity in flights. A South African fruit grower told Reuters news agency that shipping by sea is becoming more difficult, as many shipping containers are stuck in Chinese ports. And while the demand for healthy products like oranges and lemons has actually increased, he said.
5 Have people started to eat differently because of the corona crisis?
Groups of people change their diet from rich to poor and from east to west. This is evident, for example, from the price of sugar on the world market. This fell by as much as 19 percent in March compared to February, according to the food price index of the FAO. This is especially bad news for Brazil, the country that exports the most sugar. As an explanation, the FAO mentions that people eat less outdoors. That means fewer ready-made products, which often contain a lot of sugar. The collapsed oil price also plays a role: sugar cane is now more often processed into sugar instead of ethanol, the biofuel that is mixed with petrol.
The FAO expects people to eat their hammered shelf-life products at the expense of fresh food. In Italy, for example, sales of flour increased by 80 percent, canned meat by 60 percent.
In the Bangladesh refugee camp, home to nearly a million Rohingya from Myanmar, the changes are having more serious consequences. There the markets are closed, so that the residents can no longer supplement their rations – especially rice, lentils and oil – with fresh products.
6 Will governments also hoard food?
The first protectionist interventions are already there. For example, Kazakhstan, one of the largest wheat producers in the world, has set export quotas for the grain. Ukraine has halted buckwheat exports and Egypt is no longer exporting legumes. Vietnam, the largest rice exporter after India and Thailand, has banned traders from entering into new export contracts. That is a pity for the Philippines, the largest importer of rice, who now wants to stock up. Romania has banned exports of grains, oil, sugar and other raw materials outside the EU.
The World Trade Organization has urged governments to suppress protectionist reflexes in themselves. “We must do everything we can to ensure that trade continues as freely as possible,” said the director. He warned that protectionism is also contagious, leading to price volatility and possible shortages.
Countries that are highly dependent on food imports have an extra hard time in this global crisis, especially if they also have a weak currency. Lebanon must now make a difficult decision: to spend its scarce dollars on foreign wheat that is extra expensive because of the collapsed pound, or to risk a food shortage.
President Hernandez of Honduras has his own solution to improve the self-sufficiency of his country. He says he wants to force owners of wasteland to grow food crops. That plan has yet to be worked out.
7 Are there winners in this crisis?
Some multinational companies in the food industry are currently having a very good time, despite the protective measures they have to take for production workers. Switzerland’s Nestlé – the world‘s largest food company with sales channels in all countries – has to struggle to meet “overwhelming demand,” director Mark Schneider told CNBC channel. Nescafe, Nespresso, bottled water, it is hard to bear now that billions of people are home much more than usual.
But in a video message, he called on procurement teams to “prepare for the storm” and stock up on key commodities. Multinationals have deeper pockets than other producers to keep the supply going. For example, Unilever has allocated EUR 500 million to prepay small and medium-sized suppliers. In addition, it has credit available to customers who experience payment difficulties.
The same seems to be the case with supermarkets: record sales combined with poor prospects. Covid-19 has parallels to both “9/11” and the 2008 and 2009 financial crises, a Barclays analyst writes. “9/11 led to nesting behavior, the financial crisis to destruction of demand. Covid-19 will lead to both. ”
8 Who are the biggest losers?
In developing countries, too, about 80 percent of the food is now bought in a shop, at a market or by the roadside. The farmer who leads a poor but largely self-sufficient life with a corn field, a cow and a vegetable garden is becoming less common. The food chains that have replaced them often consist of a series of small, informal companies.
Especially in the last links now problems arise. Fishermen in South Africa, for example, can still sail out, but because of the lockdown they are no longer allowed to transport the fish to small brokers. They can no longer turn to street vendors, who in turn run out of income. They can no longer buy food from other street vendors and are dependent on the expensive supermarket. The people whose existence was already marginal and who do not have their own piece of land, are the first to be in distress.