By Sara Gustafson

This post originally appeared on FoodSecurityPortal.org

 Photo credit: ILRI

Increasing urbanization plays a major role in shifting patterns of food supply and demand and thus in transforming food systems. These transformations carry significant implications for the livelihoods of rural populations, presenting both challenges and opportunities. A new paper published in Food Security examines some of these impacts in Africa south of the Sahara (SSA) and South Asia, as well as the enabling environments needed to help rural communities benefit from the changes.

Both SSA and South Asia are expected to experience rapid urban population growth over the next three decades, according to the study. The urban population of SSA is forecast to reach 840 million in 2050, while South Asia is forecast to see its urban population grow to 1.2 billion in the same timeframe. In both regions, while most of this growth is expected to occur in large cities, peri-urban areas (i.e., small and medium-sized cities and neighborhoods on the outskirts of large city centers) are also on the rise. This distinction is important, the study emphasizes, because smaller urban areas are tied to rural economies in different ways than large cities. They often depend more heavily on the agricultural sector, for example, and be more closely tied to local food value chains.

The paper identifies four main channels through which urbanization can impact rural livelihoods. As stated above, the extent to which these channels are in play varies depending on the size and geographic location of a particular urban area.

• Overall growth in urban food demand. Overall demand for food could rise as much as 2.5 times and 1.7 times its current levels in SSA and South Asia, respectively, by 2050. In both regions, urban food demand is expected to grow by two to four times more than rural food demand between now and 2050.
• Urban population’s purchasing power and food preferences. On average, urban households are better able to afford food than rural households. While urban populations in much of SSA struggle more with poverty and income inequality than their urban peers in South Asia, in general, their purchasing power and subsequent food security tend to be higher than rural populations. With this burgeoning urban demand and increased purchasing power will come shifts in consumer preferences. This includes shifts toward greater consumption of meat, dairy, vegetables and fruits, and processed foods – all higher value products that can increase incomes for rural producers.
• Complexity of food value chains and shifts in market linkages. In addition to opening the door to the production of higher-value crops, growing demand for more diverse foods and more processed foods provides opportunities for rural and peri-urban populations to diversify their incomes by engaging in more formal agricultural food value chains as processors and traders as well as producers. Employment in these off-farm sectors is increasing faster than on-farm employment in SSA. In addition, the paper highlights that households more closely linked to urban markets often receive greater returns on their products due to having lower transaction costs and better access to and information about these growing markets. However, formal value chains often benefit larger producers more than smallholders, potentially pushing smaller producers out of profitable sectors and increasing poverty in rural areas.
• Direct and indirect land use changes. As urban populations grow, agricultural land surrounding cities is converted to living space. This expansion of urban land impacts food production and the livelihoods of rural producers. In South Asia, between 1992 and 2015, 75 percent of urban expansion impacted surrounding cropland; this number was less than 40 percent in SSA. The paper projects that between 2000 and 2030, Asia as a whole will lose about 3 percent of its agricultural land to urban expansion, leading to a 6 percent loss in food production. In SSA, a similar 3 percent reduction in cropland will lead to a 9 percent reduction in food production. In addition to directly impacting agricultural production, these shifts in land use will also result in more rural people seeking off-farm employment.

The paper also identifies the various enabling factors – social, physical, geographic, economic, and institutional conditions – that help determine whether rural populations will be able to reap the opportunities and avoid the dangers presented by the foregoing channels. These include migration and remittance flows, communication and transport infrastructure, urbanization patterns (growth of small cities and peri-urban areas instead of large cities), trade policies and financial incentives, and stable government services.

Ensuring the proper combination of enabling factors to help rural populations, particularly smallholders, take advantage of the opportunities presented by urbanization will require a multi-sectoral approach on both the local and the global scale. Globally, this means focusing on establishing and upholding fair trade agreements and increasing investments in capacity building in developing countries. At the national level, policymakers should work to integrate food and agriculture policies and invest in improving communication and transportation infrastructure linking rural and urban areas. Local governments should focus on ensuring that government services are accessible and inclusive, particularly for smallholders, and on increasing rural populations’ access to markets and agricultural inputs.

By Sara Gustafson

 Photo credit: Malcolm Dickson

The CGIAR COVID-19 Hub has released updated policy notes regarding the impact of the COVID-19 pandemic on global and regional food systems. This latest series of updates covers several FSP priority countries, including Ethiopia, Nigeria, Malawi, and Bangladesh.

In Ethiopia, the pandemic has resulted in declines in overall GDP and in GDP of the agrifood sector.  The majority of these declines stemmed from reductions in trade and remittances. Total GDP fell by between 6.1 and 7.7 percent, with the agrifood sector accounting for 14.9 percent of those total losses. Ethiopia’s poor population has risen by 8.5 percentage points since the onset of the pandemic, which severely restricted the livelihoods and incomes of poor urban households in particular. Despite these declines, overall the country’s food value chains have proven to be resilient to the shock presented by the pandemic. The report also highlighted that earlier investments in irrigation have provided important access to water for vegetable production and household sanitation.

COVID-19 posed significant challenges to agricultural production in Malawi, exacerbating existing climate stresses. Access to agricultural inputs and output supply chains has been disrupted; at the same time, transport costs have risen, and market prices have faced volatility. All of these factors have reduced farmers’ incomes, as well as the GDP of Malawi’s agrifood system. The pandemic has had an even greater impact on urban households, which have experienced some of the highest income losses. Research into the impact of the pandemic on Malawi’s food value chains remains ongoing.

Nigeria has also faced doubled challenges in the form of the COVID-19 pandemic and a weakened economy. During the course of the pandemic, both total GDP and agrifood system GDP declined as a result of lost income and disrupted supply chains. The agrifood system accounted for 14.7 percent of Nigeria’s national GDP loss. Household purchasing power has also declined as incomes have been impacted by economic recession and high inflation rates.

CGIAR researchers continue to work with the Nigerian government to assess the impacts of the pandemic and associated policy responses and to identify priority policies to aid in national and household-level economic recovery.

In Bangladesh, the economic fallout from the COVID-19 pandemic has been severe. As in other countries, reductions in income and disruptions to supply chains have led to declines in total GDP and agrifood system GDP. The losses in the agrifood system GDP account for around 41 percent of national GDP losses. Rice prices within Bangladesh increased 35 percent during the pandemic; in addition, the 2021 harvest period and replanting period have been hampered by floods, which could further drive up prices. The dairy, poultry sectors, and aquaculture sectors were all hit with substantial losses due to lockdown measures, with producers facing significant loss of income. Poverty in Bangladesh reached 30 percent of the total population – an estimated 7 percentage points higher than would have been estimated in the absence of COVID-19. Government policies, including subsidies, have attempted to bolster the agrifood sector to support recovery and strengthen value chains.

By Sara Gustafson

This blog is originally posted in the ssa.foodsecurityportal.org. 

 Photo credit: World Bank

As the world continues to grapple with the ongoing presence of COVID-19, it has become clear that the pandemic’s impacts extend far beyond human health. Economic growth, markets and supply chains, poverty, and food security have all experienced ripple effects from the pandemic itself and the measures taken to stop the spread of the deadly virus. In Africa, the outbreak of COVID-19 coincided with the signing of the African Continental Free Trade Area (AfCFTA), leading to concerns about the potential negative impacts on free trade targets in the region.

A forthcoming book chapter, “The COVID-19 Pandemic and African Continental Free Trade Area (AfCFTA): Exploring Potential Impacts and Developmental Implications” (published in Global Market and Global Trade [Working Title]), examines these impacts and discusses how the AfCFTA and similar trade agreements could be used to mitigate the negative economic fallout of COVID-19 and similar shocks in the future.

The AfCFTA was launched by the African Union (AU) to address persistent low levels of intra-regional trade on the continent. In 2014, trade among African countries accounted for 16% of the continent’s overall trade activity, despite the existence of numerous bilateral intra-African trade agreements. Research has linked intra-regional trade to reduced poverty, improved food security, and strengthened economic growth, and so improving these low numbers could have significant effects on important development outcomes in Africa.

The AfCFTA’s target is to increase boost intra-regional trade by 60% by 2022. The agreement aims to achieve this ambitious goal by creating a single African continental market for goods and services that allows free movement of people (for business purposes) and investments. In addition to expected reductions in poverty and food insecurity, a secondary hoped-for outcome of the agreement is the improvement of Africa’s trading position in the global market. Some of the AfCFTA’s most important stated objectives include: the elimination of tariffs and non-tariff barriers to trade; cooperation on investments, intellectual property rights, and customs matters; and the establishment of a mechanism to settle disputes among member states.

To date, 34 of the 55 AU member states have signed and ratified the agreement, making the AfCFTA the largest free trade area in the world. The agreement has the potential to lift 30 million Africans out of poverty and bring approximately USD 16.1 billion in welfare gains to the region.

The chapter reports that in the first quarter of 2020, before the outbreak of COVID-19 in Africa, there were signs that intra-regional trade was beginning to intensify as the framework of the AfCFTA took shape. However, the pandemic has already had some direct effects on the agreement itself and on trade activity within the region. COVID-19-related travel bans and border closures postponed negotiations on several key aspects of the AfCFTA, causing a six-month delay in the implementation of the agreement.

As in many other places around the world, COVID-19 and the associated policy measures adopted to help stop the spread of the virus disrupted supply chains in Africa. Inputs for agriculture, manufacturing, and other industrial uses became more difficult to import, causing production delays and shortages. At the same time, production was further slowed as many employers like factories and mines closed as part of social distancing and lockdown efforts.

Travel bans and lockdown measures around the world also led to declining demand for oil, both globally and within Africa. This has had a significant detrimental impact on oil-producing countries in the region (e.g., Angola, Nigeria, and the Democratic Republic of the Congo).

Demand has slowed for African non-oil goods as well. Overall consumption throughout the region slowed in 2020 as a result of the pandemic. The chapter reports a 17.3% decline in African household expenditures from the previous year. Together, declining production and slowing demand for both oil and non-oil exports are expected to impact trade, employment, incomes, and well-being in the region for at least the next two years.

Despite these negative impacts, however, the chapter also highlights how the COVID-19 pandemic has presented the opportunity for AfCFTA and similar free trade agreements to capitalize on new products, markets, and trade frameworks. These could ultimately help mitigate the potential longer term negative impacts of the pandemic, stimulate future economic growth, and increase resilience against future shocks.

For example, the chapter argues that travel restrictions could encourage more local and regional production and reduce dependence on imports from overseas. By supporting African countries in ramping up production of goods that are currently often imported from Europe or Asia, AfCFTA can help create employment on the continent while also guarding against future supply chain disruptions.

Similarly, intra-African trade can play an important role in reducing food insecurity – both chronic and that induced by COVID-19 – in the region. Many African countries are net food exporters; however, the region also has many areas suffering from food deficits. By improving regional transportation networks, the AfCFTA can help strengthen regional food value chains. With stronger value chains, food-exporting countries can more easily export food within the region to areas in need.

The AfCFTA was also launched at the right time to leverage technological advances and improvements in connectivity across the region, the chapter argues. While other sectors have suffered from pandemic-induced supply chain disruptions, the telecommunications sector in Africa has experienced some growth. By focusing on new and emerging sectors and products, the AfCFTA could help generate employment and income opportunities that are more protected from economic shocks.

While COVID-19 has presented, and continues to present, significant challenges for populations and economies throughout Africa and the rest of the world, it also presents opportunities. The AfCFTA presents one channel through which policymakers and other value chain actors can strengthen the region’s ties, break down barriers hampering growth, and invest in vital institutions and infrastructure. By doing so, trade in the region will become more sustainable and resilient.