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By Sara Gustafson

 Photo credit: Malcolm Dickson

Introduction

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.

Ethiopia's situation

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.

Significant challenges to agricultural production in Malawi

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's challenges

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.

Economic fallout in Bangladesh

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.

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By Sara Gustafson

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

 Photo credit: World Bank

Introduction

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 African Continental Free Trade Area (AfCFTA)

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 COVID-19 Pandemic and African Continental Free Trade Area

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.

Potential Impacts and Developmental Implications

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.

Poverty reduction through the development of inclusive food value chains

Propelled by urbanization, rising incomes, and changing diets, food markets have been expanding in Africa and South Asia, creating the vast potential for job and income opportunities along food supply chains and, hence, for poverty reduction. The novel coronavirus (COVID-19) that spread to a pandemic in early 2020 provokes enormous setbacks to this expansion. This, however, should provide lessons regarding the importance of resilient and inclusive food systems.

Covid‐19 and global food security

Covid‐19 has major implications for global food security. The virus itself and the policy reactions have triggered a massive recession and major disruptions in food value chains. The combination of both has been dramatic for the food and nutrition security of billions of poor people around the world. The impacts are heterogeneous, depending on the nature of the commodity, the resource‐intensity of the food systems, and the level of economic development. Covid‐19 affects the food security and nutrition of poor people more strongly than that of richer people.

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by Aminou Arouna, Guillaume Soullier, Patricio Mendez del Villar, Matty Demo, and Sara Gustafson

Photo by World Bank

Introduction

Around the world, governments and populations continue to grapple with the effects of the COVID-19 pandemic. Of particular concern are the potential impacts of the pandemic and related lockdown measures on food security. While global food supply chains have been generally untouched by COVID-19 and AMIS forecasts strong trade in 2020 for major food commodities, local and regional food value chains may not fare so well, particularly in developing countries. A new paper published in Global Food Security examines the potential impacts of COVID-19 on rice value chains in West Africa and identifies several policy options to help prevent increases in food insecurity in the region.

 

West Africa continues to face high levels of food insecurity, with almost 56 million people undernourished in 2018. As a staple in regional diets, rice has a substantial role to play in West Africa’s food security, and regional policymakers have ramped up investments in domestic rice value chains since 2008. However, rice consumption continues to outpace domestic production, and many consumers favor imported rice over lower quality domestically produced rice. This leaves the region reliant on rice imports — and vulnerable to supply disruptions and price spikes.

Policy options for mitigating impacts of COVID-19

The new study finds that global rice prices saw a steep rise between December 2019 — the initial outbreak of COVID-19 — and March 2020. While rice prices stabilized in May, it is not yet clear how rice prices will respond to a potential second wave of the pandemic.

 

The study also examines several channels through which COVID-19 could affect West Africa’s domestic rice value chains. It finds that the pandemic could significantly  negatively impact paddy procurement, financing, human resources and labor, and marketing and sale of rice in the region. Value chain logistics and rice processing, on the other hand, should not experience marked effects.

 

Farmers are the main suppliers of paddy rice in West Africa, so impacts at the farm level could be important for overall value chain functioning as well. According to the authors, farmers’ access to crucial inputs like fertilizers, seeds, credit, and improved technologies and training could be diminished by the COVID-19 pandemic. At the same time, farmers may also have a harder time selling their paddy because of lockdown restrictions preventing access to open air markets and a lack of digital marketing capabilities.

 

To address these varied risks to domestic rice value chains, policymakers in West Africa should take several steps. In the short term, they should provide financial support for rice millers, both traditional and modern, in order to help improve coordination between farmers and millers, maintain continuity of milling operations, and assist in paddy procurement. This support could take the form of interest-free loans and should include safeguards to prevent speculation. In addition, movement of food should continue to be unrestricted in the region, and lockdown measures on millers should be avoided through strict sanitation requirements. Governments can also buy local milled rice to use in national and regional food stocks in order to bolster food security for vulnerable populations.

 

In the medium term, governments should focus on creating an enabling environment that fosters both domestic and foreign direct investment in modernized rice value chains. They should also build a regulatory framework for contract farming in order to reduce reliance on informal markets and make value chains more resilient to shocks like COVID-19.

Upgrading West Africa’s rice value chain

A more in-depth look at the state of upgrading West Africa’s rice value chains will be presented at an upcoming webinar, co-hosted by the CGIAR Research Program on Policies, Institutions and Markets and IFPRI’s Food Security Portal. The webinar will be held on October 27 at 10:00 EST. 

 

About Authors/Citations

Sara Gustafson is a freelance writer.

Citation: Arouna, A., Soullier, G., Del Villar, P. M., & Demont, M. (2020). Policy options for mitigating impacts of COVID-19 on domestic rice value chains and food security in West Africa. Global Food Security, 26(2020) 100405.

 

 

Food marketing margins during the COVID-19 pandemic: Evidence from vegetables in Ethiopia
Photo credit: World Bank

It is widely feared that the COVID-19 pandemic will lead to a significant worsening of the food security situation in low and middle-income countries. One reason for this is the disruption of food marketing systems and subsequent changes in farm and consumer prices.

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