Food Coalition

Protecting and transforming value chains and agri-food businesses in the Near East and North Africa

Governments in the Near East and North Africa (NENA) region have made every effort since the pandemic started to ensure that food systems continue to function, addressing issues related to safe access to inputs, land and markets, safe working conditions along value chains, and meeting the needs of the most vulnerable. By several measures, value chains have stayed alive despite disruptions brought about by the health and economic crisis. Food production appears to be at near similar levels to before COVID-19, and global and local food availability and prices remained stable.

Below the surface, however, the disruptions in value chains have had immediate and possibly lasting effects on value chains actors’ incomes and business operations. The crisis has exposed many of the systemic problems within NENA food systems and obstacles to strengthening value chains; the dominance of traditional activities, large and deeply entrenched informal sectors, labour-intensive SMEs that are poorly integrated horizontally and vertically, weak value chain infrastructure, low digital technology penetration, low levels of value addition capacity and high levels of food loss and waste.

The phase of containment measures to prevent the virus from spreading during March to June 2020 has disrupted the way producers, intermediaries and consumers conduct their activities. In some cases for the better, such is the case of emergent digital B2B and B2C e-commerce tools. In other cases for the worse, such as major losses in fisheries sector and value chains directed toward food service. Rural women and girls have been disproportionately affected by the crisis, in their productive roles and care functions, due to their limited access to productive resources, services, information, and time. Women represent up to 45% of agricultural labour across the region.

The many disruptions with value chains have translated to higher costs of production and higher transaction costs, thus eroding incomes and profits of value chain actors, which may hurt business decisions in the coming months and years. Some key issues faced include:

- Shortages or lack of access to labour due to movement restrictions and higher costs of displacement to abide physical distancing requirements. Informal workers and daily wage laborers have the most difficulty navigating movement restrictions, and in some countries accessing movement permits. Women laborers have had particular difficulties given the additional housework and care burden during the crisis. Children’s involvement in family farming may increase with confinement and closure of schools. Under such conditions, children may be trapped in child labour in agriculture;

- Disruptions in agricultural input and service availability and access. Supply chain disruptions as well as limited market operating hours have created availability and access problems for intermediate inputs - seeds, fertilizers and pesticides – and fixed factors of production, such as spare parts for machinery or maintaining structures such as processing units and storage facilities. Many NENA countries rely on international markets for the majority of these inputs. Small-scale farmers and SMEs facing higher transaction costs may also face productivity-affecting trade-offs in light of lower profits, and difficulty accessing inputs;

- Liquidity constraints. Cash flow constraints are tightening, as cash up-front for input purchases is increasingly required which further hinders access. While production so far seem stable, productivity and quality may still be affected down the line for growing and handling food products sensitive to the quality and timeliness of inputs when they cannot be accessed in a timely manner;

- Livestock producers and nomadic herders deeply affected by movement restrictions that prevent grazing and water access. Herds are accumulating at state borders affecting animal health, and producers are facing rising costs of water and feed, and difficulty marketing animal or dairy products. These challenges are most acute in countries facing multiple other crises (Sudan, Syria, Palestine);

- Fishery and aquaculture sectors are deeply impacted by COVID-19, for example production in capture fisheries decreased by over 75 percent in most North African countries, an effect of a substantial drop in domestic and export demand due to hotel and restaurant closures and other changes in consumption patterns;

- Changes in nutritional status as the economic recession prolongs and job losses across services and other sectors take their toll. Large segments of the population may shift their food demands towards more staples and less fruit, vegetable, meat and dairy products due to lower purchasing power. This would result in higher rates of malnutrition in the short-term, which is likely to persist in the medium and long-terms;

- Potential trade disruptions. Whereas the NENA region is dependent on food imports, large quantities of fish, olive oil, fruits and vegetables are exported. Trade disruptions and/or lower global demand can build up supply in domestic markets, lowering prices and leading to income and food loss unless viable storage, processing, or marketing opportunities exist locally. Thus far, the major agricultural exporters (Egypt, Morocco, Tunisia) have seen trade relatively unaffected. However, fishery exports are down in North Africa and Sudan, Tunisian olives and olive oil prices are down and supply in a glut, Egypt has had a disastrous season for potatoes, and many fear a substantial drop in exports in the coming seasons.

Despite the many disruptions within food systems, value chains have continued to function and this shows the intrinsic resilience of agri-food producers and SMEs. Local agriculture production and value chain activity has held strong and avoided the impacts of COVID-19 as in other sectors. As such, the agri-food sector can be a driver of economic recovery in NENA; production and all intermediate processing, distribution and retail activity accounts for 19 to 27% of GDP and 21 to 45% of employment in Egypt, Jordan, Morocco and Tunisia.

There is certainly need to support value chains and actors against immediate impacts of the crisis and support recovery, yet there is an opportunity to drive real transformation of food systems in the region to better provide safe and healthy foods for all, while protecting scarce natural resources and creating employment and incomes within a broader economic development framework. This can be done by addressing the systematic issues and obstacles exposed by the COVID-19 crisis, and by promoting a food systems-oriented policy framework that is nutrition-sensitive, grounded in natural resource capacity and climate change realities, and supports innovation and modernization in a manner inclusive of women, youth, informal actors and small-scale agro-food enterprises.

Priority Areas of work: Food Systems Transformation
SDG: 1. No Poverty, 2. Zero Hunger, 5. Gender Equality, 8. Decent Work and Economic Growth, 10. Reduced Inequality, 12. Responsible Consumption and Production, 15. Life on Land, 17. Partnerships to achieve the Goal
Level: Regional
Region: Near East and North Africa
Country: Algeria, Egypt, Iraq, Mauritania, Oman, Sudan, Tunisia
Budget: USD 10 million

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