1) Can you share examples on how the bottlenecks listed in the policy brief have been addressed and with which result?
The bottlenecks addressed by the FAO (Food and Agriculture Organization of the United Nations) in the Brief (titled Responding to the impact of the COVID-19 outbreak on food value chains through efficient logistics; published on web link: http://www.fao.org/3/ca8466en/CA8466EN.pdf on April 4, 2020), has debated some of the situations that can hinder supply of and access to adequate food to the beneficiaries (across the region of the globe). The COVID-19 pandemic is caused by the SARS-CoV-2 virus (referred to as the COVID-19 virus). However, it seems that all food-supply chains have not been looked into, the reasons being non-availability of data/information owing to the world-wide COVID-19 epidemic (and resulting lockdown). The governments around the world have implemented measures to curb spread of the COVID-19.
2) What has been the impact of measures to face the COVID-19 pandemic on the exports of food and cash crops?
National governments around the globe have taken appropriate measures to ensure adequate production and supply of food chain. Nature of measure taken depends on locally prevailing situations of the economy. In cities around the world, reports of panic buying and food hoarding have proliferated since the COVID-19 pandemic began.
3) What has been the impact of measures to face the COVID-19 pandemic on the imports of food ingredients, inputs, packaging and other goods related to the food value chain?
On the supply side, global grain stockpiles are healthy but could quickly be depleted as the virus disrupts food production and distribution. And shortages of animal feed, fertilizers, and pesticides have increased both the costs of farming and the risk of bad harvests. Further, in the post-outbreak era, what can food sector players do to make their supply chains both responsible and resilient? Solutions should run along below lines:
a) Go-to-market versatility: Existing go-to-market channels like bars and restaurants have closed down and expectations are that it will take 12-18 months before societies fully recover from COVID-19. Companies, therefore, need to invest in capabilities, especially focusing on online/digital solutions.
b) End-to-end supply chain management: As sourcing ingredients/merchandise becomes harder for businesses, one alternative is to work with a wider pool of suppliers, including regional ones, and keep larger strategic stocks. A broad product range is more expensive to maintain, but spreads risks. An alternative is to simplify recipes and/or remove problem products from the portfolio, resulting in a leaner, more manageable product range, less risk and lower costs. That would also free up time and resources to invest in the development of innovative new products that combine a healthy lifestyle with minimal environmental impact. Meanwhile, it’s important to invest in relationships with supply chain partners. Supplier and customer loyalty and resilience are pivotal to ensure business continuity and to thrive post-COVID-19.
4) How have logistics from the national to the local level been impacted by the pandemic and response measures?
From harvesting fruits and vegetables in India to operating meat plants in the USA, labor shortages are becoming increasingly apparent as cross-border travel restrictions in much of the world disrupt the normal seasonal cycle of migrant farm workers. And transportation shortages are making it more challenging to get produce to market.
It is important to note that nobody knows the timetable for the lifting of COVID-19 containment measures. But when the lockdown is over, businesses that have used the downtime well – by embracing supply chain innovation, diversification and collaboration, preferably also integrating sustainability goals– will come out fitter for the future.
5) What have been the implications on informal cross-border trade?
Farmers need to reconfigure their supply chains away from bulk wholesale to (currently closed) restaurants, hotels, and schools, and toward grocery stores and home delivery. But that takes time, not least because commercial and consumer food products are prepared and packaged differently. In the meantime, fresh produce has had to be destroyed. Furthermore, some major food-producing countries have already imposed export bans or quotas in response to the pandemic, as Russia and Kazakhstan have done for grain, and India and Vietnam have done for rice. Meanwhile, other countries are stockpiling food through accelerated imports, as is true of the Philippines (rice) and Egypt (wheat). Such food protectionism may seem like a good way to provide relief to the most vulnerable segments of the population, but simultaneous interventions by many governments can result in a global food-price surge
6) What challenges related to the food value chain have emerged during the relaxing of COVID-19 containment measures?
While the COVID-19 pandemic has led to falling growth, rising unemployment, widening fiscal deficits, and soaring debt in advanced and emerging economies alike, the appearance of new infection hotbeds in developing countries will mean an even starker trade-off between saving lives and protecting livelihoods. Moreover, developing countries are already facing a sudden stop in capital and remittance inflows and a collapse in tourism, while the terms of trade and currencies of the many oil and primary-commodity exporters among them are crashing. Even before COVID-19, many low-income countries were at serious risk of debt distress. And many of these economies are also highly vulnerable to a spike in food prices.
Nomura’s Food Vulnerability Index ranks 110 countries based on their exposure to large food-price swings, taking into account their nominal GDP per capita, the share of food in household consumption, and net food imports. The latest reading shows that of the 50 countries most vulnerable to a sustained rise in food prices, nearly all are developing economies that account for nearly three-fifths of the world’s population.
In fact, surging food prices would be a global problem, because they are highly regressive everywhere. Even in developed economies, a jump in food prices would drive a bigger wedge between the rich and poor, exacerbating already severe wealth inequality. No one should ignore the age-old connection between food crises and social unrest.
Multilateral institutions have mobilized quickly during the crisis to provide emergency loans to a record number of developing countries, while G20 creditors have agreed to a temporary suspension of debt-service payments from poor countries that request forbearance. But because the risks posed by surging food prices do not apply only to the most vulnerable economies, temporary debt relief may need to be extended to other countries as well.
7) Are there any additional areas not yet included in the brief that warrant particular attention with regard to logistics affecting the food supply chain?
With the pandemic threatening to wreak even more economic havoc, governments must work together to address the risk of disruptions to food supply chains. More broadly, some modicum of global policy coordination is essential to prevent food protectionism from becoming the post-pandemic new normal. However, following areas warrant particular attention by policy makers with regard to logistics affecting the food supply chain:
a) Harvests: As spring arrives, crops are rotting in the fields. Europe’s asparagus growers, for instance, are dramatically short of staff, with migrant workers from Eastern Europe unable to come to their farms due to border restrictions - or simply afraid to risk infection.
b) Logistics: Food transport, meanwhile, is steadily turning into a logistics nightmare. Where produce does get harvested, border controls and air freight restrictions are making international transport of fresh goods extremely difficult – and expensive.
c) Processing: Food processing plants are scaling or shutting down due to containment measures or staff shortages, with their suppliers scrambling to adjust their output. In Canada, for example, poultry farmers collectively acted to reduce their output.
d) Go-to-market: Companies that normally sell a significant portion of their output through out-of-home channels (for example soft drink producers) are seeing their sales slashed.
e) Sourcing: Supermarkets, while scoring stellar sales figures, are understaffed and under-delivered. Because of sourcing problems, products based on wide range of ingredients are becoming increasingly difficult to make and are therefore disappearing from store shelves.
Santosh Kumar Mishra