Keeping Asia and the Pacific fed during the pandemic

The Covid-19 pandemic has raised food security risks in Asia and the Pacific as lockdowns and export restrictions have affected food supply chains.

Throughout Asia, countries are grappling with food supply disruptions and other challenges brought about by COVID-19. Photo: Debbie Molle

The pandemic is hitting the entire food value chain from farm to fork. Farms and small and medium-sized agricultural businesses face labor shortages due to lockdown measures and a decline in migrant workers. Transporting harvests quickly to markets has become a challenge as well. Large amounts of unsold seasonal vegetables and fruits have been wasted in farms as restaurants, hotels, and schools have been shut down.

While disruptions in food production, processing, and distribution caused farm-gate prices to fall for perishable products, retail prices of staple food, fresh vegetables and fruits rose sharply due to panic buying at least temporarily and higher transportation costs. Altogether, they are adversely affecting consumers’ choice of food and posing immediate threats to food security for the poor and vulnerable.

The sudden closure of borders, and trade restrictions, add strain on food security for import-dependent countries. The retail prices of rice and wheat have risen sharply in several developing economies in the region as more than 20 countries including major rice and wheat exporters in Asia have adopted temporary trade restrictions to stabilize domestic food supply.

Across the region, the pandemic has turned a spotlight on stark inequalities and its impact on the most vulnerable. The pandemic-induced economic slowdown has already dealt a devastating blow to vulnerable jobs in developing countries in Asia. According to the International Labour Organization, Asia and the Pacific ─ where 7 in 10 workers are employed informally ─ suffered the greatest impact in terms of lost working hours. There was an estimated 7.2% reduction in working hours or an equivalent of 125 million full-time jobs lost in the second quarter.

A particular concern is the nutrition status of those most exposed and vulnerable to the Covid-19 crisis. As schools close due to the pandemic, school meal programs have been suspended, significantly affecting low-income children’s access to healthy and balanced diets. Pregnant women, lactating mothers, and young children should have access to micronutrient-rich food such as fresh vegetables, fruits, fish, and milk, but those foods are highly perishable, thus more vulnerable to supply chain disruptions.

Compared to the 2007–08 food crisis when poor harvests drove the global prices of major cereal crops significantly higher, international prices of rice and wheat have not risen to alarming levels. Driven largely by disruptions in food supply chains and trade restrictions, the current food security concern can be broadly manageable as long as the pandemic can be effectively contained soon. Stock-to-use ratios of rice and wheat, which measure the extent of downward pressure on prices have remained well above 2007–2008 food crisis levels for the past several years.

Current low energy prices will also keep the likelihood of food price inflation low. However, economic slowdowns and rising job and income losses will inevitably hit vulnerable countries and communities hard, leading to deterioration of people’s real income. Furthermore, should the lockdowns be extended, shortages of labor and input supplies could also reduce the scale of crop production. Prolonged disruptions in food supply chains and higher costs in logistics would also limit smallholder farmers’ choices of better priced markets, negatively affecting farm incomes.

Swift, bold, and innovative policy interventions are needed to secure food supply chains and mitigate the immediate impact of the crisis on the most vulnerable groups. Effective policy interventions should be comprehensive, covering a wide range from protecting consumers and public health, securing supply chains for producers, fair labor, trade, macroeconomic policies, and regional cooperation.

First and foremost, the authorities should increase coverage, relax eligibility criteria, and enhance the benefits of social protection programs such as food transfer schemes so that vital support reaches the poorest of the poor and the most vulnerable.

Immediate support should be also provided to enhance smallholder farmers’ access to markets, for example, by arranging food transportation. During lockdown, famers have difficulties in locating the markets they can access. Even when they know, it is challenging to arrange transportation.

In the same context, it is critical to provide financial relief and liquidity support to farmers, agri-businesses, and food processors who fall under financial stress due to Covid-19. Many governments in the region have been rolling out fiscal measures aimed at cushioning the immediate impact on farmers, agri-firms, and other stakeholders along the food supply chain by providing loans and subsidies for working capital and allowing for debt rescheduling or restructuring under immediate liquidity stress.

Lessons from the 2007–2008 food crisis have taught the region’s policy makers to be more careful this time not to impose trade restrictions on food and not to turn a health crisis into a food crisis. Enhanced regional cooperation mechanisms such as the ASEAN Plus Three Emergency Rice Reserve also help strengthen the food supply safety net.

Post-Covid-19 agriculture sector reforms should support a transition from a labor-intensive supply chain to a more resilient and efficient agriculture system, including smart agriculture and mechanization. Such a transition will help mitigate the impacts of climate change, environmental degradation, and shrinking natural resources on food security.

Wider adoption of agricultural technology such as remote sensing and Geographic Information System-based land and soil management will be needed to address long-lasting constraints to scaling up of agricultural production capacity with enhanced productivity, including lack of financing or public-private cooperation, cumbersome regulatory environments, and incoherence of policies across various economic sectors.

The Covid-19 crisis should be used as an opportunity for developing economies to initiate or start implementing long-sought agricultural reforms. A recent move by India may be a good example: India announced in May 2020 a long-awaited plan that deregulates the production, supply, distribution and prices of key food commodities to help provide price assurance for farmers, and allow farmers to freely choose the market.

A shift toward digital agriculture and mechanization may accelerate in the post-Covid era, and Asia’s developing countries will need to cope with this new environment to make the agriculture sector more competitive.

Authors:

Kijin Kim is Economist, Economic Research and Regional Cooperation Department, ADB.

Cyn-Young Park is Director for Regional Cooperation and Integration, Economic Research and Regional Cooperation Department, ADB.