Will the coronavirus pandemic lead to a food crisis? | Counting the Cost
The epidemic threatens the world with a food crisis
Coronavirus leaves farmers idle, countries stockpile.
Coronavirus outbreak could impact food security as global pandemic disrupts labor availability and supply chain.
«We risk falling into an impending food crisis unless rapid action is taken to protect the most vulnerable nodes, maintain the world’s food supply chains and mitigate the impact of the pandemic on the food system», – said the Food and Agriculture Organization of the United Nations (FAO) in a recent posting on its website.
FAO said disruptions can be expected in April and May.
The FAO estimates that restrictions on movement and «resentment» on the part of workers can interfere with farming. Food manufacturers may also be deprived of the ability to process agricultural products.
«However, we already see problems in terms of logistics associated with the movement of food (inability to move food from point A to point B) and the impact of the pandemic on the livestock sector due to limited access to animal feed and slaughterhouses.. «Decreased capacity (due to logistical constraints and labor shortages) similar to what happened in China», – believes FAO.
Disruptions are minimal so far as food supplies have been adequate.
Price spikes are more likely for more expensive foods like meat and perishable goods than for staple foods, which are still in abundance, the FAO says..
«Grain production in developed markets, usually done on large farms in areas with low employee density, is less prone to contamination, but labor-intensive industries such as plantations (palm oil) and manufacturing (meat processing) are at greater risk of contamination of workers and therefore on interim measures to block», – said in a recent post by Fitch Solutions.
Sabah, Malaysia’s largest palm oil state, ordered the closure of palm oil plantations in three districts after some workers tested positive for the COVID-19 coronavirus.
Even though there are sufficient stocks of basic foodstuffs, despite the manpower and logistical challenges, any restrictions by countries reserving strategic supplies could increase the risks.
«Some countries may resort to trade restrictions or aggressive stocks in an effort to protect food security, which can quickly raise and hold prices for grains and oilseeds», – notes Fitch Solutions.
Major crop producing countries that have imposed export restrictions include Vietnam, which has restricted rice exports, and Russia, which has halted exports of processed grain. Kazakhstan also suspended the export of wheat flour, buckwheat, sugar, sunflower oil and some vegetables
Such moves could accelerate food price inflation as consumers worry about blockages and build up their own home stocks, Fitch Solutions said..
«The potential implementation of country-level food protection measures in an attempt to protect food security, such as export restrictions in key suppliers or aggressive government stockpiles, could also significantly disrupt global food supplies.», – notes Fitch Solutions.
Most subject to growth food prices of states with an increased share of imports relative to domestic food supplies, such as countries in the Middle East, China, Japan and South Korea, Fitch Solutions reports.
Weaker currencies such as India and Indonesia are also at risk as most goods on the international market are denominated in dollars.