Miller Magazine Issue: 126 June 2020

54 COVER STORY MILLER / JUNE 2020 are already affected by the COVID-19 outbreak. These af- fect mainly second-tier ports, transhipments to landlocked countries and truck transportation within large countries. Not just container shipments are under strain; there are also first reports about a lack of truck drivers due to quar- antine restrictions, industrial action or actual illness. Generally, lower incomes and supply chain disruptions suggests that total merchandise trade will likely fall be- tween 13 to 32 percent in 2020. The World Trade Orga- nization (WTO) expects a recovery in trade in 2021, al- though the extent is likely to be limited. However, trade in agricultural products is projected to contract more signifi- cantly, but less than the average across all goods and ser- vices. A number of factors suggest that agricultural trade is likely to be less affected than total merchandise trade. First, demand for agricultural products is relatively in- come-inelastic; food is an essential product for all, and the options for import substitution, i.e. replacing food im- ports through domestic production, are limited at least in the short term. Second, a considerable amount of agricul- tural trade (especially cereals and products in the oilseed complex) takes place in bulk shipments, highly capital-in- tensive, and trade logistics in many routes are highly au- tomatized with little human interaction. Disruptions due to health reasons are no doubt possible, but they are less likely to result in protracted interruptions of trade flows. Third, while global food value chains are also becoming increasingly complex, the international division of labour in food and agriculture is much less pronounced than in other sectors. Finally, international prices of food have begun to decline, and this is a sector that has limited re- course to widespread trade restricting measures, such as export bans or taxes. Global food production prospects are positive, stocks are high, international food prices are low, trade is broa- derbased with more importing and exporting countries, costs of bulk transportation are depressed, fertilizer and input prices remain stable, energy prices have collapsed and competition from biofuels has virtually seized. Policy-makers in 2020 are more experienced in deal- ing with global crises, and arguably also better informed and better prepared. In high-income coun- tries, central banks are now fully familiar with the instruments of monetary easing; they have been adding new instruments to accom- modate additional credit needs. The importance of ‘global stabi- lizers’ – allowing market forces to equilibrate imbalances – are key to solidifying the fundamentals for in- ternational food security. In order for these stabilizers to do their job, the current hindrances to logistics and distribution must be addressed and mitigated. In this regard, governments must recognize the importance of ensuring that trade, wheth- er internal or international, remains open and frictionless, free from restrictions, and meets food capacities in terms of volumes and fulfilling nutritional gaps. This also implies speedy clearances at customs, borders and ports. The truism that food is the most fundamental need re- quires that farmers and agricultural workers are placed on the same footing as health workers engaged in fight- ing COVID-19. Equally, global and national food systems should be regarded as on a par with health systems in en- suring that hunger and poor nutrition problems are not al- lowed to escalate. This in turn requires that farmers main- tain and invest in productivity, with access to affordable credit, and that consumers have normal opportunities to procure food and meet their nutritional needs on the mar- ketplace. Not all countries have the fiscal means to manage the impacts of the pandemic, especially SIDS, which are highly dependent on food imports. Also vulnerable are lo- calized shock-prone countries in sub-Saharan Africa, which are in the grip of other crises, such as pest and disease outbreaks (locust, African swine fever), adverse weather conditions, or compromised security. Their societies are facing a loss of income-earning opportunities as well as deepening threats to their livelihoods. As a result, coop- erative international support and interventions will be im- perative to safeguard the vulnerable populations of these countries and avoid an aggravation of their food insecurity. The world was awfully unprepared for the pandemic. But by keeping the gears of the supply chains moving and actively seeking international cooperation to keep trade open, countries can prevent food shortages and protect the most vulnerable populations. SOURCES FAO-Biannual Report on Global Food Markets COVID-19: From a global health Crisis to a global food crisis?, Maximo Torero Cullen C M Y CM MY CY CMY K