Governments and companies face a new challenge during COVID-19: a global food crisis.
This is not a new issue, but the need to act is more important than ever. As we entered 2020, the United Nations was already claiming this year could be the worst humanitarian crisis since World War II. The UN estimated that more than 900 million people were already battling hunger before COVID-19.
Now, with the pandemic, another 130 million people could be pushed into starvation by the end of 2020. In the worst case, the UN says up to three dozen countries could face famines this year.
We’re looking at 1 billion people going hungry.
We face complex and multifaceted issues driving this food crisis, such as processing and packaging plants that have been disrupted. For instance, in the United States meatpacking companies had to close when COVID-19 outbreaks hit their workforce.
On the distribution side, some countries have had transportation issues including border and port closures that have restricted imports and exports. Sometimes, even when borders have remained open for food to pass through, people cannot cross to sell at their usual markets. Other countries had movement restrictions placed on people within their borders which stopped food from reaching local markets. In other countries, markets were closed but the people had few if any alternatives for shopping.
In other instances, farmers and distributors have seen their major markets vanish almost overnight. For example, with food supply chains, we typically have two: one for retail and another for food service like distributing to restaurants, schools, and hotels. Due to many lockdowns, those sectors closed—some have partially reopened, but nowhere near previous levels.
At the same time, demand for food in retail in grocery stores, markets, or for home deliveries has increased exponentially. But it takes time for companies and distributors to shift from supplying bulk commercial orders to retail consumers. This has left farmers scrambling to find markets for their food, and unfortunately without them, farmers have been forced to dump milk, plow under vegetable fields, and euthanize livestock.
Each and every issue listed above create economic challenges for farmers, cooperatives, and distributors. They lose income, and without money coming in, they cannot purchase food.
These are just some of the interconnected challenges we must find solutions for. The good news is that cross-sector partners in government, companies of all sizes, and other organizations around the world are working collaboratively to find innovative and effective ways to meet these challenges.
There is still time to avert a global food crisis.
To help governments and companies understand what they can consider doing to help address the distribution challenges, we have compiled key recommendations for each party. This list comes from some of the actions that our clients are taking today.
4 Key Recommendations to Solve the Global Food Crisis
Strengthen regional food supply networks
Many local markets where people buy food have shut down or had restrictions placed on them. Without the markets, people have few, if any, alternatives.
Here, the challenge is to get the food from the farmers to the people. Let’s examine some steps governments and companies can take to achieve this.
- Support programs and financial inclusion efforts that help businesses develop capacity to expand sales to new markets locally, regionally, or internationally;
- Encourage investment in those businesses or develop government financing programs to support them;
- Identify any supply surpluses and facilitate connecting suppliers with buyers in other markets. If necessary, local, state, or federal governments can work with business and trade associations to help find the right partners.
- Ensure suppliers and other essential workers know and are implementing proper Coronavirus protections, and that they have the necessary protective equipment;
- Check in with suppliers to ensure their businesses remain stable and what they may need to make this possible;
- Help suppliers find financing opportunities to keep their businesses financially sound. If none exist, and the supplier is about to go under, consider financially supporting them, especially if the company will be left without alternative sources for their product;
- Consider shortening payment terms; and
- Identify local or regional programs, partnerships, or make funding available to support suppliers and other value-chain actors through financing or capacity building.
Provide healthcare and protect incomes
Many countries will continue to face healthcare challenges caused by COVID-19. Ensuring that people have access to healthcare will be critical to maintaining a healthy population in which people can perform their jobs and continue earning an income. Loss of income will lead to greater food insecurity.
Keeping people healthy also prevents disruptions in production, processing, and distribution that could ripple throughout the food system.
Here are some steps governments and companies can take:
- Ensure health programs have sufficient funding, equipment, and number of medical staff;
- Consider auxiliary emergency funding and staff to support an uptick in demand for healthcare services;
- Promote and fund continuity of care for non-COVID-related health issues;
- Invest in social marketing and behavior change to educate populations about prevention techniques such as handwashing; and
- Increase coordination between health, environment, and agriculture ministries.
- Support healthcare initiatives for employees and individuals involved in their value chains, like smallholder farmers;
- Invest in healthcare, sanitation, and hygiene in communities in which they operate;
- Ensure all workers have proper protection and that COVID precautions and sick pay are implemented;
- Pay suppliers for work completed even if the company cannot sell its product. For example, Unilever offered early payments to some of its most vulnerable small and medium-size suppliers; and
- Consider ways to repurpose regional manufacturing or production facilities to support healthcare response (e.g. making PPE/ventilators).
Invest in new approaches or innovations
On April 1, Cargill launched a digital farming tool for their farmers in Côte d’Ivoire that shares government information and measures on safety and sanitation to help slow the spread of the Coronavirus. This new technology should reach about 1,200 cooperative leaders and lead farmers. The app was co-developed with FarmForce and deployed in 2017 to collect data on mapping cocoa farms and the traceability of beans.
As Cargill shows, it will take adaptability and creativity in the public and private sectors to address the food supply chain issues that are interconnected with addressing the Coronavirus.
While Cargill has leaned on technology, others may discover that new approaches or process changes have a huge impact. The key is to connect with farmers and people on the ground to better understand their challenges and find ways to ease their burdens.
Here are some actions that governments and companies can take to help mitigate this challenge:
- Review the policy landscape and consider ways to improve the business enabling environment to support new innovations or new businesses;
- Consider using World Bank Doing Business Indicators to spur innovation;
- Support innovation accelerator programs or request that existing programs expand into the country; and
- Review and consider changes to tax policy that would incentivize new innovation.
- Identify key problems with anticipated long-term risk/impacts in supply chains;
- Dedicate funding or R&D to innovations to address COVID impacts in supply chains;
- Partner with suppliers to identify new approaches to solve challenges jointly faced;
- Identify new innovations to test in the supply chain, consider offering the innovator access to a new pool of potential customers, and publicize their product if it works; and
- Accelerate innovation iteration and time to market.
Maintain free and open trade
Some countries like Russia, Kazakhstan, India, and Vietnam placed quotas or bans (some temporary) on certain food exports.
As of now, supplies of key staple foods like wheat, rice, and grains are stable and expected to remain strong through 2020. While it’s understandable why some countries may want to restrict the flow of goods, it could inadvertently cause more harm than good for people up and down the value-chain.
As first reported in a story for Bloomberg, in Vietnam, one of the country’s largest rice exporters found himself in the untenable position. He had 12,500 pounds of sticky rice to ship in a port container to his Chinese clients. His rice was stuck in containers for over a month at the port because the Vietnam government restricted shipments. At the time, the exporter had furloughed 400 factory workers and was at risk to default on $13 million in bank loans.
Let’s look at what governments and companies can do to address this challenge.
- Maintain open trade;
- Avoid pursuing short-term strategies that reduce long-term viability (e.g. converting peatland to farmland); and
- Improve ease of doing business by considering World Bank Doing Business Indicators.
- Identify key trade dependencies and border crossings in their supply chains and vocalize support to key governments involved.
The world faces enormous challenges in the coming weeks and months, possibly years. The global food crisis will not be solved by one government or company policy change. It will take the concerted and committed efforts of both sectors to tackle this challenge. It can be done, and in doing so, millions of people—their health, livelihoods, families, communities, economies, and environments—can be saved too.