Food Security in Asia and the Pacific amid the COVID-19 Pandemic

Sunae Kim

Natural Resources and Agriculture Specialist

South Asia Regional Department

Asian Development Bank

7 July 2020 | RCI-POD Webinar Series #5

Kijin Kim

Economist

Economic Research and Regional Cooperation Department

Asian Development Bank

Disruptions to the entire food supply chains during the COVID-19 pandemic

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Lockdown impact on demand• Income loss due to layoffs and

furloughs• Consumer sentiment and behavior (e.g

panic buying, hoarding)• Limited accessibility to food• Undernutrition for the vulnerable

groups

• Local, seasonal migrant workers

• Structure, machinery and equipment

• Fertilizer,

pesticide

• Seeds, feeds

• Energy

• Logistics

• Workers

• Facilities, storage

• Machinery

• Packaging

• Logistics

• Grocery stores, supermarkets

• Food chains

• Online markets

Input Supply

Farming Processing DistributionWholesale and retail

Consumers

• Hotels, restaurants, schools

• Households

Lockdown impact on supply• Labor shortage due to travel restrictions and fear of infection• Limited capacity of farmers to store harvested crops• Factory or facility shutdown• Port restrictions and congestion, leading to the spoilage of

perishables and increasing food waste due to a lack of refrigerated storage

• Delays or retrieval in capital investment

Source: Kim, Kim, and Park (2020).

Mobility restrictions in Asia and the Pacific

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Oxford COVID-19 Government Response Stringency Index by subregion

(as of 17 June 2020)

Oxford COVID-19 Government Response Stringency Index over time

(as of June 17 2020)

Source: Oxford Government Response Tracker. https://www.bsg.ox.ac.uk/research/research-projects/coronavirus-government-response-tracker (accessed June 2020)

Prices of staple foods have increased in several economies in the region

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Domestic retail prices(year-on-year % change, average Jan-May 2020)

International price index(Jan 2000 = 100, as of 29 June 2020)

Note: International prices are based on “free on board” export quotations in major shipment locations; black horizontal lines in panel b represent average prices in 2019.Sources: International Grains Council. Grains and Oilseeds Index. https://www.igc.int/en/markets/marketinfo-goi.aspx ; Food and Agriculture Organization. Food Price and Monitoring Analysis Tool. https://fpma.apps.fao.org/giews/food-prices/tool/public (all accessed 30 June 2020).

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Impacts on vulnerable countries and communities

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The Pacific

Southeast Asia

South Asia

East Asia

Central Asia

Asia and the Pacific

Total Female Male

Informal employment(% of total employment, latest available year)

• Decline in working hours of 6.5% in first quarter and 10% in second quarter in the region (ILO 2020).

• Informal sector workers at risk due to limited social protection.

• Migrant workers face higher unemployment risk.

Note: Employment figures include both agriculture and non-agriculture activities.Source: International Labour Organization. ILOSTAT. https://www.ilo.org/ ilostat/ (accessed May 2020).

Asia highly dependent on imports for cereal consumption

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South Asia Central Asia East Asia The Pacific Oceania Southeast Asia

Cereal import dependency (%; left) Per capita wheat consumption (kg; right) Per capita rice consumption (kg; right)

-29-79 -215

Sources: Food and Agriculture Organization. Food Price and Monitoring Analysis Tool. https://fpma.apps.fao.org/giews/food-prices/tool/public (accessed 19 May 2020); United States Department of Agriculture. Production, Supply, and Distribution Database. https://apps.fas.usda.gov/psdonline/app/index.html#/ app/downloads (accessed 29 April 2020).

Export bans on cereals: 2007-2008 vs COVID-19Country Products 2007-2008 Food crisis

Duration(months)

COVID-19 pandemicDuration(months)

Bangladesh Non-aromatic rice Nov. 2008-Sept. 2009 10

Brazil Rice Apr. 2008-Apr. 2009 12

Cambodia Rice Mar.-May 2008 2 Apr.-May 2020 1.5

India Basmati+ non-basmati rice, wheat, edible oil, pulses

Mar. 2008-Sept. 2011 41

Indonesia Rice Apr. 2008-May 2009 13

Myanmar Rice July-Nov. 2008 4 Mar.-June 2020 3.5

Nepal Rice, maize, wheat Apr.-Nov. 2008 6

Sri Lanka Rice June 2008-June 2009 12

Thailand Rice May 2008-Oct. 2009 17

Viet Nam Rice July 2007-Apr. 2009 20 Mar.-Apr. 2020 1

Kazakhstan Cereals Feb. 2008-Jan. 2009 12

Kazakhstan Wheat Apr.-Sept. 2008 5 Mar.-Apr. 2020 0.3

Kyrgyzstan Wheat and meslin July 2008-Jan. 2009 6 Mar.-Sept. 2020 6

Malaysia Flour Mar. 2009-Mar. 2010 12

Nepal Wheat products May 2008-May 2009 12

Pakistan Wheat, wheat products Apr. 2008-Dec. 2010 32 Apr.-May 2020 (food) 0.5

Russia Wheat, barley Feb. 2008-Sept. 2011 43 Mar.-June 2020 (processed grains) 3.5

Ukraine Wheat, maize, barley June 2007-Apr. 2008 10 Apr.-June 2020 (buckwheat) 2

PRC Grain, grain flour products Mar. 2008-Mar. 2009 12

India Maize July-Oct. 2008 37

Source: Public Tableau Export Restrictions Tracker (accessed June 2020) https://public.tableau.com/profile/laborde6680#!/vizhome/ExportRestrictionsTracker/FoodExportRestrictionsTracker

Food price crisis,

2007–2008

COVID-19 Pandemic

(2020, as of 22 May)

Main factors

• Supply: Poor harvests, lower grain stocks, higher oil

prices ($86/barrel on average; 2007-2008)

• Demand: Rapid growth of global economy, inflation,

crop (maize) demand for biofuels

• Policies: Export bans and restrictions, lowering import

tariffs, restocking

• Other: Weak USD

• Supply: Lockdowns and movement

restrictions create logistics problems, low

energy prices ($39 on average, Jan-Apr

2020), adverse weather conditions

• Demand: Panic buying, hoarding for staple

foods

Trade

restrictions

• Adopted by 33 countries

• Share in world market of calories: 19%

• On rice: 17 countries including CAM, PRC, IND, INO,

PAK, THA, and VIE.

• On wheat: 13 countries including RUS, KAZ, PRC, UKR,and ARG

• On maize: 6 countries including IND, PRC, and UKR

• Adopted by 22 countries (13 are active)

• Share in world market of calories: 5%

• On rice: 3 countries (CAM, MYA, VIE)

• On wheat: 6 countries including KAZ, RUS,

and UKR

Food policies

in Asian

developing

countries

• Total number of policies: 132 (35 in 2007 → 97 in 2008)

• Consumer-oriented: 20% (22% → 19%)

• Producer-oriented: 43% (53% → 39%)

• Trade-related: 34% (17% → 40%)

• Macroeconomic: 4% (18% → 2%)

• Total number of policies: 53

• Consumer-oriented: 42%

• Producer-oriented: 45%

• Trade-related: 8%

• Macroeconomic: 5%

2007–2008 Food Crisis vs. the COVID-19 Pandemic

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ARG = Argentina, CAM = Cambodia, IND = India, INO = Indonesia, KAZ = Kazakhstan, MYA = Myanmar, PAK = Pakistan, PRC = People’s Republic of China, RUS = Russian Federation, THA = Thailand, VIE = Viet Nam, UKR = UkraineNote: Average oil prices are calculated using West Texas Intermediate spot prices; Consumer-oriented policies mainly include social protection, market management, and nutrition and health assistance; Producer-oriented policies mainly include production support and market management. Source: Food and Agriculture Organization. Food and Agriculture Policy Decision Analysis Database. http://www.fao.org/in-action/fapda/tool/index.html#main. html (accessed 23 May 2020); Laborde and Parent (2020); Wiggins, Keats, and Compton (2010).

Stock-to-use ratio remains above 2007-08 food crisis level

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Stock-to-use ratio (left) IGC rice price index (right)

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Stock-to-use ratio IGC wheat price index

International rice market International wheat market

Wheat for select DMCs

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2018-19 stock-to-use (%) 2004-06 stock-to-use (%)2019 consumption per capita (kg; right)

DMC = developing member country, IGC = International Grains Council, kg = kilogram, Lao PDR = Lao People’s Democratic Republic, PRC = People’s Republic of China. Sources: Food and Agriculture Organization. Food Price and Monitoring Analysis Tool. https://fpma.apps.fao.org/giews/food-prices/tool/public; International Grains Council. Grains and Oilseeds Index. https://www.igc.int/en/markets/marketinfo-goi.aspx; United States Department of Agriculture. Production, Supply, and Distribution Database. https://apps.fas.usda.gov/psdonline/app/index.html#/app/downloads (all accessed April 2020).

Rice for select DMCs

Other key factors for food security

10WTI = West Texas InstrumentSources: Food and Agriculture Organization; Federal Reserve Bank of St. Louis; US Energy Information Agency (accessed April 2020).

• Shortage of labor and input supplies, if continued, could reduce scale of food production.

• Low energy prices will temper food price inflation.

Food and energy prices

Immediate and short-term measures

• Social protection incl. food provision/ food packages

• Enhanced farmer groups’ activities to identify buyers and arrange transportation

• Financial relief and liquidity support incl. debt rescheduling and short-term working capital provision

• Budget support (e.g. Trade Finance Program, Microfinance Risk Participation and Guarantee Program, Supply Chain Finance Program)

• Regional mechanism for food security

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Medium- and long-term measures for efficient and competitive food supply chains

• Direct marketing through online platforms

• Enhanced price risk management system

• Movement toward agricultural technology

• Institutional and legislative reforms

• Targeted support to poor and smallholder farmers through agricultural reforms

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(1) Enhanced direct marketing by farmers

• Farmer group development gained a momentum as multiple layers of intermediaries are reduced.

• More farmers experienced processing at farm level

• More informed about market-favoured quality standards through direct marketing

• Quality control to earn trust from online customers incl. pre and post-harvest handling, quality input supply mechanism

• Consumption of the local and indigenous products has increased resulting in the self-sufficiency of an individual

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(2) Enhance price risk management system

An opportunity to stabilize supply chains, less government intervention and reduce price risks for farmers and consumers

• Collaborative planning among value chain actors

• Demand forecast and price prediction models links to farmers’ planning

• Better data collection, validation, and management platforms and enhanced logistic infrastructure

• Warehousing capacities and negotiable warehouse receipts

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(3) Integration of agricultural technologies in farming and marketing

• GIS-based land, water and soil management

• Wider option of agricultural technology applications

• ICT addresses constraints on scaling up, including lack of financing or public– private cooperation, cumbersome regulatory environments, growing costs and limited availability of agricultural labor in some developing countries, and policy inconsistencies in various economic sectors

• Renewed interest in mechanization

• Start-up companies’ financial risks

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(4) Institutional and legislative reforms • Initiate or start implementing long-sought agricultural reforms

• Reforms should also realign public and private sector roles in agricultural input supply, food safety, value chain infrastructure, quality assurance, and extension.

• Fair labor, market transparency, digitized land use planning and management, and food quality control

• Rural financing, marketing opportunities through economies of scale and entrepreneurial skills, value chain infrastructure, and engagement of small and medium-sized agriculture enterprises and other off-farm income generation activities.

Case of India Essential Commodities Act to deregulate key food commodities to help provide price assurance for farmers

agriculture marketing reforms to choose the market by removing interstate trade barriers and providing e-trading of agricultural produce.

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(5) Targeted support to poor and smallholder farmers

• Targeted support for smallholder farmers and low-income agricultural communities

oAccess to available and affordable digital infrastructure and training

oRural financing

oOff-farm income opportunities

oExtension and training to smallholder farmers including youth and women

oAccess to quality input

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Thank you

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