FAO

Food security and COVID-19 — how World Trade Organization Members could fill a pressing need

· August 15, 2020 · COVID-19, food security · , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , · No Comments

In 2020 as the world has been dealing with the health and economic consequences of the COVID-19 pandemic, the World Trade Organization has focused attention on keeping markets open by urging Members to provide notifications of trade restrictive and trade liberalizing measures taken not just on medical goods but also on agricultural products. The G20 countries and various groups of WTO Members have made commitments to impose restrictions only under limited circumstances and only temporarily, consistent with WTO obligations. Some Members have urged countries to agree not to impose export restraints on agricultural goods to limit worsening challenges during the COVID-19 pandemic. On agricultural export restrictions, a number of countries have applied some restrictions despite information that global food supplies are sufficient which should make restrictions unnecessary. The attention paid to the issue by the WTO and its Members have limited the number of countries engaged in agricultural export restraints which is a positive development.

With the steps many countries have taken to limit the spread of the COVID-19, there has been enormous economic pain incurred by most countires, with tens of millions of people in countries temporarily unemployed, schools closed, food distribution disrupted with the closure of restaurants which constitute a large part of food shipped from processing plants and farms.

The UN, World Bank and others have projected huge increases in the number of people pushed into extreme poverty because of the effects flowing from the pandemic. Extreme poverty brings with it food security issues as people suffering extreme poverty don’t have the means to procure basic food needs.

The United Nation’s World Food Programme (WFP) has long been involved in helping address food security needs around the world. In the COVID-19 pandemic, the WFP is mobilizing to provide assistance to some 138 million people in 83 countries. With most countries occupied with dealing with the needs of their own populations, countries and private citizens have been slow to respond to the humanitarian challenges facing so many around the world. The WFP has appealed for US$4.9 billion to let them perform their stepped up function during COVID-19 through the end of 2020. As of August 6, they had received only 9 percent of what they need, $US440 million.

The WFP during the pandemic has been involved in facilitating services by many NGOs and international organizations. For example, “Over 16,500 health and humanitarian personnel from 288 organizations have now been transported to destinations throughout Africa, Asia, the Middle East and the Commonwealth of Independent States countries by WFP’s air passenger service since its launch on 1 May. 53 destinations are now being served, with approximately 2,500 passengers using WFP’s service per week.” WFP, COVID-19, Level 3 Emergency, External Situation Report #12 (6 August 2020)(emphasis in original). The latest situation report is embedded below and reviews the wide array of services provided as well a review of some of the countries with acute needs. It also provides a link to contribute to the WFP.

WFP-0000118265

The External Situation Report indicates that there are 27 countries (based on an FAO-WFP hotspot analysis) which “are at risk of significant food security deterioration in the next six months”. (page 2). Countries at risk are Guatemala, Honduras, El Salvador, Nicaragua, Haiti, Peru, Ecuador, Colombia, Venezuela, Burkina Faso, Mali, the Niger, Sierra Leone, Liberia, Nigeria, Cameroon, Central African Republic, Democratic Republic of the Congo, Lebanon, Sudan, South Sudan, Mozambique, Zimbabwe, Somalia, Yemen, Ethiopia, Iraq, Syrian Arab Republic, Afghanistan and Bangladesh (total is 31, though Peru, Ecuador, Colombia appear to be at a lower level of risk based on coloration used on page 2). FAO – WFP early warning analsyis of acute food insecurity hotspots, https://docs.wfp.org/api/documents/WFP-0000117706/download/.

Where is the food aid?

For many countries, agricultural production has remained reasonably strong but large volumes of agricultural products have been destroyed based on lack of domestic markets, typically flowing from the collapse of the restaurant trade and the challenges in redirecting product, packaging and labeling into retail channels. See, e.g., New York Times, April 11, 2020, Dumped Milk, Smashed Eggs, Plowed Vegetables: Food Waste of the Pandemic, https://www.nytimes.com/2020/04/11/business/coronavirus-destroying-food.html.

At the same time, there have been huge increases in internal-country demand for help from food banks in some countries. See, e.g., for the United States: Feeding America, The first months of the food bank response to COVID, by the numbers, https://www.feedingamerica.org/hunger-blog/first-months-food-bank-response-covid-numbers.

It would seem that coordinated action by major agricultural goods producers in the WTO with the WFP and other groups should be able to provide large quantities of agricultural goods to those in need globally in the remaining months of 2020, goods which might otherwise simply be destroyed.

Similarly, while all countries are financially stretched during the pandemic, helping WFP obtain the needed financial resources to provide a coordinated pledging event should be of interest to WTO Members and many of the multilateral organizations working on COVID responses, as well as the business community and the general public.

While the WTO has grappled with limiting/eliminating export subsidies for agricultural goods, the WTO has always recognized the need to maintain the flow of humanitarian need particularly in agricultural goods. Consider these paragraphs from the 2015 Nairobi Ministerial Conference Decision on Export Competition (WT/MIN(15)45, WT/L/980 (21 Dec. 2015) at 6-7):

“International Food Aid

“22. Members reaffirm their commitment to maintain an adequate level of international food aid, to take account of the interests of food aid recipients and to ensure that the disciplines contained hereafter do not unintentionally impede the delivery of food aid provided to deal with emergency situations. To meet the objective of preventing or minimizing commercial displacement, Members shall ensure that international food aid
is provided in full conformity with the disciplines specified in paragraphs 23 to 32, thereby contributing to the objective of preventing commercial displacement.

“23. Members shall ensure that all international food aid is:

“a. needs-driven;

“b. in fully grant form;

“c. not tied directly or indirectly to commercial exports of agricultural products or other goods and services;

“d. not linked to the market development objectives of donor Members;
and that

“e. agricultural products provided as international food aid shall not be re-exported in any form, except where the agricultural products were not permitted entry into the recipient country, the agricultural products were determined inappropriate or no longer needed for the purpose for which they were received in the recipient country, or re-exportation is necessary for logistical reasons to expedite the provision of food aid for another country in an emergency situation. Any reexportation in accordance with this subparagraph shall be conducted in a manner that does not unduly impact established, functioning commercial markets of agricultural commodities in the countries to which the food aid is re-exported.

“24. The provision of food aid shall take into account local market conditions of the same or substitute products. Members shall refrain from providing in-kind international food aid in situations where this would be reasonably foreseen to cause an adverse effect on local13 or regional production of the same or substitute products. In addition, Members shall ensure that international food aid does not unduly impact established, functioning commercial markets of agricultural commodities.

“25. Where Members provide exclusively cash-based food aid, they are encouraged to continue to do so. Other Members are encouraged to provide cash-based or in-kind international food aid in emergency situations, protracted crises (as defined by the FAO14), or non-emergency development/capacity building food assistance environments where recipient countries or recognized international humanitarian/food entities, such as the United Nations, have requested food assistance.

“26. Members are also encouraged to seek to increasingly procure international food aid from local or regional sources to the extent possible, provided that the availability and prices of basic foodstuffs in these markets are not unduly compromised.

“27. Members shall monetize international food aid only where there is a demonstrable need for monetization for the purpose of transport and delivery of the food assistance, or the monetization of international food aid is used to redress short and/or long term food deficit requirements or insufficient agricultural production situations which give rise to chronic hunger and malnutrition in least-developed and net food-importing developing countries.15

“28. Local or regional market analysis shall be completed before monetization occurs for all monetized international food aid, including consideration of the recipient country’s nutritional needs, local United Nations Agencies’ market data and normal import and consumption levels of the commodity to be monetized, and consistent with Food Assistance Convention reporting. Independent third party commercial or non-profit
entities will be employed to monetize in-kind international food aid to ensure open market competition for the sale of in-kind international food aid.

“29. In employing these independent third party commercial or non-profit entities for the purposes of the preceding paragraph, Members shall ensure that such entities minimize or eliminate disruptions to the local or regional markets, which may include impacts on production, when international food aid is monetized. They shall ensure that the sale of commodities for food assistance purposes is conducted in a transparent, competitive and open process and through a public tender.16

“30. Members commit to allowing maximum flexibility to provide for all types of international food aid in order to maintain needed levels while making efforts to move toward more untied cash-based international food aid in accordance with the Food Assistance Convention.

“31. Members recognize the role of government in decision-making on international food aid in their jurisdictions. Members recognize that the government of a recipient country of international food aid can opt out of the usage of monetized international food aid.

“32. Members agree to review the provisions on international food aid contained in the preceding paragraphs within the regular Committee on Agriculture monitoring of the implementation of the Marrakesh Ministerial Decision of April 1994 on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-developed and net food-importing developing countries.

“13 The term ‘local’ may be understood to mean at the national or subnational level.

“14 FAO defines protracted crises as follows: ‘Protracted crises refer to situations in which a significant portion of a population is facing a heightened risk of death, disease, and breakdown of their livelihoods.’

“15 Belize, the Plurinational State of Bolivia, Ecuador, Fiji, Guatemala, Guyana, Nicaragua, Papua New Guinea and Suriname shall also have access to this provision.

“16 In the instance where it is not feasible to complete a sale through a public tender, a negotiated sale can be used.”

It is believed that the current WTO provisions on food aid should not pose hurdles to countries providing in kind aid where there are needed food products that can be exported during the pandemic. If that is not the case, then the WTO Members should agree to a temporary waiver of relevant restrictions to permit food aid during the pandemic.

There has been much discussion within the G20, WTO, WHO and other groups that collective action on the medical front is critical to see that medical goods, vaccines, are therapeutics are available equitably and at affordable prices. What one hasn’t seen is the same focus on ensuring that the world’ populations have access to food equitably and at affordable prices. During the pandemic, WTO Members have the opportunity to work together to see that food is not wasted and that food aid is supplemented to the extent possible to alleviate the unique challenges to food security presented by the COVID-19 pandemic.

Food security – export restraints and border controls during the COVID-19 pandemic

· April 1, 2020 · Uncategorized · , , , , , , , , , , , · No Comments

While COVID-19 is first and foremost a health crisis, efforts to control the fallout from the virus have led to border controls on farm workers and encouraged some countries to impose export restraints on particular agricultural products. While the border control dimension to the problem is new, the world has in recent years gone through a number of situations where large numbers of countries have imposed export restraints on core agricultural products in an effort to ensure adequate supplies at home. The results are never positive for the global community and particularly harm the least developed countries and those dependent on imported food products.

For example, in 2007-2008, there were dozens of countries that imposed export restraints on specific items such as rice or wheat leading to massive price spikes and shortages of product available to countries dependent on imports. The nature and extent of the problem was outlined in a paper I prepared back in 2008 which is embedded below.

GDP

The crisis led to coordinated efforts by the various UN organizations to find solutions and ways of avoiding repeats moving forward. A policy report from multiple UN agencies was released on 2 June 2011, Price Volatility in Food and Agricultural Markets: Policy Responses.

igo_10jun11_report_e

Unfortunately, a number of countries in reacting to the COVID-19 pandemic have introduced export restraints on certain food products. Russia, Ukraine, Kazakhstan, and Vietnam are some of the countries identified so far as introducing export restraints on selected agricultural products. In the past, export restraints by some have led to export restraints by many. The possibility of rapidly expanding restraints by trading nations is obviously a major concern and major complication to the global response to COVID-19.

Equally troubling are the potential challenges to agricultural product availability in countries that rely to some extent on temporary foreign labor to harvest produce and other products where border measures are restricting access of foreigners to reduce the potential spread of COVID-19. Coupled to that are concerns about whether imported agricultural products meet health and quality needs and any changes in approach to those issues during the pandemic.

As one example of the farm labor concern, the United States is a country that relies on temporary farm workers from outside of the country and has significant restrictions on the entry of foreign nationals from many areas at present. U.S. farmers have raised concerns about the availability of sufficient migrant labor to harvest the fields when product is ready. How the issue gets resolved in the United States is not yet clear. But the same or similar challenges will apply in any country where imported farm labor is important to the harvesting, processing or transporting of agricultural products.

That these multiple potential issues on agricultural goods trade are escalating can be seen in yesterday’s joint statement from the WTO, WHO and FAO. The joint statement is available on the WTO webpage, https://www.wto.org/english/news_e/news20_e/igo_26mar20_e.htm, and is reproduced below:

“Joint Statement by QU Dongyu, Tedros Adhanom Ghebreyesus and Roberto Azevêdo, Directors-General of FAO, WHO and WTO

“Millions of people around the world depend on international trade for
their food security and livelihoods. As countries move to enact measures
aiming to halt the accelerating COVID-19 pandemic, care must be taken
to minimise potential impacts on the food supply or unintended
consequences on global trade and food security.

“When acting to protect the health and well-being of their citizens,
countries should ensure that any trade-related measures do not disrupt
the food supply chain. Such disruptions including hampering the
movement of agricultural and food industry workers and extending
border delays for food containers, result in the spoilage of perishables and increasing food waste. Food trade restrictions could also be linked
to unjustified concerns on food safety. If such a scenario were to
materialize, it would disrupt the food supply chain, with particularly
pronounced consequences for the most vulnerable and food insecure
populations.

“Uncertainty about food availability can spark a wave of export
restrictions, creating a shortage on the global market. Such reactions can
alter the balance between food supply and demand, resulting in price
spikes and increased price volatility. We learned from previous crises
that such measures are particularly damaging for low-income, food-deficit
countries and to the efforts of humanitarian organizations to procure food for those in desperate need.

“We must prevent the repeat of such damaging measures. It is at times like this that more, not less, international cooperation becomes vital. In the midst of the COVID-19 lockdowns, every effort must be made to ensure that trade flows as freely as possible, specially to avoid food shortage. Similarly, it is also critical that food producers and food workers at processing and retail level are protected to minimise the spread of the disease within this sector and maintain food supply chains. Consumers, in particular the most vulnerable, must continue to be able to access food within their communities under strict safety requirements.   

“We must also ensure that information on food-related trade measures, levels of food production, consumption and stocks, as well as on food prices, is available to all in real time. This reduces uncertainty and allows producers, consumers and traders to make informed decisions. Above all, it helps contain ‘panic buying’ and the hoarding of food and other essential items.

“Now is the time to show solidarity, act responsibly and adhere to our common goal of enhancing food security, food safety and nutrition and improving the general welfare of people around the world.  We must ensure that our response to COVID-19 does not unintentionally create unwarranted shortages of essential items and exacerbate hunger and malnutrition.”

Conclusion

There is little doubt that COVID-19 is placing extraordinary strains on countries, their peoples, their economies and the ability and willingness to act globally as opposed to locally. The strains and how the world reacts will shape the world going forward and determine the magnitude of the devastation that occurs in specific markets and the broader global community.

The UN report released yesterday, Shared responsibility, global solidarity: Responding to the socio-economic impacts of COVID-19, and the statement from UN Secretary-General Antonio Guterres outline the enormity of the global challenges and a potential path to a better future. See https://news.un.org/en/story/2020/03/1060702; https://reliefweb.int/sites/reliefweb.int/files/resources/sg_report_socio-economic_impact_of_covid19.pdf.

The global health emergency is significantly worsened by the introduction of food security issues. Despite a better understanding of the causes and necessary approaches to minimize food security issues, the world has a poor track record on working for the collective good in agriculture when fears of food availability arise. An eruption of export restraints at the time of the global COVID-19 health crisis could indeed undermine societal stability.