How COVID-19 may disrupt food supply chains in developing countries
This blog on the IFPRI website examines how COVID-19 will affect food supply chains (FSCs) in developing countries. The evidence suggests that the impacts will be felt widely, but unevenly. Farm operations may be spared the worst, while small and medium-sized enterprises (SMEs) in urban areas will face significant problems. Governments will have to develop policies to respond to these varied impacts to avoid supply chain disruptions, higher food prices, and severe economic fallout for millions of employees. The authors come with seven hypotheses of what might happen to food supply chains: 1) Direct impact will overwhelmingly be felt post-farm; 2) The impacts are likely to be largest in dense urban and rural peri-urban areas; 3) Effect will be strongest in the downstream segments of retail and food service; 4) Retail and food service firms in modern FSCs face fewer problems; 5) Direct impacts on farm population and farm production will be much smaller; 6) COVID-19 is likely to increase food prices; 7) COVID-19 responses will create economic hardship. In the short term, millions of these businesses will face lower foot traffic, lower incomes, and substantial unemployment. In the medium term, COVID-19 impacts on these segments may induce rapid concentration, leading to the rise of large processing firms and supermarkets. Governments’ general strategy must be two-pronged: Implement robust public health measures and address food security impacts, particularly income and employment. Addressing the FSC issues will require three complementary policy paths: In the short run, implement new, broad safety nets for SMEs and workers in the midstream and downstream segments of FSCs. In the short and medium term, monitor and regulate wholesale markets, retail wet markets, and processing clusters more strictly, and redesign their sites for improved health practices. Finally, make long-term investments to help SMEs change hygiene practices and better site design that will help them remain competitive.