Blog Posts Ellen Huan-Niemi Economy, Food

The global food supply chains are capable of providing enough food to feed the world population, but the rich world should help the poor over the COVID-19 crisis, writes Luke’s Senior Scientist Ellen Huan-Niemi.

Doomsayers have predicted food supply crisis and increase in food prices at the beginning of the COVID-19 pandemic. Food hoarding among households were common at the start of the pandemic due to the fear of food shortages. Living in the rich world like Finland, there is hardly any disruption in the food supply. The supply of fruits and vegetables were barely disrupted even though half of the fruits and vegetables purchased in Finland are imported.

Therefore, it is fair to say that Finland is a good example of functioning trade and global co-operation. As the lockdowns began in Europe, many supermarkets have empty selves. However, delivery trucks were filling the supermarkets’ empty shelves in days.

Connectivity together with advancement in technology is what the global food supply chain is all about.

Connectivity together with advancement in technology is what the global food supply chain is all about. Most of the world population is consuming imported food, whereby masses of trucks and fleets of ships connect tens of millions of farms to hundreds of millions of shops and billions of consumers. The sophisticated global food chains have counteracted the impact of the pandemic on both supply and demand of food by rerouting supply chains and skilfully swapping sources of food supply to satisfy demand.

Despite the severity of the COVID-19 pandemic, each layer of the food system has adapted. The supply of cereals has been maintained due to sustained production and high stocks of inventory kept by governments and private storage. Shipping firms and ports are continuously moving food in bulk around the world. Big wholesalers and retailers have cut their ranges and rewired their distribution because restaurants’ sales have dropped dramatically. The shift from eating out to eating at home has had dramatic consequences for restaurant services, but online buying and e-commerce capacity has risen significantly, thus more employment has been created due to the upsurge in online buying. Supermarkets are hiring food packers continuously.

On the contrary to e-commerce, the lockdown measures to prevent the spread of the coronavirus have serious consequences for economic activities globally. With preserved global food production, the pandemic is driving down prices for major food commodities due to weakening demand and falling oil prices along with declining economic activities. Importantly, most governments have avoided protectionism and learned the lesson from the 2007–2008 spike in global food prices. In 2007–2008, bad harvests and high energy costs pushed up world food prices.

The rhetoric on more protectionism in order to increase domestic self-sufficiency should be kept at bay.

The finely tuned food system can misfire with devastating consequences due to concentration of food production and government interventions as well as climate disruptions and volatile commodity markets. Governments panic about shortages and ban exports, consequently causing more anxiety and even higher prices. The high food prices instigated distress in many developing countries and a wave of riots. In contrast, only 5% of global food exports, measured in calories, face restrictions this year compared to 19% in 2007–2008, according to the Economist magazine. As a result, the rhetoric on more protectionism in order to increase domestic self-sufficiency should be kept at bay.

The global food supply chains are resilient, but the reduction of global poverty is fragile. The research by the World Institute for Development Economics Research (UNU-WIDER) reveals that up to 500 million people could be thrust into poverty due to the economic shock of the COVID-19 pandemic. The loss of income and remittances is reducing poor people’s ability to buy food that is causing the rise in food insecurity.

The four pillars of food security are: food availability, access to food, utilization and stability. High levels of unemployment, loss of income, and rising cost of living are making access to food more difficult and less stable, hence the rise in food insecurity globally. The global food supply chains are capable of providing enough food to feed the world population, but the rich world should help the poor world swiftly and amply to provide financial relieve from the impacts of the COVID-19 pandemic.

Leave a Reply

Your email address will not be published. Required fields are marked *