Global food supply chain is “holding up” but is at risk of pandemic-related disruption

06 Apr 2020 --- The coronavirus pandemic is so far having little impact on the global food supply chain. However, that could change for the worse – and soon – if anxiety-driven panic by major food importers takes hold, the World Food Programme (WFP) has warned. According to the agency’s latest analysis, if large importers were to lose confidence, it could prompt panic buying and disrupt markets.

In a new report – entitled COVID-19: Potential impact on the world’s poorest people: A WFP analysis of the economic and food security implications of the pandemic – the UN agency said that global markets for basic cereals are well-supplied and prices generally low.

But it points out that because of the highly globalized nature of food production and supply around the globe, commodities need to move from the world’s “breadbaskets” to where they are consumed. COVID-19-related containment measures, such as lockdowns, restrictions and quarantine measures, are starting to make this more challenging, WFP notes.

“Disruptions are so far minimal; food supply is adequate and markets are relatively stable,” says WFP Senior Spokesperson, Elizabeth Byrs. She also notes that global cereal stocks are at comfortable levels and the outlook for wheat and other staple crops is positive for the rest of 2020. 

“But we may soon expect to see disruptions in food supply chains,” she says, explaining that if big importers lose confidence in the reliable flow of basic food commodities, panic buying could ensue, driving prices up. 

Could behavioral changes rock markets?
Elaborating on the main issue at hand, a seasoned grain market analyst at the Food and Agriculture Organization (FAO), quoted anonymously in the report, said the problem is not supply, but “a behavioral change over food security.”

“What if bulk buyers think they can’t get wheat or rice shipments in May or June? That is what could lead to a global food supply crisis,” the analyst said.

For low-income countries, the consequences could be devastating, with long-term repercussions, with coping strategies coming at the expense of such essential services such as health and education. It recalled that when a food price crisis struck in 2008, the world’s poorest households – which typically spend the largest share of income on food – suffered disproportionately.

Using the economic pillar of the Proteus food security index – and taking into account dependency on primary commodities such as fuel, ores and metals for export earnings – the report said that countries in Africa and the Middle East are most vulnerable.

As the crisis continues, the WFP report stresses that it is essential to monitor food prices and markets and to transparently disseminate information. This will help to strengthen government policies while also averting public panic and social unrest.

It added that in places where food insecurity is caused by restricted access, rather than lack of availability, cash-based transfers – which can often be made through contactless solutions – should be considered as a standard response.

“Planning in-kind food assistance is essential”, the report continues, noting that supply chain disruptions are likely to affect higher-value items first. Such items involve more tiers of suppliers, human interaction and dependency on few suppliers – putting specialized nutritious food more at risk than staples.

Edited by Gaynor Selby