The sight of supermarket shelves temporarily out of staple products is always unsettling. Combined with sweeping travel bans affecting many countries grappling with the COVID-19 pandemic, it can be tempting to think that shortages are linked to low global food supplies. But that’s simply not the case.
Production levels and global stocks for staple foods are at an all-time high and world prices for most food commodities have been remarkably stable since 2015.The global food market is one of the rare things that is relatively stable these days. Policies should preserve that stability, not destroy it.
So, what do the empty shelves mean? And
First, we need to recognize that local issues – not global supply -- are behind empty shelves at this time. It’s critical to get the diagnostic right if we are to avoid prescribing the wrong medicine. During the 2007-2008 world food price spike, global food stocks were low and oil prices were high. In 2010-2011 when prices spiked for a second time, there had been significant weather-related production declines in major exporting countries. Not so today. With some localized exceptions, all major staples (wheat, rice, maize) production levels are above the average for the past five years, oil prices are low and global food stocks are at historic highs.
We see around the world precautionary buying by consumers who worry about the future and want to stock up to feed their families, putting exceptional pressure on certain goods. Closure of restaurants and a sudden stop to out-of-home food consumption has increased food purchases at wholesale and retail outlets, and domestic supply chains are still reorienting to these changed consumption patterns. The local availability of food is also impacted by farm and food processing labor shortages and the disruption of domestic distribution channels, caused by lockdown restrictions, curfews, traditional market closures, and morbidity linked to the COVID-19 disease. Finally, people’s ability to buy what’s on the shelves will become increasingly constrained by the loss of income resulting from sweeping business closures and mass unemployment.
Second, countries should forget export bans – they are the wrong policy response and risk making things worse. In the 2007/2008 crisis, as many as one third of the world’s countries adopted trade restrictions, increasing food prices for everyone. An estimated 45 percent of the increase in world rice prices, and almost 30 percent increase in world wheat prices was due to insulating behavior. Today, we hear the first rumblings of temporary export bans coming out of countries in Eastern Europe, Central Asia and Asia. Though they have not yet had significant impacts on export flows or global food prices because they account for a fairly small share of global exports, it’s imperative that these protectionist measures are reversed and do not spread further.
It’s encouraging in this regard to hear countries beginning to heed the calls for concerted and constructive policies that came out of the United Nations, the G20, the Food and Agriculture Organization and the International Food Policy Research Institute in recent days and take steps to reverse previously announced export bans. to curtail misinformed trade decisions that would disrupt a stable global food market and put importing countries in a major bind. Learning from the 2007/2008 crisis, G20 Ministers of Agriculture established the Agricultural Market Information System (AMIS) in 2011 to improve market transparency and policy co-coordination in food markets. AMIS is providing assessments of global food supply and actively engaging with international agencies and G20 countries and provides a platform for coordinated policy response. (AMIS’ latest market monitor was released on April 2.)
Third,Good practices under current conditions would include:
- Putting money in people’s pockets through targeted cash transfers so they can buy food;
- Ensuring delivery of food to complement cash transfers as part of safety net operations in areas where availability of food is severely disrupted;
- Continuing to provide school meals as “take-out” packages to ensure nutrition is maintained for vulnerable children, including food for other family members, effectively turning schools into emergency food distribution points;
- Declaring food as an essential commodity, and all food-related services as essential;
- Opening “green channels” for food, trade and agricultural inputs to ensure supply chains are kept open and functional;
- Ensuring access and availability of key agricultural inputs (seeds, labor, fertilizer, machinery, etc), by keeping input supply chains functioning to ensure timely production for the planting season coming up and providing special permits for migrant labor;
- Working with food logistics companies to develop health screening protocols and providing targeted, time bound and transparent incentives to hire workers to maintain food transport and logistics, including deliveries to remote and needy areas;
- Reviewing regulations to permit closed food service establishments (restaurants, food centers, e-commerce companies) to redeploy their equipment and assets to deliver essential foods to areas needing it the most;
- Supporting informal and formal food-related Small and Medium Enterprises to maintain cashflow and survive potentially catastrophic drops in demand so they can recover when the crisis is over.
Does my village or my city have food for sale today? Do I have seeds to grow food for the next season? Within countries and regions around the world, the World Bank is closely monitoring agricultural supply chains and food security in partnership with governments and other organizations.