With restrictions on movement and operations, what are the impacts on food supply chains?
By Joelyn Chan
Whenever a government announces a lockdown or curfew, citizens flock to markets. The uncertainty and fear drive people to stockpile food and necessities, but this panic buying can throw off global supply chains and expose gaps in their systems.
To address the surge in demand, some supermarkets restrict the number of essential items a person can purchase, but workers still struggle to restock empty shelves. As the COVID-19 crisis drags on, how will ASEAN’s markets be affected?
COVID-19 is a stress test for ASEAN
ASEAN nations generally score above average on food security, according to the Economist Intelligence Unit’s Global Food Security Index. The annual study rates countries on three areas: the affordability, availability and quality and safety of their food supplies.
Laos is the least food-secure nation in ASEAN, apart from Brunei, as the developing country struggles with agricultural infrastructure and dietary diversity. As COVID-19 disrupts food supply chains and markets, the country will face additional challenges.
Singapore, however, ranks first in the world, despite being a small nation that imports over 90% of its food. This is due to the fact that country has developed successful and resilient food safety net programmes, including a rice stockpile program that ensures private importers supply the country with adequate reserves. These safety net programmes are being put to the test as the pandemic throws food imports into question and disrupts transportation.
Singapore’s approach to food security, according to Environment and Water Resources Minister Masagos Zulkifli, is to grow its “three food baskets”—to diversify its sources of imported food, encourage firms to grow food overseas and expand its local produce industry.
|2019 Global Food Security Index|
|Rank||Country||Overall score||Affordability||Availability||Quality & Safety|
Source: Global Food Security Index
ASEAN’s food value chain is not to be taken lightly
The food and beverage industry, which includes agriculture, contributes about 17% of ASEAN’s gross domestic product (GDP) and accounts for about 116 million jobs, or about 35% of the region’s total labour force.
Source: Food Industry Asia (FIA) – PWC
Brunei and Singapore both stand out as exceptions with little dependence on the sector, but both countries are vulnerable to a reduction of imports due to a shortage of supply.
More agricultural ASEAN nations, on the other hand, worry about being unable to get their perishable products to market. This could negatively impact GDP and lead to possible unemployment in the agricultural sector.
Exporters like Thailand report lower demands for certain agriculture products like fruits and root vegetables. Cassava, for example, is one of Thailand’s top exports to China, worth over US$880,000 in 2018. However, due to lockdowns in China beginning in February 2020, prices fell by 0.5% to 3.1%. Tropical fruits like durian saw larger decreases in price as producers struggle to sell off the excess crops they grew in anticipation of increasing demand.
As the COVID-19 crisis continues, the food and agriculture economy may see a 10-15% reduction in production and revenue. As for the impact on employment, the drop ranges from 5 to 10%.
Governments and businesses have a strategic role to play
Governments and businesses must all coordinate their responses to ensure that everyone in the region still has access to safe, affordable food.
Matt Kovac, executive director of non-profit organisation Food Industry Asia, emphasizes the importance of keeping borders open to trade.
“If governments across the region put in place policies that hinder production across supply chains as well as trade barriers, this could lead to regional food shortages,” he said.
As the number of COVID-19 cases and deaths spiral upwards, governments are tempted to act in their own self-interest. Closing borders helps to quickly eradicate rising trends of imported cases. But if governments push such policies without coordinating to ensure that supply chains can still function, it could accelerate the impacts of COVID-19 on the region.
Before COVID-19, there was sufficient food in the region, though many still faced food insecurity. But the spread of the coronavirus has thrown the food supply chains into question. In the face of the pandemic, food industries and governments should avoid going into isolation and instead keep borders open for trade.