The ripple effect of COVID-19 on Agribusiness value chains - Sydney Kurai Zharare: DevPact. 15 April 2020. FANRPAN and the Graça Machel Trust (GMT) in conjunction with its African Women in Agribusiness Network, organised a Webinar o establish the effects of COVID-19 on food systems and agribusiness in the Eastern and Southern African (ESA) region.

1. Establishing the effects of COVID-19 on
agribusiness and food systems in Eastern and
Southern African (ESA)

2. Background
• According to the FAO, currently approximately 820 million people around the world are experiencing
chronic hunger – not eating enough caloric energy to live normal lives. Of these, 113 million are coping
with acute severe insecurity – hunger so severe that it poses an immediate threat to their lives or
livelihoods and renders them reliant on external assistance to survive. These people can ill-afford any
potential further disruptions to their livelihoods or access to food that COVID-19 might bring
• Indeed, FAO is particularly concerned about the pandemic’s impacts on vulnerable communities already
grappling with hunger or other crises – the Desert Locust outbreak in the Horn of Africa, insecurity in
the Sahel, for example – as well as countries that rely heavily on food imports (most countries in ESA)
• According to the Brookings Institution, COVID-19 could result in a global loss of $2.4 trillion to over
$9 trillion in gross domestic product this year alone. And according to the World Bank, agriculture
accounted for one-third of global gross domestic product as of 2014, while the Food and Agriculture
Organization has estimated that 60% of the world’s people depend on agriculture for their livelihoods.
• The International Food Policy Research Institute’s early projections indicate that even under an
effective COVID-19 containment scenario, 14 million to 22 million people could slip into extreme
poverty and low- and middle-income countries could see a 25% decline in agri-food exports.

3. Understanding COVID-19 Impacts Using a
Systemic Lens
SUPPORTING FUNCTIONS
Access to
Finance
Infrastructure
(WASH; Logistics)
Information
ENABLING ENV.
Existing
Laws
Phytosanitary
rules
Social distancing rules Cross border trade
policies
Private
sector NGOS; Public
Sector
GovernmentNGOS;
Communities
Inputs FARMERS Markets
CORE
FUNCTION
Digital Technology
(drones)
Labour

4. Effects
CORE SUPPORTING
FUNCTIONS
ENABLING
ENVIRONMENT
This is where production
and trade takes places
between farmers and the
market e.g. smallholder
farmers and traders;
commercial farmers and
retails chains
These are ancillary services
that are fundamental to the
effective functioning of the
core or exist only if the
core is functioning e.g.
school feeding schemes;
transport and logistics
services to convey produce
to markets
These are the policies, rules
and regulations that govern the
entire agricultural system e.g.
phytosanitary regulations;
national & regional trade
policies

5. Approaches to address COVID-19 that
carefully consider the gender dimensions
of food security, labour, health, and
vulnerability are essential. Women play a
central role in the market as traders,
producers, health care workers, and they
often assume the role of caretakers in the
community. These roles may increase
exposure to illness and impact income
earning.
Source: Tetra Tech
Effects

6. Effects
6
• Vulnerable groups such as smallholder farmers, pastoralists in East Africa and
fisherfolk might be hindered from working their land, caring for their livestock, or
fishing.
• They will also face challenges accessing markets to sell their products or buy essential inputs or
struggle due to higher food prices and limited purchasing power
• Farmworkers, especially contract and seasonal labour, will be affected by job and
income losses in harvesting and processing
• Stringent phytosanitary requirements for overland cargo transport could slow
down fresh produce transportation, resulting in increased levels of food loss and
waste
• Fresh fish and aquatic products, which are highly perishable and therefore need to be sold,
processed or stored in a relatively limited time are at particular risk
• Measures to guarantee acceptable health standards in food factories may slow
down production
Source: Tetra Tech

7. Effects
• Restricted movement and fear could result in shortages of labour disrupting
production and processing of food
• Reduced income options and uncertainty could fuel reduced spending and therefore
reduced aggregate demand and consequently reduced production
• Smallholder farmer households might resort to negative coping strategies such as
selling of productive assets and less diverse diets to compensate for income
constraints
• Reduced visits to food markets could lead to a shift in how people buy and consume
food e.g. lower restaurant traffic, increased e-commerce deliveries (as evidenced in
China) and a rise in eating at home
• According to the FAO, in countries with high commodity-import dependence, the
negative effect is stronger, as a one percent increase in commodity-import
dependence causes an average increase in undernourishment of 3.8 percent per year.
Source: Tetra Tech

8. Recommendations
• Support farmers to continue producing and marketing food
• Farmers can be assisted to institute safe labour practices, increase access to personal protective
equipment — such as masks and gloves — and reduce contact with packaging and produce
• Accelerate the deployment of relevant agricultural technologies and digital
agriculture solutions
• Agricultural technologies, especially digital agriculture solutions, offer a range of important
opportunities to address the impacts of COVID-19 on agricultural production, labour availability,
input supply, and logistics. For example, agricultural drone sales have skyrocketed in China to
address labour constraints and to reduce human contact amid COVID-19. Drones and other
digital extension tools can help farmers adopt labour- and input-saving practices, while digital
agriculture solutions that link farmers to buyers and logistics services could help reduce the
impacts of control measures related to COVID-19 on aggregators and supply chains.
• Accelerate online buying and selling platforms
• In February, Chinese e-commerce platform Pinduoduo reported a near 1 000% increase in the
sales of farming products including seeds, fertiliser and sprinklers compared with last year.
• Alibaba’s Taobao marketplace also reported that sales of farming machinery, including tillers,
seed drills and cultivators, had shown a 78% year-on-year increase, while purchases of seeds and
fertilisers rose over 100%, and animal feed sales rose 233%.
Sources: Tetra Tech; Farmers’ Weekly

9. Recommendations
• Support small, medium, and large agribusinesses
• Increase assessments of the impacts of COVID-19 on agriculture and food
systems
• Support regional policy dialogues to help countries address food shortages
• Assess the impact of COVID-19 on agriculture-based livelihoods and food
security using a gender lens
• Increase the use of cash transfers as opposed to food distribution
• Cash-based responses work through markets. Well-targeted cash injections can re-stimulate
demand, increase trust along the market chain that stocks would be sold, unlock the flow of
credit and prevent the capture of the aid market by a few elite agents.
• Other options include electronic vouchers — such as something like a debit card — which
people can redeem for products from a vendor.
• For example, Indonesia has expanded its e-food voucher program from 15 million to
20 million low-income households in response to the pandemic.
Sources: Tetra Tech; DevPact Private Sector Engagement Report, 2020

10. Recommendations
• Countries should gain efficiencies and try to reduce
trade-related costs
• Do not impose measures that would restrict trade
and mobility of commodities
• Review trade and policy options and their likely
impacts
• Reduce import tariffs when governments think is
appropriate to minimize, for example, when there is
an increase in costs because of devaluation of their
currencies and other restrictions (FAO 2020)
Source: FAO

11. DISCUSSION

12. sydneyz@dev-pact.com
shungug@gracamacheltrust.org
+27 82 858 6824
+27 11 325 0501