Food supply chains do not care if people go hungry
Coronavirus shines a light on the global food chain’s dirty little secret.
Economies around the world are slowly reopening from their coronavirus-induced lockdowns, but like limbs starved of nutrients for too long, parts of the global food supply chain may have suffered permanent damage.
In the time it takes for the world to adjust to our new normal, more than 130 million people could go hungry, predicts the World Bank. The so-called hunger pandemic could affect far more people than those who contracted the actual virus. At the heart of this dire vision of the near future is a food system that was already wasteful and never designed to withstand the type of powerful shock brought on by COVID-19.
“I hope this is a wake-up call for the world that we cannot let the financial markets drive the global food supply chain,” Christopher Tang, UCLA distinguished professor of business administration told Al Jazeera.
The pandemic is shining a light on a painful open secret: The need for food – actual hunger – is not a determining factor in food supply chains.
Getting food to your table is a race against rot; delays along the chain increase the risk of spoilage or loss. Under normal circumstances, the problem is so bad that the Boston Consulting Group estimates by 2030 $1.5 trillion worth of food around the world could be lost or wasted, but that math does not account for the virus.
The pandemic raises the stakes for everyone along the food supply chain.
Unclogging the system
Images of farmers around the globe destroying crops or killing a generation of livestock because of a lack of transportation or diminished demand from restaurants and cafeterias are doubly painful to see juxtaposed to a video of long lines of hungry people at food banks.
While it would make sense to simply send food to places where people are the hungriest, the system does not work like that.
The food supply chain consists of seven types of actors: Seed and chemical sellers, farmers, traders, food companies, retailers, restaurants/cafeterias and finally, consumers. All of them need to be paid for their efforts, or they will start reducing capacity “because it is a free market, it is not just about food it is about finance – how are actors within the free market being compensated for their efforts”, said Professor Tang.
In the United States, President Donald Trump’s administration is promising to turn hunger into demand for food by spending $300m to buy vegetables, fresh fruit, dairy products and meat from American farmers.
The Coronavirus Food Assistance programme is designed to strengthen some of the weakest links along the US food supply chain. It provides financial relief to “farmers and ranchers, but it will also allow for the purchase and distribution of our agricultural abundance to help our fellow Americans in need,” agriculture secretary Sonny Perdue said during a recent news conference.
The US Department of Agriculture also plans to pay distributors to pick up food from farmers and transport it to food bank distribution centres.
Yet this is only a short term fix, which may not be applicable to other regions of the world with higher rates of food insecurity.
Demand for food is changing because of a rise in unemployment, a drop in bulk orders from restaurants and cafeterias and, ironically, post-lockdown efforts to prevent a resurgence of new infections.
“Whether through rising food prices, falling incomes, or both, people will have less real income to pay for their food,” Johan Swinnen, director general at the International Food Policy Research Institute told Al Jazeera.
In the US, nearly 40 million workers applied for unemployment benefits since the first virus-related lockdown went into effect, which hit the service industry especially hard. Reservations application OpenTable forecasts one out of every four US eateries will go out of business. The World Bank says COVID-19 is likely to cause the first increase in global poverty since 1998, pushing hundreds of millions of people away from their next meal.
As economies reopen, food businesses are rethinking what it means to have employees report to work in close quarters. Many firms will require workers to wear personal protective equipment like masks and gloves.
“Every hand that touches food along the supply chain will need safety measures, and there is a cost for all of those measures: Truckers need safety measures; Farmers need safety measures, and shops will limit the number people they allow in at one time,” said Tang. “Every single link on the chain costs money so vendors must charge higher prices.”
They will likely charge higher prices, even if people cannot pay. And that may be one of COVID-19’s most painful and deadly consequences: You could survive the virus, but be crippled by hunger.
– with additional reporting by Radmilla Suleymanova.