The current global outbreak of the Novel Coronavirus also known as COVID-19 has crippled the global economy on scales never before seen, with global healthcare systems struggling to cope with the strain brought about the outbreak of the virus. Since its discovery in December 2019, over five million people have been infected by the virus, while over three hundred thousand have died from Coronavirus related complications. Hospitals around the world overflow with patients suffering from the coronavirus and some governments have had to convert event centers to makeshift treatment facilities.
To stem the spread of COVID-19, many governments have had to enforce lockdowns (sit-at-home orders) or curfews which have restricted movements of people and logistics services and have brought many economies to a screeching halt while pushing many others into recession such as the German economy which is heavily reliant on exports and has been made vulnerable due to international restrictions on travel and trade. The economic slowdown brought about by the spread of the Coronavirus has made already bad economic situations even worse.
According to the Financial Times, Italy which happens to be Europe’s third-largest economy is already heading into its fourth recession in 10 years, owing largely to its high level of public debt which is the third-largest in the world and slowed economic growth. Meanwhile, manufacturing has been heavily disrupted in countries like China, touted as the factory of the world, and in India in the bid to contain the spread of the Virus. Lifestyle changes such as Social distancing measures have also been drawn up to slow and potentially stop the spread of the virus, and to that effect, restaurant sit-in services, schools, religious gatherings, and large gatherings have also been on hold.
The agricultural sector like many other sectors has had its fair share of thrashing from the COVID -19 outbreak globally. All over the world we see disruptions in the agricultural sector such as in production systems that are heavily reliant on seasonal workers of which a large percentage are migrant workers who have been hindered by travel restrictions that have been put in place to curb the spread of the virus. Agriculture in France is estimated to need at least two hundred thousand migrant seasonal workers to help with harvests in the country this season. France has seen a rise in volunteer workers to help mitigate any problems farmers may face during harvests, while in Germany, the Department of Agriculture has announced plans put in place to help transport migrant farm workers into the country, the effects remains to be seen. Further to the west in the USA, the drop in the demand for energy and fuel, especially gasoline, which by US regulations is mixed with 10% ethanol in the minimum has caused a resultant drop in the price of US corn as 38% of corn produced in the US is used in the production of ethanol biofuel. According to the Purdue University Center for Commercial Agriculture, the demand for ethanol is expected to drop by at least 1.7 billion gallons in 2020, and the net demand of corn by over two hundred thousand tons.
Globally, the effects of the drop in demand and also the supply of certain commodities have led to dramatic negative swings in prices, as we have seen the price of live cattle in the US drop by almost 30% in April, for other regions of the world such as my locale, Nigeria, according to data released by the Nigeria Bureau of Statistics, the selected food prices watch report for March 2020 showed there was an increase of at least 1.66% in prices of food items sold between February and March 2020. A probable reason for this price hike being the fact that the harvest period for most food items produced was starting to come to an end, and the possibility of a dire situation caused by an inability to access inputs due to supply chain disruptions as highlighted by Bidemi Ogedengbe in a previous Farmtrybe article about the disruptions of agricultural supply chains and food security.
To better understand the effects the pandemic has had on players in the Nigerian agricultural sector, I reached out to Farmer Samson Ogbole, founder of the Soilless Farm Lab, to get a picture of the effects the pandemic has had so far on entrepreneurs in the field, and he said that his farm-setup business and production business have been hindered due to travel restrictions and also closure of hotels and restaurants in the country due to COVID-19 containment measures. On the flip side he has been able to carry out online trainings for many more people than at any other period in time as a lot of people have more free time and are able to participate in his online classes. To a great extent, this continues to prove that the businesses that may end up thriving during and even long after the pandemic are those which have employed some form or use of technology to bridge gaps of demand and supply in the sector.
Debo Akanke, the special adviser to the Oyo State Government on Agri-business in an interview with Premium Times recommended that the country should begin a study on the possible effects of COVID-19 on food security. This is vital as the FAO projects that up to 7 million Nigerians will be affected by food shortages between June and August 2020.
For countries experiencing a crisis within a crisis, it is a whole new story. To the East of Africa, the worst locust swarm ever seen in 70 years for Kenya and in 25 years for Somalia, is currently ravaging East Africa and has already spread to many other countries like Uganda. According to the UN, a swarm of locusts can eat in a day as much food as 35,000 people, creating an alarming threat to food security. The timing of this plague could not be worse, as many countries in East Africa already face extreme food shortages, like in Somalia and South Sudan, these locust swarms have also now come at the start of a new planting season. Coupled with restriction on exports and travel due to the Coronavirus pandemic, farmers and governments have found it difficult to control the swarming locusts as getting pest control supplies down to farmers in remote areas have become increasingly difficult. The situation becomes even much worse in a country like Yemen which is currently ground-zero of the world’s worst humanitarian crisis, caused by a civil war that started back in 2015, millions of Yemeni people have been displaced by the war, many more are food insecure, and locust swarms from the horn of Africa and the Middle-East continue to threaten local food production.
In the end, the full extent of the coronavirus outbreak on agriculture and food security is still to be seen as the pandemic still poses a very present threat. In the words of Farmer Samson Ogbole “the first effect we are going to have on the agricultural value chains is dependent on the farmer… the whole of the value chain depends primarily on the farmer; are the farmers able to sustain themselves, are they able to produce? And these effects on the farmer varies from whether the farmer is a subsistence farmer, smallholder or commercial farmer … In the short term or long term, it’s about the farmer, it’s about what happens to the farmer as the farmer is first a person before the profession, whatever happens to the farmer is what happens to agriculture generally.”
Although the Central Bank of Nigeria has announced reductions in interest rates, and extension on loans, there has been very little government led interventions for businesses and farmers in the agricultural sector as the supply of inputs continue to dwindle and prices continue to soar. Trends we will see in the aftermath of the Coronavirus pandemic may include institutions and governments is serious debt, or defaults on loans acquired by companies and governments. If or when these situations come to be, there would be a loss in investor trust in institutions abilities to pay debts and solvency of companies, and there would be ripple effects felt in every sector of the economy. In advanced economies, we would begin to see farmers begin to turn to new labor saving technologies such as fruit pickers, in a bid to end reliance on seasonal farm laborers, whose availability may be hindered by immigration policies and like we have seen, restrictions due to outbreak of infectious diseases. Also, in Nigeria we have begun to see proliferation of internet food retail services during the pandemic to serve households that may be cut off from markets, notable among them are the Farmcrody foods and the Eko Food Mart apps. The aftermath of this pandemic would see more and more technology based solutions rise to supplement or replace existing solutions at a faster pace and the best plan of action for agri-business entrepreneurs would be to adapt these tech solutions for their businesses.