Counting The Cost on Food - Between $1 billion and $5 billion of export value at risk for 2020

  • McKinsey says exports of crops from cocoa to roses affected
  • Coronavirus May Cost Africa $4.8 Billion in Crop Exports
  • Agriculture is also one of Africa’s most important economic sectors, making up 23 percent of the continent’s GDP. In sub-Saharan Africa, it provides work for nearly 60 percent of the economically active population.
  • Africa’s exports of food and agricultural products are worth between $35 billion and $40 billion a year, and some $8 billion a year flows through intra-regional trade in these products
  • it is likely that between 400 million and 460 million people in Africa are facing the prospect of reduced incomes
  • Supply disruptions could put between $1 billion and $5 billion of export value at risk for 2020 and affect the livelihoods of 10 million farmers through job loss or price reductions

 

The coronavirus has focused the world’s attention on the woeful lack of ventilators, respiratory masks, and intensive care unit beds available in many countries. Far less attention has been paid to another pandemic-driven shortage lurking over the horizon: food.

Africa’s exports of food and agricultural products are worth between $35 billion and $40 billion a year, and some $8 billion a year flows through intra-regional trade in these products

Around 80 percent of agriculture exports from Africa are to four regions: Western Europe (around 45 percent), South and East Asia (20 percent), the Middle East (10 percent), and North America (5 percent).

Based on 2015–18 averages, those exports are valued at some $35 billion to $40 billion a year. This could result in a severe economic blow for countries such as Côte d’Ivoire, Ethiopia, Ghana, Kenya, Tanzania, and Uganda—all of which rely on these exports as their primary or secondary source of export earnings.

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McKinsey forecasts the following losses:

 it is likely that between 400 million and 460 million people in Africa are facing the prospect of reduced incomes

  • Between $500 million and $2 billion in exports of fruit, vegetables and nuts from countries such as South Africa
  • A fall in demand for chocolate and the resultant decline in prices could reduce cocoa exports by as much as $2 billion
  • About $200 million in exports of coffee, a crop that supports 6.6 million jobs mainly in East Africa

The outbreak in Africa, which has about 190,000 confirmed infections and over 5,000 deaths, could also disrupt preparations for the next planting season and hamper efforts to curb an invasion of crop-eating locusts in East Africa.

This should certainly be a priority for leaders across the public, private, and development sectors: some 650–670 million people in Africa, roughly half of the population, already face food insecurity. Of those, more than 250 million people are considered to be severely food insecure.

Ministers for agriculture of the African Union member states have highlighted the fact that the decline in demand and production from those economically developed countries affected by COVID-19 is causing a global recession, with direct repercussions in Africa.

Supply disruptions could put between $1 billion and $5 billion of export value at risk for 2020 and affect the livelihoods of 10 million farmers through job loss or price reductions—and up to 40 million people could be affected if dependents are factored in 

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Immediate action could safeguard Africa’s food security and speed up the recovery of the agricultural sector

Key steps include safeguarding food security, understanding and managing the forces that shape demand, and ensuring that agricultural production is sustained. It will also be important to maintain trade flows, including keeping regional and international borders open for trade as far as possible.

Kenya, for example, has already set up a food-security “war room” and is deploying digital tools and data-gathering approaches to managing food availability, accessibility, and affordability—as well as providing support to value-chain players. Kenya is proactively gathering pricing and availability data on about ten food commodities at a subnational level weekly through a digital tool and maintaining dashboards on trends to identify any “hot spots” where interventions are required.

Food supply is part of the immediate health response to COVID-19. With unemployment rates skyrocketing, vulnerable people must have access to nutritious food. The strain on food banks makes it even more important for governments to stabilize the food market.

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