Extreme weather such as flooding or drought have affected rice yields in the country. Drought requires farmers to spend more money on water pumps or irrigation systems, or put aside enough capital in case of crop failures. However, the country only has irrigation infrastructures for 62% of rice paddies. Since many farmers still do not have access to irrigation systems and merely rely on rainfall to dictate their output, some farmers are reported to leave their province during the dry season to make ends meet and only return later in the rainy season.
EU imposed tariffs to protect its rice sector starting 2019 and as a result, rice exports to EU from Cambodia fell by 30%. Though most of the losses were offset by additional exports to China, losing the EU market led to a 4.3% decrease in value of rice shipments equivalent to $500M. Farmers suffer the most as rice dealers use falling exports as an excuse to drive rice prices down.
Prime Minister Hun Sen calls on MAFF and other relevant ministries to boost production in the agriculture sector to offset consequences of COVID-19 to the service and industrial sectors. MAFF was asked to provide guidance to farmers. The Ministry of Economy and Finance is also asked to consider increasing future public investments in water resources and continue engaging with development partners to address irrigation challenges.
MAFF introduced new measures to stimulate agricultural production in the coming rainy season and considering the current state of COVID-19. For the rice sector, relevant measures included:
General Department of Agriculture, MAFF: Promoting good agricultural practices (including the use of quality varieties), and introducing climate-resilient technologies. Additional measures in hygiene and sanitation to ensure quality and safety of produce.
Provincial Department of Agriculture, MAFF: Coordinating with the Department of Water Resources and Meteorology and Local Authorities to determine and coordinate the availability of water to support crop production as quickly as possible and also properly linking producers with collectors through contract farming mechanisms to ensure appropriate supply and prices.
Given the importance of irrigation in planting rice, especially during the COVID-19 outbreak, the government is determined to continue its ongoing rehabilitation programs such as the Tertiary Irrigation Network Program or Rehabilitasi Jaringan Irigasi Teriser (RJIT). Irrigation facilities are continuously monitored and any damage identified is to be addressed immediately to ensure adequate irrigation for farmers.
MOA continued to implement the Rice Milling Strategy Command (Kostraling) during the recent harvest season which aims to increase the capacity of rice millers to absorb farmers’ grain during harvest. This initiative developed some time back, was considered an anticipatory move by the government and was positively recognized by several stakeholders in the industry as a good way to stabilize prices amidst the crisis.
Farmer Financing Budget under the People’s Business Credit (KUR) has been increased due to COVID-10. Farmers are encouraged to access the funds to improve activities in the agriculture sector. For Kostraling, millers can get financing from KUR to expand their business. In addition, protection in the form of agricultural insurance through the Rice Farming Insurance (AUTP) Program is also further promoted.
Alsintan or the use of Agriculture Machinery was actively promoted during the recent harvest season to ensure farmers minimize losses and achieve production targets. Several regencies reported successful harvest partly attributed to the use of Alsintan. For the past few years, government has provided funds to rice production regencies for the use of power thresher and combine harvester for harvesting, 2-wheeled and 4-wheeled tractors, and rice transplanter for the next planting season.
A large portion of rural households produce rice for their own consumption. There are currently fears that farmers will be storing more of their excess paddy instead of selling them for fear of food shortage. This is also partly due to a number of migrant workers returning to their villages from neighboring countries, most notably Thailand. This implies rural households having to feed more people which lead to less rice being available in the market for urban consumers.
Most of Lao rice farmers use their own seed and do not apply imported chemicals. However, for those that do, there were some reports of difficulty in accessing seeds and fertilizers, partly due to the absence of Vietnamese traders. Others reported significant price increases due to the short supply.
MAF is cooperating with WFP and FAO to provide direct assistance to farmers and ensure food security in the country. They have recently completed a rapid assessment on the impact of COVID-19 on farmers and smallholders across Laos and supporting the ministry’s assistance to farmers including input supply and technical support.
In preparation for anticipated drought, the government is working to implement its anti-drought and emergency plan, focusing on irrigation projects; inspecting its canals, irrigation works and repairs, and fire protection. [Link]
Myanmar primarily exports rice to China (33% of total rice exports) through border gates. Though there have been numerous food trade disruptions due to illegal border trade, the recent COVID-19 restrictions has compounded the problem. Chinese border authorities have prevented Myanmar drivers from entering China and instead, have asked Chinese drivers to enter Myanmar to pick up the goods. This presents a problem for Myanmar’s truck drivers who will bear storage and damage costs, on top of the loss income of delivering it to China. Burmese officials are currently negotiating with China on the issue.
Myanmar faces an agriculture labor shortage problem as most young men have been known to leave their homes in rural areas for better jobs in cities or overseas. The labor shortage has led to an increase in wages, considered to be at par with the cost of leasing agricultural machinery (i.e. ploughing machines, harvesters, etc.). While this may be helpful for big farms, smaller farms are unable to shoulder the cost of leasing and are struggling to manage their farms.
MoALI’s Department of Agriculture increased the promotion of its services such as providing access to high quality seeds, agricultural techniques, and machinery, and coordination of labor through their village based technical centers and state and township agricultural offices.
Given the COVID-19 situation, several departments within MoALI and the Department of Finance have met to discuss effective and timely implementation of foreign funded projects under their multi-sector development plan in line with the procedures of donors/borrowing organization. Key projects highlighted were focused on irrigation and water management such as ADB’s Irrigated Agricultural Development Project and World Bank’s Agriculture Development Support Project. [Link] [Link2]
The Philippines experienced a number of challenges in rice importation when Vietnam and Myanmar, two of the Philippines’ top rice trading partners announced the temporary halt of signing new rice export contracts and shipments to ensure their own domestic supply. Towards the latter part of April, the two countries have announced that rice exports were to resume in May, with Vietnam assuring the Philippines that it will deliver the remaining 400,000MT balance of rice out of the total 666,480MT contracted from January to May of this year.
The arrival of the wet season is putting a heavy blow on rice farmers on top of the coronavirus outbreak. Typhoon Vongfong, the first storm to hit the country in mid-May resulted in $22M (Php 1.14B) worth of damages. Rice accounted for 16% of the total damages equivalent to $3.6M (Php 185M). Given that the Philippines sits on a typhoon belt and endures up to 20 typhoons a year, many rice farms are at risk of crop damage due to heavy rains and flooding. [Link] [Link2] [Link3]
RCEF is expected to be fully implemented this year, especially given the negative impacts of COVID-19. Under the Rice Tariffication Law is RCEF or Rice Fund which aims to improve rice farmers’ competitiveness and income amidst liberalization of the country’s rice trade policy. RCEF covers 57 provinces with high potential to improve competitiveness, with an annual appropriation of $197M (Php 10B) for the next six years.
The government is looking at an additional 300,000MT rice supply deal via government to government scheme to boost the country’s inventory amid the pandemic. The government has already sent communication to Myanmar, Vietnam, Thailand, India, and Cambodia on this planned supply deal. This will bring the country’s total rice imports in 2020 to 3M MT, including the 2.7M M already contracted since January.
Thailand has been hit with its worst drought in 40 years. As of May, 25 provinces have been declared as drought disaster areas. A 15% drop in precipitation levels in 2019 caused Thailand’s current water supplies to dip to 3.8 billion cubic meters, down 60% compared to the previous year. To preserve water for household consumption and ecological management, the government is limiting irrigation supplies for rice production, which are likely to lead to a decline in rice production.
A number of factors have contributed to a low export forecast for 2020. Drought is threatening to reduce supply which is driving up local rice prices. The appreciation of the baht, Asia’s strongest performing currency in 2019, also puts its rice export price at a disadvantage, especially in comparison to Vietnam. Though demand for Thai rice went up due to Vietnam’s export ban and India’s lockdown in early March, its competitors’ (including new entrants Cambodia and Myanmar) recent return to the market have led to expectations of lower rice exports in the coming months.
The Thai Rice Department has been evaluating and providing suggestions to farmers on how to address the negative impact of saltwater intrusion. Solutions such as using rice varieties that are salt, light and wind resistant, using salt washing with an underground drainage system, large scale rice paddies, improving soil maintenance with eagle material such as rice husk, manure, or compost, were suggested.
TRD together with public and private conversion agencies are promoting and assisting in the integration of small scale farmers in the development large scale rice fields. Large scale rice farming makes it easier for technology transfer, reduces the cost of production, and increases yield.
Customs announced a temporary suspension of exports in March, amid fears of not being able to replenish reserves. Three weeks after the suspension, the government allowed 400,000 tons of exports but required customs declarations with registrations. Many traders were unable to register and resulted in tons of spoiling rice stuck at ports. In Can Tho, officials estimate that majority of its rice exporters have been losing as much as $14,000 a day on damages paid to shipping companies, container fees, and fines for being unable to fulfill export contracts. Though Vietnam has lifted its export ban for rice beginning May, the uncertainty over whether the government could restrict shipments again is holding back traders from signing new export deals.
The government has been struggling to replenish national reserves after the global market rushed to secure rice supply due to the pandemic. Rice prices have reached its highest level in nearly two years and traders can no longer deliver rice to the government without making a loss. As a result, only four of the 28 enterprises who won government bids back in March have signed the contract to supply rice, leaving the government with 170,300 tons worth of unsigned contracts. A second bidding was held by the government, this time ensuring price is close to the market price to ensure all winning bidders are able to sign and fulfill their contracts.
Credit is made available to support customers affected by COVID-19 to restore their businesses or crop production. Loans will be disbursed from April 1, 2020 until 3 months after the Prime Minister announced the end of COVID-19 or until the credit limit is reached. Customers who are subjects of the program will be applied interest rates lower than 1% (for loans in VND) or less than 0.5% (for loans in foreign currency).
The World Bank funded Vietnam Sustainable Agriculture Transformation (VnSAT) Project has been working to increase rice yields while reducing cost of production in the Can Tho region. It has also focused on linking agribusinesses with farmers and cooperatives. This is even further promoted in light of COVID-19 as they hope to increase the value of rice in the market and restructure the local rice industry.
There has been a shortage of seasonal migrant laborers to harvest the Boro crop due to the transport suspension and movement restrictions brought about by the country wide lockdown. In addition, most laborers do not want to move to another district to help out in the harvest as they do not have identify cards to prove themselves as farm laborers and fear they will be stranded in the harvest area even after the harvest period.
Bangladesh is heavily dependent on seed imports for some of its crops, including rice. Hybrid crops and high yielding variety seeds coming from India, and China pose a problem as they have been badly affected by the pandemic, which have caused delays in trade of agricultural goods. In addition, the agro-input supply chain is further hampered by local government administrations and law enforcers making it difficult for crucial farm inputs to get to growers in time for the new planting season.
Many farmers are suffering from cash flow difficulties, especially in light of COVID-19. Small farmers often sell paddy directly from the field to pay off the laborers and lenders. However, due to lockdown, there is anticipation for a fall in paddy prices as buyers are not getting into any contracts, and some are offering to buy paddy on credit. Some farmers are also unable to access loans from lenders who claim that they do not have any money. There are currently calls for government to ensure fair pricing to ensure farmers can recoup high irrigation costs and have enough money to invest for the next planting season.
Prime Minister Sheikh Hasina announced that a $3.5B package has been dedicated to the agriculture sector to help farmers who have been affected by the restrictions imposed due to COVID-19.
India continues to face labor shortages and are still not convinced about mechanized paddy transplantation, fearing poor yield. Most laborers have not come to work for fear of contracting the virus, some migrant workers who have returned home and are unable to get back to work due to lockdown restrictions. Many farmers in Punjab are now making offers to local workers with paddy transplantation experience and even competing with each other on who gives better remuneration.
Price of fertilizer, such as Urea, has increased in the Indian market. Cost of irrigation also went up, due to increased price of diesel. This has led some farmers to resort to pumpsets to water their paddy fields. Increase in the cost of production is likely to adversely affect farmers if no government intervention is set in place. [Link]
Given labor shortage concerns, several farmers are now forced to make use of the DSR mechanized method that is less labor intensive, and at the same time, saves irrigation water and power. Government has been encouraging agricultural mechanization and has recently provided subsidies for the purchase of paddy transplanters and DSR machines. [Link]
To encourage more farmers to plant rice, the government has increased its procurement price or minimum support prices (MSP) by 2.9%. The agriculture department is also providing grant money or seeds and inputs to farmers on under various schemes, such as the Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) to promote paddy cultivation. [Link] [Link2]
Though rice supply may be sufficient to last the monsoon, there are concerns that the nationwide lockdown may have affected paddy harvest and the incoming planting season, leading to reduced production. In addition, although the government allowed essential businesses and industries to operate, the lack of proper coordination between the government and private sector has created initial confusion resulting in difficulties in transporting agricultural goods to the market.
Because of insufficient irrigation facilities, majority of farms still rely heavily on rainfall for water. This makes farmers vulnerable to erratic weather caused by climate change. Pre-monsoon rains and hailstorm have also been reported to damage winter crops such as wheat. The unpredictability in rainfall may be exacerbated by the pandemic which has led to labor constraints and delays in the delivery of inputs.
MoALD announced a 25% subsidy on transportation of agricultural goods (such as food grain, seeds, fertilizers, and pesticides, among others). Local authorities have been asked to make the necessary arrangements for farmers and producers to be able to bring their produce to market centers for sale amid the lockdown. This was a response to reports of farmers throwing away their produce due to travel restrictions and breakdown in supply chains. [Link] [Link2]
MoALD is in the process of finalizing the compensation package for farmers who have been badly hit by the lockdown through subsidies. Various agricultural activities have been compartmentalized by the ministry for subsidy purposes. Vegetable, poultry and dairy farmers are the priority for compensation. [Link]
There have been recent reports of stores not having rice stocks available, particularly nadyu and kekulu varieties leading to increased prices. The shortage was said to be the work of a handful of large-scale rice mill owners, known as the ‘Rice Mafia’ who are attempting to monopolise the industry. Large-scale owners sell rice at a higher cost than retail price causing retailers to increase prices when selling consumers, at a risk of getting penalized by the Consumer Affairs Authority. Because of this issue, the government is looking at importing rice to tackle the issue despite demands to make it an essential commodity. [Link] [Link2]
Though government has announced the implementation of the paddy procurement program, some farmers reported their inability to sell their paddy due to the lockdown. Storage facilities have not been opened by the officers in charge, delaying the procurement process. Since farmers cannot store their produce for a long time, most are forced to sell their paddy to local vendors at a loss. [Link] [Link2]
The government is ensuring food security while managing the volatile rice market by buying paddy stocks from the Maha season of 2019/2020 for a minimum certified price of Rs.50/kilo of paddy. This is also to encourage private sector millers to purchase paddy at a fair price. The cabinet approved the Ministry of Agriculture’s proposal to maintain a buffer stock of 20,000 MT of rice comprising Samba and Naadu varieties from the Paddy Marketing Board. [Link] [Link2]
The government declared rice milling to be an essential service the country to ensure the supply of food and rice production, storage and distribution. Rice Mill owners are asked to take mandatory steps to ensure rice production takes place in their respective areas by converting all their paddy stocks into rice amid curfew and the New Year. In addition small, medium, and large scale millers to make distributions within the division, district, and nationwide. [Link] [Link2]
The Ministry of Environment, Agriculture and Livestock (Ministry of Agriculture) recently announced harvest peak and significant increase in production for several of its crops, compared to 2015 levels. From 55,952 MT in 2015, rice production has increased to over 300,000 MT in 2020. Similar increases have been achieved for maize, potatoes, and beans.
There have been reports of farmers not being able to access to chemical fertilizers during the pandemic. Fertilizers, which are subsidized by government, and are paid in advance, have not been delivered to some farmers which are likely to affect yields. Farmers also complain about the advance payment system. It is difficult for them to get advanced payments when inputs are not yet available, especially when they could have used the money to buy other family goods.
Despite COVID-19 pandemic, donors such as IFAD are determined to continue strengthening production capacities of rural households to ensure food security. IFAD’s active projects such as the National Program for Food Security and Rural Development of Imbo and Moso (PNSADR-IM), The Value Chain Development Program (PRODEFI II), and Agricultural Production and Intensification Vulnerability Reduction Project (PIPARV-B) are all active projects which are focused on the development of rural infrastructure and strengthening of institutional capacities, specifically focusing on the rice sector.
Burundi initially developed a Rice Development Strategy in 2014 as mandated by an IFAD project. The Ministry of Agriculture currently has a goal to revise the existing NRDS and has asked Coalition of African Rice Development (CARD) for their support. In March of 2019, CARD Secretariat and representatives from the Ministry of Agriculture had their first working week to discuss format, data to be collected and other information needed for the strategy revision.
There has been significant increase in the budget for Crop Development to address the effects of COVID-19. Budget is focused on training staff, pest management, and government purchase of grain reserves.
The threat of COVID-19 led to increased demand for rice, as consumers have engaged in panic-buying and government continues to purchase rice for its relief programs. The dwindling supply is exacerbated by reductions and delays in imports by Kenya’s major suppliers Pakistan, Thailand, and India. Given Kenya’s reliance on imports for its rice stocks, traders fear a shortfall in supply if imports don’t pick up in the next few months.
Given the number of employees from the Kenya Port Authority (KPA) who tested positive for COVID-19, stringer measures have been employed to curb the spread of the virus. To increase social distancing among workers, bagging of loose cargo such as fertilizer and rice have temporarily been suspended as the process involves a large number of workers.
A number of farmers anticipate lower yields for the next planting season due to delays in delivery of inputs and reduced transplanting brought about by social distancing measures.
Mozambique is currently included in the countries at risk for acute food insecurity in the world. With a population of 27.9 million, 1.7 million were in the last three phases of food insecurity where 1.4 million are in a crisis situation and 265 thousand are in an emergency. The latest United Nations’ Global Food Crisis Report also shows that more than 67 thousand children under the age of five suffered from severe malnutrition and 42.6% had growth problems. This was largely brought about by the two cyclones “Idai,” and “Kenneth” that destroyed several farms and contributed to increasing food prices. With COVID-19 imposing movement restrictions, there is fear that this will further aggravate the country’s ongoing food crisis.
Mozambique plans to increase supply of seeds and inputs for crop production from less than 10,000 tons per year to 40,000 tons. The government is currently monitoring global input production to make sure it can access inputs to reach their targets. There have concerns due to some announcements of a reduction in export quotas; however there is currently no indication of a supply break.
Earlier in the year, Vietnam has reported an increase in rice exports to Mozambique following COVID-19. Volume for the first two months of 2020 was noted to be 5.04 times more than rice exports the year prior, which could be due to looming threat of food security brought about by the pandemic. Vietnam, which halted the issuance of rice export clearances sometime March, has resumed its rice export policy at the beginning of May, citing adequate food supply for domestic use.
This JICA initiative aims to increase rice productivity in the Quelimane, Nicoadala, Mopeia, Namacurra and Maganja da Costa districts. The project works in partnership with 17 associations within the identified districts, of which an average of ten producers were chosen to place demonstration plots to serve as a model for other producers. ProAPA was launched in 2016 and will end in 2021.
Authorities of the two countries recently decided to close Malawi’s biggest Songwe border which shares the boundary with Tanzania due to confirmation of COVID-19 cases. This has affected a number of rice farmers from Malawi has some relied on the Tanzanian market for better prices.
The agriculture ministry said that the government will not be banning import and export permits for cereal crops . These permits are being issued with phytosanitary certificates to facilitate local farmers and businessmen in the trade. However, authorities still intend to impose a ban on the importation of rice, despite COVID-19, as it is set to implement its strategy on increasing production while protecting local farmers from the competitive market.
The National Food Reserve Agency (NFRA) developed a strategy to purchase crops from farmers, especially with the incoming harvest season in May. NFRA would purchase rice, maize and millet. To ensure they strengthen the food reserves, especially given COVID-19. The government is implementing a $6.5M (Sh 15.2B) project to increase storage capacity by building more silos and modern facilities.
The government launched the NRDS-2 program in April of 2019 as part of the Coalition for African Rice Development, aimed at feeding East Africa. The program continues to be implement between the government with funding from donors such as World Bank, EU, AfDB, USAID, and JICA.
With the help of central and local governments, grain processing companies were able to resume production quickly across China with the exception of Hubei Province. By February 16, three weeks after the national lockdown, 36 of 37 key grain facilities and 3,415 national emergency grain processing facilities resumed production, accounting for 63.4% of normal. By early March, grain processing facilities returned to 100% of overall capacity, consisting of 433,000 tons per day for rice paddy.
China’s State Council recently announced temporary subsidy measures to encourage farmers to switch back to double-cropping rice. Government has earlier embraced the decline in double-cropping of rice given labor and water requirements and its unprofitability. However, industry sources say that the policy reversal favoring double-cropping is primarily due to food security concerns and wanting farmers from Hubei province to remain on their farmers rather than going to cities and potentially exacerbating the pandemic.
Rice planting for the spring season has increased compared to the previous year, partly due to the financial support of city’s rural credit cooperatives. Credit support facilities, such as the ones in Guiping, are promoted in the form of telephone calls, WeChat messages, and field visits. Loans are provided for the funding of seeds, fertilizers, pesticides, agricultural machinery, and others related to rice production.
A number of provinces have started to promote precision agriculture in rice production. Southwest China’s Gizhou Province started using a satellite system that can monitor rice farming and provide real-time data for planting. This technology, developed by the University of Electronic Science and technology of China in Chengdu, provides pictures of paddy fields taken through remote sensing, visual monitoring and other means to help professionals make decisions on planting.
South Korea’s agriculture direct payment system or subsidy program is heavily concentrated on rice. Farmers are incentivized by direct payments which are higher for rice compared to other crops, resulting in rice overproduction. Over the past five years, an annual average of 250,000 tons of rice has been added, resulting in an annual financial loss of over $300M (KRW 500B).
The government’s push for a production oriented rice policy for food self-sufficiency in the past years has led rice farmers to apply to much pesticide and chemical fertilizer for rice cultivation. As the OECD country with the highest usage for agriculture chemicals, South Korea is now experiencing serious pollution in rural areas.
With the reorganization of the variable rice direct payment system, MAFRA is now looking at safety measures to stabilize rice prices to protect its farmers. The revised grain management law proposes that government purchase rice once (1) Production exceeds 3% of demand and (2) short term or harvesting rice prices falls 5% than normal prices. In terms of government’s grain sales requirements, the amendment proposes that stocks may be sold if prices rise due to lack of private stock and must be sold if prices rise at a rate of more than 1% for three consecutive quarters.
MAFRA established disaster prevention, mitigation and recovery support measures for anticipated agriculture disasters for 2020 such as typhoons, heavy rains, and heat waves. This includes drainage improvement, pre-checking of agriculture irrigation and promoting damage prevention technologies.
Despite food processing and distribution businesses working in the essential services area, functionality has still been low as staff are unable to come to work or caught up in isolation. The shortage of workers reduces supply chain capacity and cause supply side stresses which in turn, will lead to higher prices.
The increase in consumer prices combined with lost livelihoods due to lockdowns imposed is likely to put many poor households at higher risk for food insecurity and malnutrition.
For ADB, It is critical that governments prioritize policies and investments in the food production value chain to reduce the pandemic impacts on the supply chain and prevent food price hikes. Suggested actions for governments include: opening borders and regular revision towards more targeted local lockdown policies, improving hygiene compliance with food quality standards at existing markets, providing short term output-based stimulus payments, and increasing medium to long term investments.
ADB’s COVID-19 Response Package will include a number of adjustments to policies and business processes that will allow ADB to respond more rapidly and flexibly to the crisis. This includes (1) measures to streamline internal business processes, (2) widen the eligibility of scope of various support facilities, and (3) make terms and conditions of lending more tailored.
COVID-19 is compounding ongoing challenges to the agriculture sector and is threatening food security in the African region. The locust outbreak, drought and flood extremes due to climate change, and increasing food importation costs combined with inflation and supply chain disruptions, are likely to lead to a food crisis if there are no measures taken place.
The locust crisis, the worst in decades, has emerged as the continent is dealing with the COVID-19 pandemic. Locust breeding populations have increased massively and can consume crops in one day that can approximately feed approximately 35,000 people. Due to lockdowns, pest control workers are unable to go out to spray. While restrictions have been lifted to allow aircrafts used to spray to operate, the disruptions in supply chains have prevented them from accessing the needed chemicals. There is the fear that those who escape COVID-19 will soon face the ‘LOCUST-19’ crisis and the number of people who are food insecure could jump to 30 million in East Africa alone.
AfDB is allotting $10B for emergency response to address the effects of COVID-19 in the region. Funding is available to governments and the private sector and is focused on health, economy, social protection, and agriculture. To date, AfDB has yet to announce funding approval of an emergency response project in its member countries.
AfDB is prominently involved in working with countries and regional partners to address the imminent food crisis in the region, both in the short term as well as in the medium to long term.
IFAD offers maximum flexibility in the redesign of existing projects to address the negative effects of the pandemic. Any additional funding will target IFAD’s existing beneficiaries to make sure intended impact prior to COVID-19 is still achieved. Additional funding targeted for mobilization is at $200M, with IFAD providing $40M seed money.
In the short run, demand can decrease significantly due to loss of income and overall economic slowdown. Most households in the agri-food sector have little to no safety net and thus, a loss of income has implications for food security and nutrition. In terms of the supply side, short term effects are likely smaller as upstream agricultural production relies mainly n family labor, relatively unaffected by lockdown measures. However, there is a risk that food supply could decline and prices could increase in the long run if market linkages are broken and connectivity is not restored due to pandemic response measures. This is particularly true for developing countries as they begin experiencing stress in their agricultural production capacity and food distribution.
IFAD is focused on addressing immediate impacts, preventing the erosion of results from past and ongoing operations, as well as putting in place building blocks to support post-crisis recovery. IFAD’s response is organized into four categories: identifying Immediate solutions, scaling up, advising and support, and looking to the long term.
IFAD recently announced an investment of $9M to the Agri-Business Capital (ABC) Fund, a blended capital impact fund to help small-scale farmers an small-medium rural enterprises. This investment was due to the contribution from the Swiss Agency for Development and Cooperation. This is also IFAD’s first time in investing directly into a private sector entity.
A total of $160B emergency funds are available for countries to access within the next 15 months. In July, World Bank plans to set up another $2.5B Emergency Fund, of which $500M will be dedicated to Food Security and Nutrition.
Global production for three most widely consumed staples (rice, wheat, and maize) are at or near all-time high. For certain cash crops, an important source of rural income, prices may be depressed by the slowing of global demand.
World Bank is working with governments and international partners to closely monitor domestic food and agricultural supply chains and adopt appropriate food policy responses such as treating food as an essential service and ensuring supply chains are kept open; incorporating health and safety measures along segments of the food supply chain; and supporting the most vulnerable populations via safety net programs complemented by food distributions in areas where supply chains are severely disrupted.
World Bank is reviewing projects for possible restructuring and will facilitate short and long term financing to ensure markets are supplied with food and consumers are able to access it despite movement restrictions and income losses.