Food security in the Indo-Pacific following COVID-19

Author: Peter Warr, ANU Of the many forms of suffering resulting from the COVID-19 pandemic, the possibility of widespread hunger is among the most worrying. The Australian Centre for International Agricultural Research (ACIAR) — a component of the Australian government’s international development program — has produced a rapid assessment report on food security in the […]

Food security in the Indo-Pacific following COVID-19

Author: Peter Warr, ANU

Of the many forms of suffering resulting from the COVID-19 pandemic, the possibility of widespread hunger is among the most worrying. The Australian Centre for International Agricultural Research (ACIAR) — a component of the Australian government’s international development program — has produced a rapid assessment report on food security in the Indo-Pacific. It seeks to understand the effect that COVID-19 may have on food security in the region.

After consulting widely around the Indo-Pacific region, the report produced a qualitative analysis of the pandemic’s impact on food systems. Critically, the report draws attention to the impact of COVID-19 on people movement and the flow-on effects of the crisis for getting agricultural supply to where it’s needed most. It notes that ‘large-scale migration of displaced people is placing pressure on local food and resource systems’. Further, it highlights that ‘transport suspensions and movement restrictions are disrupting the delivery of food and essential agricultural inputs’.

For example, ‘in India, movement of people from urban to rural areas was a mass response immediately before the implementation of strict movement restrictions and the sudden increase in unemployment among domestic migrant labour’. And ‘in Indonesia, the transport of agricultural products from rural areas to urban markets has been substantially disrupted. This has been worsened by limited capacity in cold storage facilities in production areas, leading to losses of perishable foods’.

The report also points to problems or adaptations arising out of the pandemic that might not otherwise have been anticipated. Problematically, the closure of schools in Indonesia may block programs that support child nutrition through school-level provision of milk and other foods. In the Indian state of West Bengal food supply chains have adapted to the pressures brought by COVID-19. An agricultural company has started purchasing vegetables from farmers for direct delivery to consumers in the urban areas through online or phone booking.

Nevertheless, the short-term, country-specific focus of the report leaves the regional food security impacts of the pandemic unclear, along with the policy responses that might deal with these impacts.

Of the ten thematic categories of impact identified in the report, three relate to a contraction of demand for food, four relate to disruption of marketing channels for agricultural outputs or inputs, two relate to the potential distributional impact of the crisis and only one relates to problems in direct agricultural and fisheries production through labour shortages. Yet the impacts on the food security of vulnerable people, including children, remain largely unknown.

Examining international evidence so far, the primary short-term food security impact of COVID-19 is on the demand for food via loss of incomes through unemployment. A secondary possible impact is on disruption of marketing channels. Direct impacts on agricultural production are apparently minor, except for possible interruptions to input supplies such as fertilizer and localised labour shortages.

But the longer-term and slowly developing impacts of COVID-19 may be more important. For example, during the 1997–1998 Asian Financial Crisis, millions of urban workers — laid off from construction, manufacturing and services — returned to rural villages from which they had earlier migrated in search of better jobs. Countries varied greatly in the capacity of their agricultural sectors to absorb these workers productively.

Since the Asian financial crisis, agriculture has contracted as a share of both GDP and employment throughout the Indo-Pacific region. Further, significant mechanisation of agricultural production has occurred, partly in response to the labour shortages produced by the exit of rural labour. It will be much harder for the returnees — this time losing their employment due to COVID-19 — to find agricultural employment than it was two decades ago.

Impacts on regional and global agricultural trade may also be significant. Worryingly, there is potential for a surge of international food prices, especially staple grains like rice, wheat and maize. The experience of the 2007–2008 food price crisis showed that the actions of a handful of food exporting countries can produce a massive spike in international prices. This occurred by restricting exports in response to a fear of rising food prices within their own countries.

But these counter-productive policy responses take time to develop and cannot be anticipated by looking at localised events in food importing countries. Some export-restricting responses of this kind have already occurred, though fortunately not to the extent of 2007–2008. The UN Food and Agriculture Organization food price monitoring website shows that although international prices of wheat and maize declined somewhat in April, rice prices increased by 11 per cent. But stocks of staple grains are more adequate now than they were in 2007–2008 and prices of petroleum (an important input to agricultural and fertiliser production) are low. These factors reduce the likelihood of international food price spikes in the short run.

The risk that COVID-19 poses to longer-term food security remains very real. ACIAR’s potential contributions relate almost entirely to longer-term economic recovery, through agricultural research and development, rather than policy responses to the short-term impact of the pandemic.

Overall, the rapid assessment report provides a useful and timely first step to understanding food security in the Indo-Pacific. Deeper and more focussed follow-up analyses are needed to determine the possible long-term implications of COVID-19 for food security.

Peter Warr is John Crawford Professor of Agricultural Economics Emeritus at the Crawford School of Public Policy, The Australian National University.

This article is part of an series on the novel coronavirus crisis and its impact.

Source : East Asia Forum More   

What's Your Reaction?


Next Article

China’s Threat Continues to Hang Over HSBC

Multinationals line up to kowtow to Beijing

China’s Threat Continues to Hang Over HSBC

Even after a top HSBC executive professed support for the controversial national security law, a Chinese state-owned newspaper aggressively threatened the venerable bank, whose history in Hong Kong dates back to the 19th century.

On June 3, HSBC posted a statement on WeChat, a Chinese social media platform, saying its Asia Pacific chief executive Peter Wong Tung-shun had signed a petition along with a list of other banks, businesses and brokerages in support of the national security law. Canvassers have also gathered nearly 3 million signatures by individuals in Hong Kong in support of the law in an intensive effort by Beijing to manufacture support for the unpopular measure.

While HSBC is perhaps the biggest of Hong Kong’s institutions to meekly agree to the implementation of the law, it is almost certainly not the only one, with a long list expected to fall in line over the next few months as Beijing shows its teeth.

“There is a bottom line that HSBC can’t cross, otherwise the bank could lose the China market,” warned an opinion column under the “GT Voice” section of the ultra-nationalist Global Times, which is often viewed as the Politburo’s megaphone. It issued the warning on June 4, the anniversary of the Tiananmen massacre in 1989.  “It is Hong Kong that is indispensable to HSBC, but the bank is not too big to fail within Chinese boundaries.”

Ironically, HSBC is submitting to Beijing’s warnings after announcing in February that it would retreat from its extensive, decades-long, largely unsuccessful foray into international banking back to the city it had called home for a century and a half, revealing massive cuts to its operations in Europe and the US, including 35,000 jobs over the next three years, as well as further slimming its investment banking and equity trading operations, and folding its private banking arm into its retail operations to focus on what it described as faster-growing Asian markets.

During the first quarter of 2020, Hong Kong contributed 88 percent of the profits of HSBC, which has US$2.7 trillion of assets and operations in at least 65 countries. Hong Kong had the most HSBC customer accounts at HK$3.9 trillion (US$502 billion) in 2019, followed by Singapore with customer accounts totaling HK$378.3 billion and mainland China in third place at HK$376.4 billion, according to HSBC’s 2019 annual report.

The law, which was passed by China’s rubber-stamp parliament, the National People’s Congress, on May 28, is expected to come into force in Hong Kong in a few months. The law will criminalize collusion with foreign forces on Hong Kong affairs, terrorism, Hong Kong separatism and subversion.

The law has sparked widespread international disapproval as well as in Hong Kong. World figures including US Secretary of State Michael Pompeo and UK Prime Minister Boris Johnson have condemned the bill. The legislation caused US President Donald Trump to announce on May 29 the ending of US privileges for Hong Kong, on the grounds that the city has lost its autonomy.

HSBC’s action has not appeased the Global Times. The newspaper said, “There is a reason to suspect that Wong’s support for the national security law was made because of public pressure. The UK-based bank needs to show greater sincerity to express its position on the US-China tension and the national security law.”

“HSBC’s silence on the issue in the past week is worth noting. In this sense, Wong’s support comes late. It seems it’s a very difficult decision for the bank to express its support for the national security law,” said the newspaper.

At the opposite end of the political spectrum, Jimmy Lai Chee-ying, an anti-Beijing Hong Kong activist, said HSBC professed support for the security law due to pressure from Beijing, not the public as the Global Times claimed. On June 4, the tycoon tweeted, “HSBC kowtowed eventually. HSBC, Swire, Jardine and many more are under pressure to openly pledge their allegiance, or they will face the consequences. It is the cost the world pays turning a blind eye to the (Chinese Communist Party) bully. Enough is enough.”

When asked, an HSBC spokeswoman said HSBC had nothing to further to say.

In a statement on June 3, Standard Chartered said the security law “can help maintain the long-term economic and social stability” of Hong Kong.

Asked whether Standard Chartered was pressured to support the security law, the bank’s spokeswoman said, “We hope greater clarity on the final legislative provisions will enable Hong Kong to maintain long-term economic and social stability. We remain positive that Hong Kong will continue playing a key role as an international financial hub.”

Standard Chartered, HSBC and Bank of China (Hong Kong) are the only three banks which are authorized to issue Hong Kong dollar notes.

On the same day, Jardines Group, a British firm that has done business in Hong Kong since the territory became a British colony in 1842, published a full-page Chinese-language statement in a pro-Beijing newspaper, Ta Kung Pao, saying it was important to enact a legal framework to safeguard the city’s national security. Jardines didn’t reply to Asia Sentinel’s questions at press time.

“It is very unusual for any company to support a national security law,” a former banker based in Hong Kong told Asia Sentinel. “Only Communists who seek to control all aspects of the economy would do this.”  

CY Leung’s threat

The Global Times was not the first to threaten HSBC. On his Facebook page on May 29, former Hong Kong chief executive Leung Chun-ying wrote in Chinese that HSBC’s business in China “can be completely replaced overnight.”

Leung, now a vice-chairman of the Chinese People's Political Consultative Conference (CPPCC), said Hong Kong officials and delegates to mainland parliamentary bodies, as well as Hong Kong and Chinese businessmen, should “immediately protect themselves, to avoid a fate similar to Huawei.”

Huawei Technologies, a leading Chinese technology company, is caught in the Sino-US tussle. On May 27, the British Columbia Supreme Court in Canada ruled that Huawei chief financial officer Sabrina Meng Wanzhou is eligible to be extradited to face trial in the US on fraud charges.

Leung said on Facebook that HSBC’s profits mainly came from China including Hong Kong, yet the London-headquartered bank’s board and senior management are mostly British. He added, “We must let the British government, British politicians and HSBC know which side of the bread is buttered.”

The Global Times said, “HSBC’s alleged involvement in Meng’s case also leaves a permanent stain on its record.” That is because HSBC earlier conducted an internal investigation into Huawei that was used by the US Department of Justice as evidence to bring charges against Meng.

“Wong’s support is not enough to resolve all the problems faced by HSBC and we still need to watch HSBC’s moves in the future related to issues such as Huawei,” the Global Times warned.

Source : Asia Sentinel More   

This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies.