By S. Gustafson  (published on December 12, 2021)

This blog apprear originally on FoodSecurityPortal.ORG 

 Photo credit: UNICEFEthiopi/2020/NahomTesfaye

As Ethiopia’s population has become increasingly urbanized over the past decade, more and more households have come to rely on markets, rather than their own farms, for their daily food needs. This dependence means that well-functioning agri-food value chains have become increasingly vital to food security for much of the population. The onset of the COVID-19 pandemic raised serious concerns about the resilience of these value chains; while Ethiopia never closed its borders or imposed full lockdown measures, efforts to contain the virus still had the potential to disrupt the agri-food system and negatively impact food and nutrition security. A new series of working papers from IFPRI’s Ethiopia Strategy Support Program (ESSP) examines how two important value chains – the dairy value chain and the vegetable value chain – fared during the pandemic.

The studies draw on in-person survey data from February 2018 (for dairy) and February 2020 (for vegetables) and phone survey data from June and September 2021 (for dairy) and March 2021 (for vegetables). Comparison of these data allowed the authors to examine how value chains have responded and adapted to the COVID-19 pandemic. The authors used a cascading survey approach to collect and analyze data across the entire value chains, from rural and peri-urban producers to wholesalers and urban retailers.

Overall, Ethiopia’s dairy value chain appears remarkably resilient to the impacts of the COVID-19 pandemic and the associated containment measures imposed by the government. While nine percent of dairy farmers stopped engaging in the dairy value chain between February 2018 and June 2021, this decline can be attributable to rising feed prices, and potentially to a lack of access to credit and extension services, rather than to the pandemic’s impacts. Similarly, while 36 percent of milk wholesalers reported that they stopped trading dairy products within the study timeframe, they attributed this decision to increased competition within the sector and limited supply of milk and butter from rural areas, not to COVID-19. While a small number of urban retailers cited the pandemic as at least one of the reasons they stopped selling dairy products, the study found that the quantity of dairy products traded actually increased between 2018 and 2021.

Milk prices have risen steadily and significantly in Ethiopia over the past three years, matching the general high inflation seen in the country. Between 2018 and 2021, however, milk prices remained relatively stable (0.92 USD/liter in 2018 compared to 0.91 USD /liter in 2021). In addition, the amount that farmers received from the final retail price rose slightly during that timeframe. The dairy sector also did not experience a rise in post-harvest losses (as measured by quantity of milk wasted) during the pandemic.

While slightly more mixed, impacts of the COVID-19 pandemic on Ethiopia’s vegetable value chain also appear minimal. Farmers’ main concern was rising input prices; these price increases, rather than the pandemic itself or related containment measures, largely drove production decisions.

At the wholesaler level, the pandemic had more direct effects. At the start of the pandemic, the major wholesale vegetable market in Addis Ababa, the capital, was moved to the outskirts of the city to allow for more effective social distancing. Many surveyed traders reported that this relocation more negatively impacted their business than the pandemic itself. Between February 2020 and March 2021, most traders saw a loss in both number of clients and volume of vegetables traded, and the majority of these traders cited the relocation of the market as the cause.

Urban retailers also reported negative impacts from the relocation of the wholesale market. In addition, two-thirds of retailers said that they had fewer choices when it came to transportation of goods from wholesale markets than they did prior to the pandemic; while the majority of these cited the market relocation as the reason for this, 19 percent stated that it was due to the pandemic itself.

The study found significant volatility in vegetable prices throughout the study timeframe. The price of many key vegetables in household food baskets, such as onions, rose at the start of the pandemic, and many farmers initially responded by ramping up production to benefit from the increased prices. This in turn resulted in an oversupply in the Addis Ababa market, which drove farm gate and final consumer prices back down. All value chain actors—farmers, wholesalers, and retailers—reported that this price volatility was a major concern for them in the long term. It is important to note, however, that prices and price movements vary among the different vegetable crops. In addition, the volatility seen during the survey period cannot be attributed to the COVID-19 pandemic with any certainty, as the vegetable value chain in Ethiopia is generally characterized by a high degree of price volatility.

Post-harvest losses along the vegetable value chain also varied by crop. The largest losses were seen for tomatoes (11.5 percent, while the lowest were seen for onions (2.6 percent). In addition, where these losses occurred also differed widely. Tomatoes saw the highest losses at the retail level, while nearly all of the losses for cabbage occurred at the wholesale level.

Overall, the ESSP surveys suggest that important agri-food value chains in Ethiopia remained generally resilient in the face of the COVID-19 pandemic’s direct impacts.

Citation: Hirvonen, Kalle; Habte, Yetmwork; Mohammed, Belay; Tamru, Seneshaw; Abate, Gashaw Tadesse; and Minten, Bart. 2021. Dairy value chains during the COVID-19 pandemic in Ethiopia: Evidence from cascading value chain surveys before and during the pandemic. ESSP Working Paper 160. Washington, DC: International Food Policy Research Institute (IFPRI). https://doi.org/10.2499/p15738coll2.134764

Citation: Hirvonen, Kalle; Mohammed, Belay; Tamru, Seneshaw; Abate, Gashaw Tadesse; and Minten, Bart. 2021. Vegetable value chains during the COVID-19 pandemic in Ethiopia: Evidence from cascading value chain surveys before and during the pandemic. ESSP Working Paper 159. Washington, DC: International Food Policy Research Institute (IFPRI). https://doi.org/10.2499/p15738coll2.134768

By S. Gustafson

This post originally appeared on FoodSecurityPortal.org.

 Photo credit: Malingering

Prevalence of hunger and food insecurity have been on the rise in Africa south of the Sahara (SSA) in recent years after a long period of decline. In 2020, an estimated one in five people in the region faced hunger, more than double the proportion of any other region worldwide. The period 2019-2020 in SSA saw the strongest increase in annual undernourishment ever recorded. In 2020, estimated prevalence of undernourishment ranged from 10.1 percent in southern Africa to 31.8 percent in Central Africa. By 2030, Africa is forecast to have the highest number of undernourished people in the world.

In “Africa: Food Security and Agricultural Trade during the COVID-19 Pandemic” (Chapter 2 of the recent book, 2021 Annual trends and outlook report: Building resilient African food systems after COVID-19), researchers examine to what extent and through which channels the COVID-19 pandemic has exacerbated these numbers.

COVID-19 has impacted economies, food and nutrition security, and agricultural trade around the globe. The containment measures and restrictions of movement imposed by governments were important in reducing infection rates and helping overwhelmed health systems, but they also posed challenges for economic activity, incomes, and livelihoods. Economic output in SSA is estimated to have fallen by 1.9 percent overall and by 4.5 percent per capita between 2019 and 2020, compared to global declines of 3.3 percent and 4.4 percent, respectively.

The livelihoods of many people in SSA rely on exports of agricultural and food products, particularly cocoa, coffee, fruits, and vegetables. At the same time, many countries in the region rely on imported staple food commodities, such as cereals, meat, dairy products, and oils, for food security. Clearly, any disruption to trade in these various commodities due to COVID-19 lockdowns would have significant implications for incomes and food security in the region.

The chapter’s author finds that despite a global decline in merchandise trade of 9.2 percent during the pandemic, trade in agricultural and food products remained relatively untouched in the long term. Most disruptions to agricultural and food trade occurred at the very beginning of the pandemic, when lockdowns and other containment measures were first established in many countries.

These findings hold true for SSA as well. Lockdown measures began in the region in March 2020; while the strictest measures were lifted in most countries by July, no country had completely removed its containment measures as of the end of 2020. These measures included restrictions on movement of people and closure of businesses and markets. In addition, some countries imposed temporary export restrictions and relaxation of import barriers to help stabilize domestic food supply, while others imposed stricter import restrictions and food safety certification requirements to prevent the possible spread of COVID-19 through food products. Food production, processing, trade, and distribution in the region were all impacted by these various containment measures, with the most significant impacts occurring early in the pandemic.

In April and May 2020, aggregate export values for agricultural and food products of 14 countries in SSA[1] declined by between 5 and 11 percentage points from the aggregate averages seen during the same months in 2018 and 2019. However, starting in June 2020, these export values began to rebound. In the second half of the year, agricultural and food export values from the region were higher overall than those seen in the latter half of 2018 and 2019. Agriculture and food import values in the region followed a slightly similar trend but experienced higher volatility. Aggregate import values began declining in the 14 study countries by February 2020 and had dropped by 15 percent from 2018 and 2019 by May. While imports rebounded in June—similar to the movement seen for exports—they fell again in July. However, import values in the second half of the year were above their pre-pandemic levels on average.

The shifts in import and export values throughout 2020 can be explained by both changes in the quantity of goods traded and changes in import and export prices, says the chapter’s author. Global food prices fell sharply between January and May 2020 and rose just as sharply in the second half of the year; this mirrors the trends seen for both export and import values in SSA.

Trade flows themselves followed a similar trend, decreasing during the first half of the year and recovering in the second half. In April 2020, the number of export flows between two specific trading partners had already declined by 25 percent from April 2018 and 2019; in December 2020, the same export flows had increased from their pre-pandemic levels by around 7 percent. The number of import flows fell by more than 10 percent in April 2020 and rose above pre-pandemic levels in November and December. Intra-regional import flows experienced larger declines in the first half of the year than import flows from regions outside SSA.

These impacts were more significant for non-staple agricultural and food products: beverages, fishery products, cotton, tobacco, and cut flowers. Thus, the disruptions may not have immediately impacted food security in all countries. However, rising unemployment and falling incomes due to business closures, particularly in the tourism and hospitality industries, reduced food security for millions of households over the course of the pandemic.

In addition, the author points out that trade impacts varied at the country level. For example, cereal values in Ethiopia and Madagascar (both of which depend on imported cereals) experienced significant volatility in 2020 that did not follow clear pattern. In Namibia, cereal import values dropped 60 percent below average in June and remained low until October, generally following the observed global trend.

The author concludes that while agricultural and food trade were relatively resilient in the face of COVID-19, the pandemic ultimately exacerbated already acute hunger and food insecurity in Africa south of the Sahara. Food security for millions was worsened by increased unemployment, falling incomes, and generally poor macroeconomic conditions throughout the region. As a result, SSA has gotten even farther away from achieving the food and nutrition security targets laid out in the Sustainable Development Goals.

[1] Botswana, Côte d’Ivoire, Egypt, Ethiopia, Ghana, Kenya, Madagascar, Mauritius, Morocco, Mozambique, Namibia, Senegal, South Africa, and Zambia

By Sara Gustafson

 Photo credit: Malcolm Dickson

The CGIAR COVID-19 Hub has released updated policy notes regarding the impact of the COVID-19 pandemic on global and regional food systems. This latest series of updates covers several FSP priority countries, including Ethiopia, Nigeria, Malawi, and Bangladesh.

In Ethiopia, the pandemic has resulted in declines in overall GDP and in GDP of the agrifood sector.  The majority of these declines stemmed from reductions in trade and remittances. Total GDP fell by between 6.1 and 7.7 percent, with the agrifood sector accounting for 14.9 percent of those total losses. Ethiopia’s poor population has risen by 8.5 percentage points since the onset of the pandemic, which severely restricted the livelihoods and incomes of poor urban households in particular. Despite these declines, overall the country’s food value chains have proven to be resilient to the shock presented by the pandemic. The report also highlighted that earlier investments in irrigation have provided important access to water for vegetable production and household sanitation.

COVID-19 posed significant challenges to agricultural production in Malawi, exacerbating existing climate stresses. Access to agricultural inputs and output supply chains has been disrupted; at the same time, transport costs have risen, and market prices have faced volatility. All of these factors have reduced farmers’ incomes, as well as the GDP of Malawi’s agrifood system. The pandemic has had an even greater impact on urban households, which have experienced some of the highest income losses. Research into the impact of the pandemic on Malawi’s food value chains remains ongoing.

Nigeria has also faced doubled challenges in the form of the COVID-19 pandemic and a weakened economy. During the course of the pandemic, both total GDP and agrifood system GDP declined as a result of lost income and disrupted supply chains. The agrifood system accounted for 14.7 percent of Nigeria’s national GDP loss. Household purchasing power has also declined as incomes have been impacted by economic recession and high inflation rates.

CGIAR researchers continue to work with the Nigerian government to assess the impacts of the pandemic and associated policy responses and to identify priority policies to aid in national and household-level economic recovery.

In Bangladesh, the economic fallout from the COVID-19 pandemic has been severe. As in other countries, reductions in income and disruptions to supply chains have led to declines in total GDP and agrifood system GDP. The losses in the agrifood system GDP account for around 41 percent of national GDP losses. Rice prices within Bangladesh increased 35 percent during the pandemic; in addition, the 2021 harvest period and replanting period have been hampered by floods, which could further drive up prices. The dairy, poultry sectors, and aquaculture sectors were all hit with substantial losses due to lockdown measures, with producers facing significant loss of income. Poverty in Bangladesh reached 30 percent of the total population – an estimated 7 percentage points higher than would have been estimated in the absence of COVID-19. Government policies, including subsidies, have attempted to bolster the agrifood sector to support recovery and strengthen value chains.

By Sara Gustafson

This blog is originally posted in the ssa.foodsecurityportal.org. 

 Photo credit: World Bank

As the world continues to grapple with the ongoing presence of COVID-19, it has become clear that the pandemic’s impacts extend far beyond human health. Economic growth, markets and supply chains, poverty, and food security have all experienced ripple effects from the pandemic itself and the measures taken to stop the spread of the deadly virus. In Africa, the outbreak of COVID-19 coincided with the signing of the African Continental Free Trade Area (AfCFTA), leading to concerns about the potential negative impacts on free trade targets in the region.

A forthcoming book chapter, “The COVID-19 Pandemic and African Continental Free Trade Area (AfCFTA): Exploring Potential Impacts and Developmental Implications” (published in Global Market and Global Trade [Working Title]), examines these impacts and discusses how the AfCFTA and similar trade agreements could be used to mitigate the negative economic fallout of COVID-19 and similar shocks in the future.

The AfCFTA was launched by the African Union (AU) to address persistent low levels of intra-regional trade on the continent. In 2014, trade among African countries accounted for 16% of the continent’s overall trade activity, despite the existence of numerous bilateral intra-African trade agreements. Research has linked intra-regional trade to reduced poverty, improved food security, and strengthened economic growth, and so improving these low numbers could have significant effects on important development outcomes in Africa.

The AfCFTA’s target is to increase boost intra-regional trade by 60% by 2022. The agreement aims to achieve this ambitious goal by creating a single African continental market for goods and services that allows free movement of people (for business purposes) and investments. In addition to expected reductions in poverty and food insecurity, a secondary hoped-for outcome of the agreement is the improvement of Africa’s trading position in the global market. Some of the AfCFTA’s most important stated objectives include: the elimination of tariffs and non-tariff barriers to trade; cooperation on investments, intellectual property rights, and customs matters; and the establishment of a mechanism to settle disputes among member states.

To date, 34 of the 55 AU member states have signed and ratified the agreement, making the AfCFTA the largest free trade area in the world. The agreement has the potential to lift 30 million Africans out of poverty and bring approximately USD 16.1 billion in welfare gains to the region.

The chapter reports that in the first quarter of 2020, before the outbreak of COVID-19 in Africa, there were signs that intra-regional trade was beginning to intensify as the framework of the AfCFTA took shape. However, the pandemic has already had some direct effects on the agreement itself and on trade activity within the region. COVID-19-related travel bans and border closures postponed negotiations on several key aspects of the AfCFTA, causing a six-month delay in the implementation of the agreement.

As in many other places around the world, COVID-19 and the associated policy measures adopted to help stop the spread of the virus disrupted supply chains in Africa. Inputs for agriculture, manufacturing, and other industrial uses became more difficult to import, causing production delays and shortages. At the same time, production was further slowed as many employers like factories and mines closed as part of social distancing and lockdown efforts.

Travel bans and lockdown measures around the world also led to declining demand for oil, both globally and within Africa. This has had a significant detrimental impact on oil-producing countries in the region (e.g., Angola, Nigeria, and the Democratic Republic of the Congo).

Demand has slowed for African non-oil goods as well. Overall consumption throughout the region slowed in 2020 as a result of the pandemic. The chapter reports a 17.3% decline in African household expenditures from the previous year. Together, declining production and slowing demand for both oil and non-oil exports are expected to impact trade, employment, incomes, and well-being in the region for at least the next two years.

Despite these negative impacts, however, the chapter also highlights how the COVID-19 pandemic has presented the opportunity for AfCFTA and similar free trade agreements to capitalize on new products, markets, and trade frameworks. These could ultimately help mitigate the potential longer term negative impacts of the pandemic, stimulate future economic growth, and increase resilience against future shocks.

For example, the chapter argues that travel restrictions could encourage more local and regional production and reduce dependence on imports from overseas. By supporting African countries in ramping up production of goods that are currently often imported from Europe or Asia, AfCFTA can help create employment on the continent while also guarding against future supply chain disruptions.

Similarly, intra-African trade can play an important role in reducing food insecurity – both chronic and that induced by COVID-19 – in the region. Many African countries are net food exporters; however, the region also has many areas suffering from food deficits. By improving regional transportation networks, the AfCFTA can help strengthen regional food value chains. With stronger value chains, food-exporting countries can more easily export food within the region to areas in need.

The AfCFTA was also launched at the right time to leverage technological advances and improvements in connectivity across the region, the chapter argues. While other sectors have suffered from pandemic-induced supply chain disruptions, the telecommunications sector in Africa has experienced some growth. By focusing on new and emerging sectors and products, the AfCFTA could help generate employment and income opportunities that are more protected from economic shocks.

While COVID-19 has presented, and continues to present, significant challenges for populations and economies throughout Africa and the rest of the world, it also presents opportunities. The AfCFTA presents one channel through which policymakers and other value chain actors can strengthen the region’s ties, break down barriers hampering growth, and invest in vital institutions and infrastructure. By doing so, trade in the region will become more sustainable and resilient.

By Antoine Bouët, Brahima Cissé, and Fousseini Traoré published in Dec 10 2020

 Photo credit: World Bank

This post originally appeared on telos-eu.com.

Mark Twain once warned, “There are three kinds of lies: lies, damned lies, and statistics.” Yet statistics are a fundamental tool for economic policy and decision-making by governments, international institutions, and even the private sector. International trade statistics play a particularly important role. They allow us to determine a country's current account balance — that is, whether a country is living above or below its means — which is crucial information for macroeconomic policy. Detailed information on trade flows can be used to identify not only a country’s largest trading partners, but also the sectors in which it has a comparative advantage or disadvantage. This makes it possible to design structural actions to improve the competitiveness of certain sectors or trade relations with certain countries. These same statistics also provide valuable information for the private sector, as they help in identifying both attractive sectors for investment and which countries offer promising markets or are emerging as serious competitors.

However, official international trade indicators must be well measured, or at least not stray far from reality! To understand why these statistics can err significantly, one must keep in mind the methods used to collect them: Either customs officials record all flows of goods crossing borders (the usual source of collection), or central banks use tax declarations (VAT) and banking transactions to estimate these flows (this is the method adopted in the European Union to trace European trade flows within this borderless area), or national statistical institutes conduct surveys on representative samples and extrapolate results to the national scale (method used in the United States to evaluate trade between US states). Of course, using several methods is advisable because each has its flaws.

Yet Africa’s trade flows, particularly in the agriculture and food products sector, are known to be very underestimated, suggesting there is a considerable margin of error. This greatly hampers the continent's governments in making policies for food security; without exhaustive trade statistics, they do not know how much food is available for human consumption. Indeed, to establish the national availability of an agricultural and/or food product, a cereal for example, one must account for both the national production of the product and exports and imports of the product. National production, minus exports, plus imports gives the availability for consumption of this cereal or product in this country.

How do we know that the margin of error in trade statistics is substantial in Africa, given that we only have the official figures and not the real trade values? In fact, African national statistics institutes regularly conduct field surveys: for a period of time and/or at a limited number of crossing points, government-funded collectors survey any convoy or person crossing the border with a commodity. In Benin, for example, the ECENE (Enquête sur le Commerce Extérieur Non Enregistré) survey concluded that smuggling (trade at border posts not covered by customs officials) between that country and Nigeria was 3.8 times higher than official trade in 2011. A survey conducted by Rwanda in 2014 concluded that unregistered trade was equal to 59 percent of official trade with its four neighbors (Burundi, Congo DR, Uganda, Tanzania). More recently, since 2015, Uganda's Bureau of Statistics estimates unrecorded exports at just over 15 percent of official exports, based on a daily survey of almost half of the country's border crossings. The high level of unrecorded trade in Africa can be explained by inefficiency of customs operations and weak incentives for customs staff to complete official records, due in particular to the liberalization of trade in agricultural products, by the quasi-absence of tax declarations, and by the low level of access to banking services on the continent.

Although these surveys are interesting, we cannot expect them to fill the data gap — they are expensive and marred by inconsistency in terms of coverage of border crossings and different means of transport and uncertainty in terms of the representativeness of the estimation period.

It is with the dual objective of filling this statistical gap and developing a sustainable and self-financed means of collecting reliable agricultural and food trade data in West Africa that the project titled Family Farming, Regional Markets and Cross-Border Trade Corridors in the Sahel (FARM-TRAC) was launched in June 2020.

With initial funding from the International Fund for Agricultural Development (IFAD), and supported by the United States Agency for International Development (USAID), FARM-TRAC is collecting data on agricultural and food trade along all trade corridors in West Africa with the help of the West African Trade Association for Cross-Border Trade in Agro-Forestry Pastoral and Fisheries Products (WACTAF). The project’s innovation lies in organizing the collection of statistics in collaboration with the region’s apex organizations (associations for producers of cereals, livestock and meat, fruits and vegetables, and so on), greatly facilitating cooperation with these economic operators. Procedures have been put in place to record and collect information on trade values and volumes in real time, bring it up to international customs standards, avoid double counting, identify outliers, and otherwise control the quality of the information.

Data are also being collected on the number of illegal controls and checkpoints put in place by the gendarmerie, police, or customs officials along these road corridors, as well as the amount of payments demanded by these officials. What is modestly called “red tape” is indeed a common practice in the region and is equivalent to bribery.

The private sector is benefiting through access to an electronic platform (ECO-ICBT, http://www.eco-icbt.org/) set up to provide real-time information on the volumes and values of products traded, as well on the illegal checkpoints. To sustain the project without external financing, the levy of a modest share on each trade transaction will be set up by the Trade Information and Border Assistance Desk (TIBAD) with the technical assistance of the United Nations International Trade Center.

Both the national statistical institutions of the 15 countries of the region and the statistical service of ECOWAS (Economic Community of West African States) also benefit by using these statistics to improve the measurement of intraregional agricultural and food trade. The process of integrating these data into official statistics has begun.

The measurement of agricultural and food trade is significantly improved as a result. For example, a comparison of data provided by the ECO-ICBT platform and official data shows that between January and October 2020, for Togo, the total value of trade (exports and imports) of products targeted by ECO-ICBT was about 2.9 billion FCFA, while the values recorded on the basis of Togo's official customs statistics on these same products represent only 2.8 million FCFA, or only about 0.1% of the value recorded by the platform.

Last but not least, FARM-TRAC contributes to the implementation of the Regional Support Program for the Regulation of Informal Trade in ECOWAS (PARCI), which aims to encourage informal trade operators to register their operations with the official authorities, and to promote regional integration, which would enable farmers in the region to sell on more markets and thus improve their economic situation and give people access to cheaper food. PARCI communicates about abnormal practices by police, military, and customs authorities, implements customs facilitation procedures, and improves information on regulatory legislation for trade operators.

Economic statistics are an essential tool for policymakers. In developing areas where food security is far from assured, as is the case in West Africa, international trade statistics more in line with reality, and available in the very short term, could help identify, on a weekly basis, areas where there is a significant risk of undernourishment and/or malnutrition. Indeed, we can imagine projects that would enable us to identify these risks over the course of the year, since the production of each crop can now be reliably estimated in near real time thanks to satellite data and climate data. With such production estimates, coupled with export and import statistics, precise food balances can be established by region. These statistics will make it possible to anticipate food shortages, rather than responding to them with delay. But this will require reliable trade statistics in real time. A well-structured partnership between private operators, apex organizations, national statistical institutes, and international institutions can make an important contribution to improving Africa’s international trade statistics.