Covid-19: Food trade restrictions

The ongoing pandemic continues to wreak havoc across the world, with most, if not all, economies facing a looming contraction. Multilaterals such as World Bank and IMF expect Pakistan’s economy to contract by 1.3-1.5 percent. According to calculations made by Pakistan Institute of Development Economics (PIDE), this is set to push at least 10 percent of the population below poverty line.

From fears of job losses to specter of food shortages, federal and provincial governments have grappled with responses. Last week for example, the federal cabinet decided to ban exports of essential food items to ensure domestic food security. Similar decisions have also been taken by other countries causing disruption in trade as a result.

Critics, however, point out that with month-on-month exports already down by half in April-20 due to slump in global demand of Pakistan’s staple export, textile, the loss of not exporting may be far more than cost of incremental import in case any of shortages later.

Similarly, development agencies such as Food and Agriculture Organization (FAO) believe that the global community needs to allow free movement of essential food items across borders, now more than ever, to ensure security in food insufficient countries. Consider that many LDCs on African Continent and in the Caribbean, or war-ravaged nations such as Syria and Yemen have food self-sufficiency ratio much below 50 percent, dependent on imports to tackle ever worsening crises of  hunger and poverty.

To this end, FAO put out results of a rapid study last month, addressing the impact of Covid-19 on the livestock sector. According to the report, the greatest challenge being faced is a reduction in access to inputs, especially animal feed, due to “requirement for physical distancing and PPE that have hurt the efficiency of industrial enterprises”. For example, the report reveals that in Argentina, restrictions on movement have resulted in reduction of soy supply to feed factories by half. That could set in motion a domino effect on global meat trade flows, considering Argentina is world’s largest soymeal exporter.

On the other hand, in a recent interview with BR Research, CEO of Lucky Foods Salman Hussain noted that Pakistan only produces 45 percent of its fodder requirement, while the rest is not met through imports but instead leads to cattle going hungry and underfed. Hussain believes that given the chronic livestock undernourishment, Pakistan should impose a ban on feed export. With supply of imported feed sources such as soy set to suffer due to global trade slowdown, it may be tempting to impose restrictions to ensure domestic availability. But it might help to pause and reconsider.

Apart from feed, Pakistan is mostly import-dependent for its supply of animal vaccines, unavailability of which may give rise to disease outbreaks and lead to livestock losses. Any protectionist moves in current global environment will not only lead to tit-for-tat countervailing restrictions; moreover, inability to import vaccines will also deal a major setback to Pakistan’s long-term meat export potential. Disruption caused to livestock certification in absence of vaccination may result in the country being kicked out of even other exporting markets such as the Middle East, since suspicions may be raised on the safety of Pakistan’s non-vaccinated meat.

So where should the line be drawn? Should borders be sealed to ensure food security now, or should trade continue to ensure both food security and safety later?