VCB-N has launched a series of Webinars on the COVID crises to offer a platform for learning and exchange about the current situation. This is the summary of the webinar on impact of the COVID-19 pandemic on agricultural value chains by VCB Network.
Speakers:
1. Mr. Barua Kaushik, Country Director IFAD Cambodia & Mr. Fabrizio Bresciani, Regional Economist IFAD Rome - IFAD perspectives
2. Anirban Bhowmik, Country Director, Swisscontact, Bangladesh – the smallholder farmers and the informal sector perspectives in Bangladesh
3. Mr. Andrew Wilson, Regional Coordinator Market Systems, HELVETAS – The market perspective
4. Prof. Liu Yonggong, China Agricultural University (CAU)- The market perspective from China
Summary:
1. The COVID crisis does negatively impact households in three inter-connected areas i) food security ii) income and iii) investment ability. In rural areas, the down-fall of prices has diminished the investment ability thus working capital of smallholder farmers which will again affect the production thus income and broader food security in the mid-term. The decreased ability to invest in next season’s crops is further deteriorated by the insecurity about next season’s markets. Farmers are falling back on local food systems and traditional production and solidarity mechanisms to deal with the crisis.
2. IFAD is using Rural Poor Stimulus Facility having 4 main pillar: i) safeguarding access to inputs and basic access for production purposes ii) facilitating access to markets incl. support to logistics, storage etc. iii) targeted funds to assure access to services mainly through existing programmes and iv) funds to develop / disseminate digital services / tools to farmers. This will help actors to overcome both Income shocks and Asset shocks.
3. Upstream actors like traders and retailers saw their income flow diminishing with falling business volumes and are short of liquidity which hampers their ability to pre-finance inputs for smallholders. Ability to extend credit line to farmers will be reduced for next season as traders are getting hit.
4. Food production chain especially fish will face big trouble in Bangladesh. April and May are the peak season of stocking of fish and many smallholders are not going to stock due to poor transport, price and availability of inputs. Hatcheries are only able to supply at least 50% of their total production and struggling to keep these all fish fry in their limited area.
5. International value chains for non-perishables like the trade in food ingredients are less affected by the logistical complications. As their exists a 6 weeks lag between shipment and retail at destination markets the real impact on trade volumes is still unclear.
6. “Stress reveals the cracks” : Structural weakness of agriculture value chain related to access to finance along the chain (production and forward market linkages) has been exposed in the current food systems.
7. Policy Narrative- Fiscal and Non fiscal: Non fiscal interventions must focus on production support with timely supply of seeds, fertilizers and pesticides. Fiscal support must be given to the farmers to manage their debt and allow them to invest in future production cycles.
8. Technology based entrepreneurs are not enough and form minuscule part of supply chain. Investments should be balanced along the VC (farm-level, storage, processing, logistics, and market access) to avoid bottlenecks which can be a "time bomb" for commodity prices, and farmers' income in the end.
9. Responses at company level should typically include software (adapted procedures, regulations) as well as hard-ware (protective gear etc.).
10. Responses as applied in China might be difficult to duplicate in other countries that lack the mechanisms for direct support to producers or financial reserves to apply similar support measures.
Speakers:
1. Mr. Barua Kaushik, Country Director IFAD Cambodia & Mr. Fabrizio Bresciani, Regional Economist IFAD Rome - IFAD perspectives
2. Anirban Bhowmik, Country Director, Swisscontact, Bangladesh – the smallholder farmers and the informal sector perspectives in Bangladesh
3. Mr. Andrew Wilson, Regional Coordinator Market Systems, HELVETAS – The market perspective
4. Prof. Liu Yonggong, China Agricultural University (CAU)- The market perspective from China
Summary:
1. The COVID crisis does negatively impact households in three inter-connected areas i) food security ii) income and iii) investment ability. In rural areas, the down-fall of prices has diminished the investment ability thus working capital of smallholder farmers which will again affect the production thus income and broader food security in the mid-term. The decreased ability to invest in next season’s crops is further deteriorated by the insecurity about next season’s markets. Farmers are falling back on local food systems and traditional production and solidarity mechanisms to deal with the crisis.
2. IFAD is using Rural Poor Stimulus Facility having 4 main pillar: i) safeguarding access to inputs and basic access for production purposes ii) facilitating access to markets incl. support to logistics, storage etc. iii) targeted funds to assure access to services mainly through existing programmes and iv) funds to develop / disseminate digital services / tools to farmers. This will help actors to overcome both Income shocks and Asset shocks.
3. Upstream actors like traders and retailers saw their income flow diminishing with falling business volumes and are short of liquidity which hampers their ability to pre-finance inputs for smallholders. Ability to extend credit line to farmers will be reduced for next season as traders are getting hit.
4. Food production chain especially fish will face big trouble in Bangladesh. April and May are the peak season of stocking of fish and many smallholders are not going to stock due to poor transport, price and availability of inputs. Hatcheries are only able to supply at least 50% of their total production and struggling to keep these all fish fry in their limited area.
5. International value chains for non-perishables like the trade in food ingredients are less affected by the logistical complications. As their exists a 6 weeks lag between shipment and retail at destination markets the real impact on trade volumes is still unclear.
6. “Stress reveals the cracks” : Structural weakness of agriculture value chain related to access to finance along the chain (production and forward market linkages) has been exposed in the current food systems.
7. Policy Narrative- Fiscal and Non fiscal: Non fiscal interventions must focus on production support with timely supply of seeds, fertilizers and pesticides. Fiscal support must be given to the farmers to manage their debt and allow them to invest in future production cycles.
8. Technology based entrepreneurs are not enough and form minuscule part of supply chain. Investments should be balanced along the VC (farm-level, storage, processing, logistics, and market access) to avoid bottlenecks which can be a "time bomb" for commodity prices, and farmers' income in the end.
9. Responses at company level should typically include software (adapted procedures, regulations) as well as hard-ware (protective gear etc.).
10. Responses as applied in China might be difficult to duplicate in other countries that lack the mechanisms for direct support to producers or financial reserves to apply similar support measures.
