The Coronavirus is raging around the world. While many countries have started easing lockdowns, others still have restrictions in place or had to re-introduce measures because of renewed outbreaks. For the foreseeable future, the impacts on economic activity are huge. Oxfam works with women and men small and medium-sized farmers, producers and enterprises in agricultural value chains around the world, and we’ve seen many of them experience severe impacts due to the pandemic.
We expect stresses will linger even when lockdown measures are eased. Drawing from three programmes – the Enterprise Development Programme (EDP), Gender Transformative and Responsible Agribusiness Investments in Southeast Asia (GRAISEA), and the Enhancing Livelihood Fund (ELF), we’ve identified three current impacts on small producers and the interventions that could help build resilience for the longer-term. Supporting small producers in food supply chains needs to be part of establishing a more robust food system, to tackle the risks of a food crisis and to protect those most vulnerable.
Cultivation and production
For some crops, cultivation has continued more or less as normal and adjustments have been quick and successful (e.g. the rice sector in Vietnam). But many agricultural producers are facing challenges, such as maintaining social distance and hygiene.
Access to farm labour, input materials and an increase in their prices has been another challenge. The rice planting seasons in Pakistan and Cambodia are at risk of being delayed because workers can’t get transport to the fields, and agricultural supply shops are closed. One of our partner enterprises in Bangladesh, which purchases duck eggs from women backyard farmers to incubate and hatch ducklings, has experienced a drastic decline of inputs as farmers resorted to consuming eggs themselves rather than selling them.
In the longer term, there is a worry that producers’ yields and income will continue to be affected by accessibility challenges, for example if field staff who provide technical support and training can’t reach farmers.
Information, markets and demand
Massive changes in the markets has severely impacted farmers and producers. They are being exposed to huge market uncertainties and often little information about developments. For remote producers with limited connectivity, along with travel restrictions, communications between the firms, farmers and markets are particularly difficult. All while prices are rapidly going up in some markets, and going down in others.
For example, shrimp farmers in Asia with products intended for the US and European export markets have seen a sudden disruption in buying schedules. Prices for locally-produced coconut sugar in Indonesia jumped up as transport restrictions kept imported coconut sugar out. And mushroom producers in Rwanda faced significant losses due to a collapse in their sales to the profitable hospitality sector. They were being forced to sell their products more cheaply to local buyers.
Reducing production has been one way of responding to the changes in the market, and increasing storage of produce until the lockdown measures are softened has been another way to cut losses. But that isn’t always an option, particularly for perishable goods. Oxfam works with seed producers in Nepal who are unable to transport their products to buyers. Since these seeds aren’t edible, if producers can’t sell them, they simply must dispose of unsold stock.
Finance
Financial liquidity is a big struggle, both during lockdown but also when measures are eased. With reduced revenues to cover fixed costs, some enterprises are experiencing cash shortages and risk of not meeting their liabilities. Financial institutions may in the longer term use the enterprises’ assets pledged as loan security, which could push enterprises out of business. Many of the enterprises and producers Oxfam works with have limited capacity in financial management, which aggravates the challenge during a crisis.
For farmers, decreased income in the short term (e.g. due to lack of sales) often impacts long-term profitability by making it harder to buy agricultural inputs for the coming growing seasons. As investors are becoming more reluctant to invest in low-income countries in the current climate, liquidity is likely to remain a problem.
What next?
Even as lockdown measures are lifted, many producers hit by the coronavirus pandemic will not bounce back quickly. Impacts will continue to be felt in the next growing season and further down the line.
While it’s vital to address the immediate impacts for producers, it is also essential to enable them to “build back better”. The pandemic has particularly highlighted the need to strengthen resilience. Taking measures now might help in managing long term vulnerabilities to the risk of flare-ups or a second wave of the pandemic but also to tackle other risks.
Attention needs to be paid to backward integration that involves women and men smallholder farmers and producers, who are often not considered in stimulus packages. It will be vital to consider how the pandemic impacts men and women differently and to incorporate this into measures for a just recovery. For example, we expect that women may get involved more in farm work if there is a shortage of labour. This can potentially be positive for their income, but also comes with the risk of an increased burden for women if their other (unpaid care) responsibilities don’t shift.
Some concrete suggestions include:
- Diversification of production as well as markets e.g. when due to transport restrictions or market disruptions income is reduced. Increased storage capacity may help for some products for a while, but identifying alternative markets and adjusting production can be critical to keep income up. In Rwanda, a producer of dried pineapple for the export market started selling raw pineapples locally when reduced international cargo flights lead to a decline of export sales.
- Enable better access to market information through technology especially with greater inclusion of women so that producers can better adjust to changes.
- Increased access to finance is critical. Rebuilding back better should consider policy measures that provide risk-sharing facilities for finance service sectors to develop loan and insurance packages for farmers and entrepreneurs, specifically targeting women farmers and entrepreneurs. Women’s access to finance is one of the key challenges for women in agricultural value chains due to restrictive social norms that are linked to women’s lack of ownership of productive resources/assets and it is vital that these dimensions are considered when introducing measures.
Author
Other contributors to this blog: Oskar Haq, Jo Villaneuva and Tamara Beradze and Elen Newcombe-Ling.