Department of Agricultural, Food, and Resource Economics Food Security Group

CRUCIAL FACTS FOR FOOD SUPPLY CHAIN POLICIES IN COVID-19 CRISIS

There are 4 crucial facts and 1 implication from the facts, to orient policy discussion about COVID-19 and food supply chains (FSCs) in Africa.

First, FSCs are extremely important to African consumers because on average 80% of all food consumed in Africa is purchased from FSCs. Only 20% is subsistence. The 80% figure is derived thus: (1) 60% of all food consumption in Africa is by urban consumers; the near totality of their food comes from purchases. (2) 40% of total food consumption in Africa is by rural households. The latter grow 50% of their food, and buy 50% of their food. (3) Hence 60%+20% is the share of purchased food in average national food consumption (Reardon et al. 2019 and 2020¹).

Second, FSCs are largely small and medium scale enterprises (SMEs): Around 85% on average of the total food supply in African FSCs is handled by SME’s. There are millions of SMEs along the whole African FSC:

• small retail and wholesale enterprises packed into informal clusters in and around wholesale markets and retail wet-markets and in small informal business zones;

• clusters of food retail shops and mills and street vendors peppered across cities and rural areas and around truck stops and schools and business districts;

• areas and around truck stops and schools and business districts;

• masses of logistics SMEs like truckers and warehouse operators serving every segment of the FSCs across Africa (we found 80% of all maize moved in supply chains in Nigeria is by traders using third party logistics services, small trucking firms).

• Coexisting with this huge aggregate of SMEs are a small emerging sector of large food enterprises like supermarkets, large processors, fast-food chains, constituting roughly 15% or at most 20% of the African food economy.

Third, domestic FSCs supply 80-90% of the food market in Africa; imports are 10-20%. So while imports are important issue, the lion’s share of food is the domestic FSC and huge attention should be paid to that (Awokuse et al. 2019)².

Fourth, FSCs are crucial to urban and rural employment in Africa. Based on analysis of Nationally representative data from several African countries (Living Standards Measurement Study-LSMS), we found that 40% of the full time equivalents (FTEs) of rural household are in own-farming; 5% are in farm-wage-labor; 20% are in post-farmgate FSC employment; 35% are in non-FSC rural nonfarm employment. We found for urban areas that 25% of FTEs are in post-farmgate FSC employment, and 65% is in other nonfarm employment³.

The implication of these FOUR facts is that the realistic context for planning policies and strategies to support the African FSCs in the COVID-19 crisis is that fully 65% of all African food moves through a huge mass of SMEs, which are key source of livelihood for many and in turn employ a large number of Africans.⁴. For Africa to access food, these SMEs need to be kept functioning, both as suppliers and as employers.

RECOMMENDATIONS FOR AFRICAN GOVERNMENTS

First, we recommend a dual strategy for governments:

(a) Continue to take public-health actions to stop COVID-19 spread and to communicate these actions to your citizens.

(b) Help keep agrifood SMEs operating. This is our focus here: it implies helping millions of SMEs already out there and feeding Africa. These include fertilizer and seed suppliers, crop and animal farms, rural and urban wholesalers, logistics firms especially truckers, street food stalls, small food shops, and wet-market stalls.

Second, we recommend specific actions to help keep the SMEs alive and delivering and processing food and employing people.

(a) Save the bones and arteries of the FSC: focus on assuring and upgrading the logistics infrastructure and the operations and flow of the SMEs in the FSC with public investments and fast regulatory/policy action.

Highways, wholesale markets, retail markets, and ports/border crossings are the “bones”, and the SMEs in logistics and wholesale are the arteries of the African FSCs. There are already 100,000’s of SME logistic firms (truckers, warehouse operators, port operators, wholesale and retail market operations): they are not “missing”, they are already present and dynamic and they and their infrastructure need help to survive this crisis. To keep the vast FSC logistics and wholesale river flowing in the COVID-19 crisis (and in the recovery period after) there needs to be:

• Infrastructure maintenance and repair in wholesale and retail markets, combining these logistics public-good investments with physical and regulatory reconfiguration for ingress control, hygiene, and crowd density and social spacing management.

• Infrastructure maintenance and logistics public-good investments for assured continuous flow on highways and across state and national borders and in and out of ports. These logistics investments like road repair need to be combined with fast regulation reform to reduce red tape and stops for truckers, the lifeblood of the FSCs in Africa. These policy actions require some coordination across states and regions in the policies they adopt.

• The infrastructure upgrading and maintenance can be done with food-for-work and other safety net schemes mixed with employment.

(b) Save the broad spectrum of FSC SMEs through helping individual firms to the greatest extent possible. Policies to encourage updating these structures and making environment safe – specific to COVID-19 include:

• Cheap loans and targeted subsidies to SME food processors to pay the rent and electricity and petrol bills and keep staff on.

• Cheap loans to truckers and warehouse operators and wholesalers to pay for repairs on vehicles, transit fees, wholesale market fees, and so on.

• Leverage the assistance and loans to get SMEs to upgrade to ensure a safe and hygienic environment for staff and customers. These could include targeted subsidies to encourage these upgrades.

Third, governments and donors will distribute food directly to consumers, but we feel they should be aware that this can cover at most 5% of African food consumption. Private sector FSC actors supply 80% of African food. We estimated that even doubling food assistance from current levels by donors would feed Africa for just 1 week.

Thus what governments and donors do in direct distribution:

• Should be highly targeted and preferably to those well outside of the FSC domain or unable to buy from the FSC.

• Should be done through mobile money transfers if possible and food distribution in well-organized way that reduces crowding and thus disease spread.

• Should be done as much as possible hand-in-hand with the FSCs so as to not crowd them out - but rather reinforce them. Government shops can procure from the private sector or private shops can distribute with support from the government.

Footnotes

¹Reardon, T., M. Bellemare, D. Zilberman. 2020. How COVID-19 may distrupt food supply chains in developing countries. IFPRI Blog, Guest Post. April 2. https://www.ifpri.org/blog/how-covid-19-may-disrupt-food-supply-chains-developing-countries; and Reardon, T., T. Awokuse, S. Haggblade, T. Kapuya, S. Liverpool-Tasie, F. Meyer, B. Minten, D. Nyange, J. Rusike, D. Tschirley, R. Vos. 2019. “Chapter 1: The Hidden Middle: A Quiet Revolution in the Private Sector driving Agricultural Transformation: Introduction,” in AGRA (ed.) The Hidden Middle: A Quiet Revolution in the private sector driving agricultural transformation. Africa Agricultural Status Report 2019. Nairobi: AGRA. https://agra.org/wp-content/uploads/2019/09/AASR2019-The-Hidden-Middleweb.pdf

²Chapter 6: Agricultural trade in Africa in an era of Food System Transformation: Policy Implications.” in AGRA (ed.) The Hidden Middle: A Quiet Revolution in the private sector driving agricultural transformation. Africa Agricultural Status Report 2019. Nairobi: AGRA. https://agra.org/wp-content/uploads/2019/09/AASR2019-The-Hidden-Middleweb.pdf

³Dolislager, M., Reardon, T., Arslan, A., Fox, L., Liverpool-Tasie, S., Sauer, C., Tschirley, D., 2020. Youth agrifood system employment along the rural-urban gradient in developing regions. Journal of Development Studies, forthcoming.

⁴65% is derived from 80%, the share of purchased food in total consumption, multiplied by 85% of total purchased food handled by SMEs.