Online Tutoring on Food Crisis During the Pandemic

Introduction

The prevailing crisis of the pandemic of Covid-19 has shook the whole world and has affected each and every sector. One such affected is the agricultural sector. In the face of the crisis, many countries have placed restrictions on food trade which can have a huge impact on both the exporters and the importers. Analysts can’t help but compare this crisis with those of the 2007-8 food price crisis, with the fear of history repeating itself. This essay will highlight the rationale of wheat and rice export bans and the policies regarding this sector ,as well as the comparison of these trade policies with those of the 2007-8 food price crisis and how that experience can help shape the trade policy during this pandemic.

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Analysis

In response to the threat of food crisis during the pandemic, a number of countries have put trade restrictions on basic staple foods, especially rice and wheat. The export ban on both these have led to an increase in overall global prices as well as an increase in regional hunger and calories reduction. It is feared that around 18 million people worldwide could be forced to face chronic hunger due to the trade ban on rice and wheat (Martin, W., & Gaubler, J,2020). In case when the ban is placed on the export of rice, it leads to more than 30% increase in overall global prices while incase of wheat, which has a much more dispersed industry, it leads to an increase of 4%.

The graph (Appendix-A) shows the curves of supply and demand, in relation to the prices and quantity. The point where the two curves intersect represents the market price. The total demand is an addition of demands of all the customers. A customer finds it likely to buy a large number of products for lower price while sellers find it likely to sell a large number of products for a higher price, thus giving the supply demand curve.

When the global food prices rise, the exporting countries tend to place restrictions on their export in the forms of taxes, bans etc. while the importing countries tend to reduce the taxes and protection imposed on their imports. In the case of these restrictions, another approach is the introduction of quantitative restrictions which eventually leads to destabilization (Sulser, T., & Dunston, S, 2020, May 15).

In the previous food crisis of 2007-2008, when some countries responded to the crisis by imposing restrictions on the export, it led to an increase in world prices of staple, that in turn forced other grain exporters to reduce export as well. The importers, in response lowered import tariffs but kept the pressure on world prices high. All these policies and responses only led to an increase in world market prices. Leading to world price surge in 2007-8.

If we compare the food crisis of 2007-8 to those with caused by covid-19, the situations are not totally same. If we have a look at the stocks, then the global stocks are way higher than they were in 2007-8, nor is there any shortage of staple food inventories. The problem right now is not food scarcity but the transportation and movement, the supply chain has been disturbed.

Experts have analyzed that despite the ample stocks, if the exports are banned then it can lead to a spike in food prices thus in turn leaving the poor at the loss of purchasing power. The low-income groups are the most vulnerable in the times of these crisis, those who are daily wagers. They are already facing challenges due to the imposed lockdown, the export ban would further burden them, may it be the importers or the exporters.  The food supply chain needs to keep moving and the trade channels need to be kept open and running in order to keep the history from repeating itself.

Conclusion

The governments need to keep working for the smooth flow of the food trade industry, instead of placing export bans and putting millions at the brink of starvation. Such bans can cause instability to both the exporter, and the importer, and can cause a rise in global food prices, moreover ,it is analyzed that the rise in prices can lead to an increase in violence as well. The policy makers need to look for ways to meet the supply-chain demand while keeping the health and safety a top priority.