Global Food Security Challenges in COVID-19 Times

The Chicago Council on Global Affairs held a webinar this afternoon to discuss how COVID-19 will affect our global supply chains. Speakers Sanjeev Krishnan at Seed2Grow Ventures and Sara Menker, founder and CEO of Grow Intelligence, offered some great insights into current global food security topics.

Whether the COVID-19 crisis will tamper with markets in a structural or cyclical way has yet to be deciphered. COVID-19’s impact on our global food supply chain will be disruptive and offer opportunities for innovations that will drive more sustainable technologies and a better future of food.

Here are the main takeaways:

Disruptions:

  • Shipping and labor are seeing the largest disruptions as the byproduct of COVID-19.
  • Logistical bottlenecks in the food supply chain have cause shocks to the entire system.
  • Commodity crops traded globally through shipping networks are seeing inventory draw downs.
  • The effects of the ongoing oil price war and impacted currencies will have serious implications for global trade balance.

Innovations:

  • The food and ag innovation sector will be extremely resilient to these times.
  • The denominator effect is unfolding. When public markets go down, people loose wealth and liquidity becomes more important. Investors are shying away from risky investments and moving towards illiquid assets.
  • Concurrently, the Fed is acting with unprecedented scale and volume to offset the shock on the markets. We will see funds dry up if the current markets continue. If this is a structural problem, it will take a while to rebound, if cyclical, recovery will be relatively quick.
  • Indoor agriculture and decentralized protein sources from cell-based meat and plant based protein will continue to trend upwards as the journey between supply and demand becomes more compressed.

Closed borders and protecting trade:

  • Decentralized production models will emerge from this crisis. Who will bear the burden of cost as the highly efficient globalized supply chain readjusts to the current landscape?
  • Products coming out of hard-hit countries will see slowing velocity. Extra virgin olive oil is an example of how markets have been impacted from the point of view of one of the hardest hit countries, Italy.

Information matters:

  • The ag industry has been built on poor quality data and the way information has been collected is localized and fragmented.
  • This crisis could reveal where the choke points are in our food system, and information will become a catalyst for redesigning our supply chains.

Food insecure places will be hit the hardest:

  • Pain will be felt in regions that are net importers from other countries. We could see hyper inflation driven by food in those areas, which could lead to significant social and political unrest.

In Closing:

In America, more consumers will start to question where their food comes from when they start seeing empty shelves or higher costs in the supermarket. Consumer demand will shift as a result.

Americans should understand that the people on the front lines of the food supply chain are taking risks to make sure we are all fed.