COVID-19: COVID-19 Latin America's Challenges to Revive Agrifood Chains

During the webinar - which featured three experts from a variety of international organizations -CAF- Development Bank of Latin America explored the challenges that countries in the region will have to face in reviving their agri-food chains following the current COVID-19 pandemic.

CAF’s Nelson Larrea facilitated the dialogue titledChallenges for Agrofood Chains in Latin America: Post-COVID-19 Global and Intra-Regional Trade.

In his keynote speech, the UN International Trade Center’s Matías Urrutigoity analyzed the effects of quarantine, a containment and social distancing measure rolled out in March in an attempt to halt the progress of the COVID-19 pandemic when the first cases were reported in the region. 

"The impact on agriculture meant lower prices due to a falling demand," he said, adding that this sector has greater opportunities because of its close relationship with food security, a variable incorporated in the Sustainable Development Goals (SDGs) promoted by the UN.

However, not all countries can perform as well as "the situation will be complex for net food importers,” who must improve their trade integration mechanisms where the performance of small and medium-sized enterprises (SMEs) is crucial to improving development indicators.

"Trade is linked to development" because it contributes to the integration between countries and companies, Urrutigoity said, adding that he nevertheless foresees that adaptation to the post-pandemic stage will face a financial barrier that will have a more impact on small agricultural initiatives.

Data

Given the situation, the UN University Institute for Comparative Studies of Regional Integration’s Nahuel Oddone stated that Latin America had already experienced a reduction in trade before the pandemic, where intra-regional trade reached a mere 14 percent.

"Based on Cepal data, which compares January-May of this year to [the same period] of the previous year, global trade is falling by 17.7 percent, but trade in our region of Latin America and the Caribbean, drops by 27 percent," he said.     

The data, which shows a drop since shortly before the start of quarantine, also reflects red numbers in all sectors of the regional economy except agribusiness, which "while suffering a collapse, still enjoys positive growth (4 percent)."

Oddone went on to explore the components of value chains, many of them affected by the confinement measures declared in almost the entire region, stressing that, in the case of the agriculture sector, these are "essential goods" whose supply must be guaranteed through trade.

"Agricultural exports will be the most resilient in the post-COVID-19 context," he said, adding that one of the most important challenges will be "recognizing the role of producers as a key link," he said

Naddone said that “the price paid to producers has not increased beyond their contribution to food security during the pandemic," while the digital divide remains high, especially in these sectors of the economy.

The discussion closed with IICA head Daniel Rodríguez, who reflected on the changes that the “new normal” derived from the pandemic will have on food value chains and trade.

"Due to its importance in food security, the agricultural sector will demand greater safety and health requirements", he said, emphasizing that the demand for some agricultural products, such as citrus fruits, grew in a context marked by logistical and transport problems.

"The big challenge is to contribute to [the region’s] economic revival, but the agricultural sector and trade, in particular, are called upon to play a key role (...). We have an important role in international food security," Rodríguez said.

Challenges

• Reaffirming the international commitments of the region’s countries within the framework of the World Trade Organization (WTO) to facilitate trade, avoiding unnecessary trade barriers.

• Improving transparency and predictability as regards sourcing and the adoption of new measures.

• Strengthening food health, safety and traceability systems at the institutional level, as well as the sector’s business community.

• Promoting the application of standard agreements and other regional and international standards with scientific justification and leading to the protection of public and agricultural health, as well as trade facilitation.
• Promoting the design of trade policies and measures that bolster environmental sustainability.