The role of restrictions on food exports during a pandemic, what will happen to fruit exports and how the agricultural sector will develop after a pandemic is a review of a World Bank briefing.
On June 2, the World Bank held an online briefing for experts and journalists from Central Asia on the impact of the COVID-19 pandemic on agriculture and food security in the countries of the region. The speakers were Lilia Burunchuk, World Bank Central Asia Regional Director, and Sergiy Zorya, Leading Agricultural Economist.

Short and medium term effects
In all countries of the region, food prices have jumped due to both export restrictions and panic purchases by the population and states, Sergiy Zorya noted in his presentation. There was a reduction in food access by the poor and vulnerable, and disruptions in the food supply chain, especially in the first weeks of the pandemic.

A decrease in domestic demand is expected due to falling incomes and the economic downturn, as well as demand for the export of fruits and vegetables from Central Asian countries to the main market - to Russia (more than 50% of fruits, vegetables and grapes from the countries of the region), due to the strong impact crisis on the economy of this country and possible competition with other exporting countries. In the first quarter of 2020, the export of fruits and vegetables from Uzbekistan fell by 25% compared to the same period in 2019.

A recent WB report on horticulture in Central Asia analyzed opportunities for fruit exporters to enter the markets of China and Russia, said Sergius Zorya.

Comparison with the 2008–2009 crisis
The current crisis triggered by the pandemic is different from the global food crisis of 2008–2009, since it has not yet significantly affected international food markets, says Sergiy Zorya. This is due to the presence of large world grain reserves, as well as stable prices for basic food products, since a small number of countries limited food exports (16 countries as of May 2020 against 33 countries in 2008). Therefore, unlike the crisis of 2008–2009, now there is a deficit only in local markets and local price hikes.

Problems caused by the crisis
Jobs and GDP are strongly associated with agriculture in Central Asia, the WB expert notes. For example, in Uzbekistan, about 27% of the workforce is employed in agriculture, about 40% in Turkmenistan, and about 48% in Tajikistan. The share of expenditures of the population of Central Asian countries on food products is 40-60%, which makes people very vulnerable to price spikes. A pandemic will lead to an increase in the number of poor in the countries of the region by at least 600 thousand people - this is an optimistic scenario. In a pessimistic scenario, this number may increase by 2.6 million, shared the calculations of Sergius Zorya.

Speaking about macroeconomic factors affecting food security in the region, Sergiy Zorya presented the forecast economic growth data calculated by the EBRD in May 2020 (-3.5% for Central Asia, 1.5% for Uzbekistan, -3% for Kazakhstan, - 4% for Kyrgyzstan, -1% for Tajikistan and 1% for Turkmenistan). Also, the devaluation of national currencies in March-April by 6-14%, the decline in remittances from Russia and the reduction in remittances by recipient regions in 2020 have an impact.

Impact of export restrictions

Export restrictions on wheat and flour of Kazakhstan had a negative impact on the countries of the region, as well as on confidence in regional cooperation and trade in the future, said Sergiy Zorya. Answering the question of the journalist, he positively commented on the decision to abolish export restrictions by Kazakhstan since June.

The share of imports of wheat and flour from Kazakhstan in the countries of Central Asia. Data from the presentation of Sergius Zory.

All countries except Uzbekistan imposed export restrictions, which led to higher price fluctuations, panic purchases of food products by both the population and government, the WB economist recalled.

Agriculture - Growth Driver
Growth in industry and services has slowed, but continued growth is expected in agriculture.

Recommendations of the WB and other organizations to stabilize the situation:

- support for poor households so that they maintain access to food;

- Preventing disruptions to national food supply chains;

- providing access to resources and labor for the upcoming agricultural season;

- maintaining international trade flows and avoiding panic reactions.

Sergiy Zorya noted the new challenges that countries will face after the pandemic. The first task he called the restoration of confidence in agricultural trade and markets.

The return or transition to full food security and self-sufficiency, which has been talked about more often lately, is an ineffective step, Sergiy Zorya emphasized. Interim measures and trade restrictions introduced during the pandemic should be lifted and trade should play an important role in ensuring food security.

The second task is the promotion of investments in state development programs and the provision of services for agriculture, the third - improving the management of state reserves of food products, including their assessment and monitoring, the fourth - increasing investments in animal health and veterinary services, the fifth - digital transformation of the agri-food sector. This block of tasks requires regional cooperation, emphasized Sergius Zorya.

WB projects in agriculture
About $ 1.6 billion worth of projects are being implemented in the region with WB assistance, said Lilia Burunchuk, World Bank Regional Director for Central Asia. She said that the WB is reviewing the investment portfolio in connection with the consequences of the pandemic, and a number of projects are taking into account the solution of problems associated with coronavirus: livestock projects in Kyrgyzstan, Tajikistan and Uzbekistan, projects for the development of horticulture in Tajikistan and Uzbekistan, which develop export and logistics.

Lilia Burunchuk noted that there were plans to create a regional project to monitor the health of farm animals and create phytosanitary and sanitary systems in the region.

Source: gazeta.uz