The agri-food sector and the COVID 19 crisis
The health crisis facing humanity, which infects people and economies globally, is changing our daily lives, modifying common meanings and priorities for this period and probably also for the future post-pandemic. What seemed inappropriate yesterday may be essential tomorrow.
Along with the urgency to prevent the collapse of health systems, for which it is essential that infections are not concentrated in a very short period of time, it is necessary to keep food supply chains operational, without which it would not be possible to sustain the measures taken to protect our health.
Until now, these chains have operated quite normally, considering that they are interdependent systems with different actors and functions articulated with each other. Indeed, primary production depends on inputs, for example, fertilizer seeds and agrochemicals that flow adequately and in a timely manner, and that workers can carry out their work in safe conditions that protect their health against the pandemic. As relevant as this is that financial flows and operating capital allow the entire chain to be kept active.
Similarly, supply chains depend on the operation of processing, storage and distribution facilities and especially on transport logistics. The logistics and distribution aspects are those that seem most sensitive to the restrictions imposed to protect the health of the population and therefore here a greater coordination is necessary between national and especially regional authorities and the actors in the chain.
Our country is a net exporter of food; Agri-food shipments are only behind mining and our trade balance is largely in surplus, reaching surpluses of US $ 5,561 million in 2019, not including the forestry sector. Considering that our main destination markets are China, the United States and the European Union, and that we export wines, fresh and processed fruits and vegetables, products whose demand is elastic to consumer income, we must prepare to face a difficult period. It is enough to remember that recent WTO estimates indicate that global trade flows could fall by 30% and that the IMF and the OECD estimate falls in global GDP of between 5% and 10% for this year, all associated with a massive loss of jobs around the world.
On the other hand, we have a deficit to varying degrees of essential products for our diet, especially wheat, corn, oilseeds, rice, beef and, to a lesser extent, dairy products. Here the challenge will be twofold: Ensuring that local production is maintained and ideally increased for the next season, making us less dependent on abroad, and at the same time ensuring that our imported food supply develops normally. Given that our main suppliers are neighboring countries, it is necessary to address this from now on, using diplomatic channels if necessary and early purchase commitments, because, just as we have witnessed fierce competition for medical equipment, something similar could happen with food. especially if production in Asia and North America is seriously affected.
The agricultural sector employs 10% of the national workforce and adds numerous indirect jobs, which is key for most of the country’s regions, except for mining in the north and the RM, which concentrates the service area. The post-pandemic reactivation can find a very good ally in this sector, which is capable of responding quickly to short and medium-term incentives with a high impact on employment and economic activity, especially in regions.
Therefore, a broad call from the government is urgently needed, incorporating the private sector, academics and specialized international organizations, both to debate and face the challenges of the short term, identifying the restrictions as well as the opportunities offered by this scenario, and also to redefine medium and long-term that allow Chilean agriculture to adapt to the new conditions, which will probably be marked by trade restrictions, changes in global demand for food and a transformation of the globalization paradigms to which the Chilean agri-food sector was incorporated at the time successfully.