09 June 2020 | Press Release 03/2020
COVID-19, the oil price slump and food security in low-income countries
IAMO Policy Brief 37 investigates the impact of the Covid-19 crisis on the food security in selected countries
Within weeks, the Covid-19 pandemic has brought the global economy to a virtual standstill. Reduced energy demand led to a historic slump in crude oil prices that poses an existential threat to low-income states that are simultaneously dependent on exports of energy and imports of staple foods. Recent panic buying and proposed trade restrictions in the world grain markets, as well as increasing calls for autarchy give further reason for concern. In the current IAMO Policy Brief 37, IAMO Director Thomas Glauben and researcher Maximilian Heigermoser discuss the consequences of the current Covid-19-related economic standstill within the context of global food security.
In early 2020, the novel Sars-CoV-2 pathogen began spreading rapidly around the globe, forcing the majority of countries to implement social distancing measures to fight the pandemic. As international flight connections are discontinued and large parts of global industrial production and domestic commerce are shut down, the International Monetary Fund (IMF) projects the “worst economic downturn since the Great Depression”. Within this context, countries whose economies and state budgets depend on the export of primary raw materials such as crude oil or industrial metals are severely affected by the economic impact of the pandemic.
The three largest African oil exporters, Algeria, Angola and Nigeria, have seen significant depreciations of their currencies as a consequence of the global oil price slump. As all three countries are net importers of staple foods such as wheat and rice, it is expected that grain imports will become more expensive. Local food price inflation jeopardizes the food security especially of poorer urban populations, which are also more strongly affected by income losses resulting from national shutdown measures.
To prevent a global famine crisis that the World Food Programme (WFP) warns about, the solidarity of the international community will be of crucial importance. Further, ensuring smooth international and interregional trade flows is strongly recommended. “Demands for greater autarchy and de-globalization should be resisted in the current precarious situation” emphasize the agricultural economists Thomas Glauben und Maximilian Heigermoser.
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The IAMO Policy Brief 37 “COVID-19, the oil price slump and food security in low-income countries” was published in English and German. The publication will also be available in Russian shortly. The issue can be downloaded free of charge on the following website: www.iamo.de/en/publications/iamo-policy-briefs.
IAMO Policy Briefs
IAMO conducts research on important agricultural policies. In our IAMO Policy Briefs we share our take on the researched issues. In this series of publications, we elaborate briefly and in comprehensive language on various topics, which are relevant for today's society. We hope to involve the interested public in these topics as well as decision makers in politics, the economy and the media. Since 2011, we publish IAMO Policy Briefs at irregular intervals.
The Leibniz Institute of Agricultural Development in Transition Economies (IAMO) analyses economic, social and political processes of change in the agricultural and food sector, and in rural areas. The geographic focus covers the enlarging EU, transition regions of Central, Eastern and South Eastern Europe, as well as Central and Eastern Asia. IAMO works to enhance the understanding of institutional, structural and technological changes. Moreover, IAMO studies the resulting impacts on the agricultural and food sector as well as the living conditions of rural populations. The outcomes of our work are used to derive and analyse strategies and options for enterprises, agricultural markets and politics. Since its founding in 1994, IAMO has been part of the Leibniz Association, a German community of independent research institutes.
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