[ad_1]
Editor’s Note: The Economist is making some of its major coverage of the covid-19 pandemic freely available to readers of The Economist Today, our daily newsletter. To receive it, register here. For our coronavirus tracker and more coverage, see our center
meF LIVES In the rich world and want an example of global trade and cooperation, look no further than your plate. When the blockades began in the West two months ago, many feared that bread, butter, and beans would fall short, causing a supply wave. Today, thanks to the fleets of delivery trucks that fill supermarket shelves, you can overeat while you overeat.
This capitalist miracle does not reflect a monolithic plan, but rather a global $ 8 trillion supply chain that is adapting to a new reality, with millions of companies making spontaneous decisions, from changing the supplier of rice in Asia to reconditioning freezers. The system is far from perfect: as incomes collapse, more people go hungry. There are risks, from labor shortages to poor harvests. And it’s ironic to see the industry deal with a crisis that probably started with the sale of pangolin meat at a market in Wuhan. But the food web is passing a severe test so far. It is crucial that, during and after the pandemic, governments do not fall into the wrong campaign for self-sufficiency.
The supply chains behind an iPhone, or an automobile component that crosses the Rio Grande, are coordinating wonders. But the unrecognized star of 21st century logistics is the global food system (see article). From field to fork, it represents 10% of the world GDP and employs perhaps 1.5 billion people. The world food supply has almost tripled since 1970, as the population has doubled to 7.7 billion. At the same time, the number of people who have very little to eat has fallen from 36% of the population to 11%, and a bushel of corn or cut of meat costs less today than it did 50 years ago in real terms. Food exports have increased six-fold in the past 30 years; Four-fifths of people live in part on calories produced in another country.
This happens despite governments, not because of them. Although their role has diminished, sometimes they still set prices and control distribution. The European Union’s agricultural tariffs are four times higher than its non-agricultural imports. A dozen major exporters, including the United States, India, Russia, and Vietnam, dominate staples like wheat and rice. Half a dozen commercial companies, such as Minnesota Cargill and COFCO From Beijing, change food around the world.
Concentration and government intervention, coupled with the vagaries of the climate and commodity markets, mean that the system is finely tuned and can fail, with devastating consequences. In 2007-08, poor harvests and higher energy costs pushed up food prices. This led governments to panic over the shortages and ban exports, causing more anxiety and even higher prices. The result was a wave of unrest and anguish in the emerging world. It was the worst food crisis since the 1970s, when high fertilizer prices and bad weather in the United States, Canada, and Russia caused a drop in food production.
Despite the severity of the current commotion, each layer of the system has adapted. Cereal supply has been maintained, helped by recent harvests and very high stocks. Shipping companies and ports continue to move food in bulk. The change in eating out has had dramatic consequences for some companies. McDonald’s sales have decreased by 70% in Europe. Large retailers have reduced their ranges and have rewired their distribution. Amazon’s grocery e-commerce capacity has increased by 60%; Walmart has hired 150,000 people. Crucially, most governments have learned the lesson from 2007-08 and have avoided protectionism. In terms of calories, only 5% of food exports face restrictions, compared to 19% back then. So far this year, prices have dropped.
But the test is not yet over. As the industry has globalized, it has become more concentrated, creating bottlenecks. Covid-19 outbreaks at several US slaughterhouses have reduced pork supplies by a quarter and increased wild turkey hunting licenses in Indiana by 28%. America and Europe will need more than 1 million migrant workers from Mexico, North Africa, and Eastern Europe to bring in the harvest. And as the economy contracts and incomes collapse, the number of people facing acute food shortages could increase: from 1.7% of the world population to 3.4%, the United Nations consider, even in some rich countries. This reflects a shortage of money, not food, but if people go hungry, governments will understandably take extraordinary measures. The ever-present risk is that increasing poverty or failures in production will lead politicians in panic to store food and limit exports. As in 2007-08, this could cause an eye-for-an-eye response that makes matters worse.
Governments must stand firm and keep the global food system open to business. That means letting products cross borders, offering visas and health checks to migrant workers, and helping the poor by giving them cash, not stockpiling. It also means guarding against a larger concentration of the industry that could grow, if the weaker food companies fail or are bought by larger companies. And it means making the system more transparent, traceable and accountable, with, for example, certification and quality standards, so that diseases are less likely to go unnoticed from animals to humans.
Understanding food as a national security problem is wise; doubling that understanding to self-sufficiency units and forceful intervention is not. Already, before this year, food had become part of a trade war. The United States has tried to manage its soybean exports and apply tariffs on cheese. President Donald Trump has designated slaughterhouses as part of the critical infrastructure of the United States. President Emmanuel Macron has called on Europe to develop its “strategic autonomy” in agriculture. However, food autarky is a hoax. Interdependence and diversity make you more secure.
Cooking a new recipe
The work of the food supply system is not yet finished. Over the next 30 years, supply must increase by approximately 50% to meet the needs of a richer and growing population, even when the system’s carbon footprint needs to be at least halved. A new productivity revolution is required, involving everything from high-tech greenhouses near cities to fruit-picking robots. That will require all the agility and ingenuity that markets can muster, and huge sums of private capital. Tonight, when you pick up your chopsticks or your knife and fork, remember those who are hungry and also the system that feeds the world. It must be left free to do its magic not only during the pandemic, but also after it.■
Dig deeper:
For our latest coverage of the covid-19 pandemic, sign up for The Economist Today, our daily newsletter or visit our coronavirus tracker and story center
This article appeared in the Leaders section of the print edition under the title “The Miracle of Food.”
