A Hungry World - EconVue Spotlight - August 2020

posted by Lyric Hughes Hale on August 26, 2020 - 11:54am

Back to work after COVID, China is experiencing widespread food shortages. Post-pandemic, a combination of historic flooding and drought has caused China's leadership to worry about food supplies, and take action. Limitations on banquets and requests from local cadres to skip a patriotic meal have been widely reported. This past winter, the world watched China struggle with COVID before it literally went viral. Could China be the vanguard of a global food shortage caused not by aggregate supply, but by distribution bottlenecks? I believe that this new crisis is the reason that China is coming back to the negotiating table with the US for the Phase I trade talks, a partial retrenchment of its new dual circulation economic model aimed at lessening China's dependence on the outside world.  

Oxfam and the United Nations Committee on World Food Security say risks to food supplies are growing worldwide. According to CSIS, at the beginning of 2020, 135 million people faced acute food insecurity; by the end of this year the number will be more than 265 million. Conflict zones such as Yemen, Syria, Lebanon, and of course North Korea are already experiencing starvation conditions, Africa has the highest rate of malnutrition in the world, almost 20%.  The UN report forecasts that malnutrition will double as a direct result of the pandemic, and eventually more people will have died of hunger than from the disease itself. Similarly to the WHO, existing international organizations do not have the scope or authority to avoid this disaster. 

It's not only war-torn or failed states such as Venezuela that are facing a hunger epidemic. Depressed economic conditions as a result of COVID have clearly resulted in food insecurity in rich nations such as the US, where 29 million Americans report not having enough to eat. Food bank lines have stretched for miles in cities across America, and school closures have meant that children who depend on school for at least one meal a day have nowhere to go to replace those meals.

Here in Chicago, school kitchens stayed open even as classrooms were closed. Last year, schools in the US served 20 million free lunches each day. As school reopening dates change food distributors, especially of fresh food, don't know how to estimate and satisfy demand. Children are being deprived not just of education, but of the basic nourishment required for their brains to grow.  We have decried the lack of Internet broadband or a laptop for 30% of the country's students; it is probably these same students who also face food insecurity. All of this will lead to worsening inequality over time.

The linkage between hunger and political unrest throughout history is obvious, and unless we address these issues soon, the world will not be a place of have and have nots, but of the hungry and the fed (no pun intended). The economic consequences of food shortages are also clear. Rising food prices could be the lever that pushes up inflation in a debt-fueled world where even the slightest uptick in interest rates could break the recovery before it takes hold.

Higher food costs might seem counterintuitive in a world where energy prices, closely related to food prices, remain low. Record crops are forecast for the US this year. Food production hotspots are already seeing permanent cost-saving changes: the meat and poultry industry has rapidly automated post-Covid. Global rice and wheat production is also robust, but as Covid crisscrossed the globe countries such as Russia and Thailand curbed exports while food-importing countries stockpiled. 
The problem that is that it is not the overall volume of food that matters, but how it is distributed: normal trade flows have been disrupted by COVID. Economist Amartya Sen's famous study of the Bengal famine concluded that it was lack of information, not availability of food that resulted in distribution chaos and mass starvation in India in 1943. Creating greater efficiency through information technology could be a worthy, attainable goal for the many non-profits dedicated to global nutrition as well as their technology company sponsors. Otherwise, the hunger games could begin, with lethal consequences for the world and the hoped-for economic recovery. 

https://www.youtube.com/watch?v=FU5akgY30nA. (Lyric Hughes Hale discusses the outlook for US-China relations, 7/30/2020 Bay Area Council)

Research from EconVue Friends & Experts

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As the summer draws to a close, we wish rest and repose to sustain you through the balance of 2020. Next month I'll be speaking about the current state of US-China relations at the Asian Studies Program at Georgetown's School of Foreign Service, on September 18th. Register here for this free event, with many thanks to EconVue contributor Eleanor Hughes.