Food crisis in the seemingly food abundant region as ASEAN

Date : 25 Apr 2020

Report Version


The spread of COVID-19 has put the world through the most uncertain moment of our times. The world has realized the importance of physical distancing, and we are accepting this new normal. However, several imbalances from this pandemic crisis have occurred, and global food scarcity is one of them.

In a seeming food abundant terrain, ASEAN’s enriched natural resources and fit-for-farm climate has not spared the region from the food shortage and security concern. ASEAN had shifted from an agriculture economy to the combination of less agriculture, and more industry, manufacturing, and services and the value-added economy a long time ago. As shown in the below table, a comparison of structure output from the World Development Indicators by the world bank, last updated on March 3, 2020. The regional GDP from agriculture sector has accounted for only 10 per cent of the total GDP volume. On the other spectrum, the proportion in the services and value-added has accounted for more than half, followed by industry, and manufacturing.

 Data Source: http://wdi.worldbank.org/table/4.2

 

Amid the primary infection prevention and control of COVID-19, Agriculture Minister Veng Sakhon has ordered all Cambodian agriculture departments to take immediate measures on ensuring the country’s food security in response to the spread of the coronavirus, Khmer Times on April 14,

For Singapore, the country has been depending on imported food. If any trading partner; such as Malaysia, and Vietnam, doesn’t have the produces to export, Singapore is seriously in a vulnerable position, CNA on April 12.

Source of photo: CNA on April 20, 2020

 

On the opposite end, the COVID-19 freeze of border lockdowns, movement restrictions and retail closures have sent a shock wave on global supply chain, which has resulted in farmers dumping their produces.

"Global supply chain shock has farmers dumping food"

 

Source of photo: CNA on April 20, 2020

 

Under the movement control order (MCO); now extended to May 12, a Malaysian fruit farmer has spoken to CNA reporter, saying that he left the melons to rot in the fields as the order has declined by 50-70%, CNA, April 20.

Under the worst-case scenario in which the coronavirus crisis exceeds nine months (beyond September), the forecasts exports would contract as much as 7.1% in 2020. It is equivalent US$17.42 billion or 557.72 billion baht of shrinking value. Said Aat Pisanwanich; director of the Center for International Trade Studies at the University of the Thai Chamber of Commerce to Bangkok Post on April 1.


Changed by COVID-19

"Consumers are switching from International to Local Brands. The consumer behaviours have changed mostly around; purchase patterns, household expenditure, and food safety concern."

The pandemic has lower the confidence of consumers in the prospect of economic recovery. According to the McKinsey’s survey; on 5,000 consumers across seven countries: Australia, China, India, Indonesia, Japan, South Korea, and Thailand. Around 30-40% of consumers in most countries are worried about meeting their ends meet. However, the number goes up to 70% in Thailand and 53% in Indonesia.

Despite the economic slumps around -8% to -13% in GDP, food retail has remained essential during the pandemic crisis. The household spending has been coupling around the essentials such as groceries, household supplies, and in-home entertainment. In contrast, spending on other categories like eating out, apparel, consumer electronics, and hospitality are likely to decrease.

The survey has also shown that consumers now prefer local brands over international. The COVID-19 has made them prompted to the freshness of food and safety rather than the luxurious consumption of imported brands.

 

 Source: McKinsey & Company, Survey: Asian consumer sentiment during the COVID-19 crisis

 

Implication or Recommendation

Consumer mindsets will continue to shift according to the spread of COVID-19 and countermeasures and stimulus packages introduced by local governments.

To address the new purchase pattern, food retailers need to think about offering healthier and more local food choices, including ready-to-eat and ready-to-cook items. As for customers, it would never be solely about the value for money when they’re making food purchase; they will also take food safety into their consideration.

Retailers will need technologies to adapt to these post-COVID-19 requirements. To name a few, online channels, home delivery, food safety guarantee, and end-to-end tracking are the technologies that can make food safer for customers. The seamless online-offline operation and technology implementation will require an investment to acquire new capabilities and talent either from the new recruitment or the reskill programs of current employees.

Reference:

  1. https://www.khmertimeskh.com/50712467/govt-call-for-urgent-action-on-food-security/
  2. https://www.channelnewsasia.com/news/singapore/big-read-covid19-global-supply-chain-shock-food-shortages-12655836
  3. https://www.bangkokpost.com/business/1890445/utcc-2020-exports-may-fall-b500bn
  4. https://www.mckinsey.com/industries/retail/our-insights/reimagining-food-retail-in-asia-after-covid-19

 

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