COVID-19 and small enterprises in the food supply chain: Early impacts and implications for longer-term food system resilience in low- and middle-income countries

Stella Nordhagen; Uduak Igbeka; Hannah Rowlands; Ritta Sabbas Shine; Emily Heneghan; Jonathan Tench

doi:10.1016/j.worlddev.2021.105405

COVID-19 and small enterprises in the food supply chain: Early impacts and implications for longer-term food system resilience in low- and middle-income countries

World Dev. 2021 May:141:105405. doi: 10.1016/j.worlddev.2021.105405. Epub 2021 Jan 29.

Authors

Stella Nordhagen¹, Uduak Igbeka², Hannah Rowlands³, Ritta Sabbas Shine³, Emily Heneghan⁴, Jonathan Tench³

Affiliations

¹ Global Alliance for Improved Nutrition (GAIN), Geneva, Switzerland.
² Global Alliance for Improved Nutrition (GAIN), Abuja, Nigeria.
³ Global Alliance for Improved Nutrition (GAIN), London, UK.
⁴ World Food Programme, Lusaka, Zambia.

Abstract

Food and nutrition security play an essential role in weathering and overcoming the COVID-19 pandemic-and in achieving sustainable development. In most low- and middle-income countries, micro, small, and medium-sized enterprises (MSMEs) play an essential role in food supply chains and thus in ensuring food and nutrition security. However, limited attention has been paid to how these critical food system actors are being impacted by the pandemic and associated measures. This paper helps fill that gap through analysis of data from 367 agri-food MSMEs in 17 countries, collected in May 2020 and capturing early impacts of the pandemic on their operations. About 94.3% of respondents reported that their firm's operations had been impacted by the pandemic, primarily through decreased sales as well as lower access to inputs and financing amid limited financial reserves. Difficulty with staffing was also widely cited. Eighty-four percent of firms reported changing their production volume as a result of the pandemic; of these, about 13% reported stopping production and about 82% reported decreasing production. Approximately 54% had changed product prices as a result of the pandemic. The probability of being severely impacted was significantly higher for firms with <50,000 USD in annual turnover; a larger decrease in consumer mobility for grocery/pharmacy shopping also increased the probability of a severe impact. Surprisingly, the youngest firms and those with the fewest employees (controlling for turnover) were less likely to be severely impacted. Over 80% of firms had taken actions to mitigate the pandemic's impact on their operations and/or staff, and about 44% were considering exploring new business areas, with some seeing opportunities for growth. We conclude by discussing implications for policy responses to address immediate challenges as well as increase long-term food system resilience to support further progress towards sustainable development.

Keywords: Africa; Asia; Covid19 pandemic; Food systems; Small and medium-sized enterprises.