Trade Responses to Covid-19 Food Security Concerns in Bangladesh

Abstract

Covid-19 Related Border Closures, Trade Restrictions and Food Security in BangladeshThe Covid-19 health crisis can lead to a food security crisis in Bangladesh if proper measures are not put in place. This global pandemic may cause breaks in food supply chains, food shortages and food price spikes in Bangladesh 2 and a broader range of countries. As widespread lockdowns cause the global economy to slow or fall into recession, the risk of exacerbating extreme poverty and hunger is high (WFP, 2020).As the pandemic spreads and its economic impact deepens, the World Bank has proposed several measures to address food security concerns in Bangladesh. Specifically, maintaining food security will require special attention to ensure: (i) functioning food markets and value chains (domestically and internationally); (ii) maintain purchasing power (social protection measures) of the rural and urban poor, including the large informal sector; and (iii) safeguard production of the next agricultural season (input and labor supply) (World Bank, 2020a).Although at this stage, trade-related disruptions seem less acute than domestic supply chain disruptions, border closures may pose short-term food security challenges in Bangladesh. World Bank (2020a) notes that globally, food security risks are currently higher from disruptions to domestic supply chains than international trade as exports seem to remain largely unaffected by significant logistics disruptions in exporting countries with major ports and sea freight channels still operating and only air freight severely affected. However, connectivity and logistics challenges 3 in importing countries such as Bangladesh can affect the availability of essential food products. Recent reports indicate that Chattogram Port has run out of storage space 4 . A queue of 20 container vessels are waiting in outer anchorage. Storage reached 44,191 containers (twenty-foot equivalent units) against a capacity of 37,620, with 3,032 refrigerated containers against a capacity of 1,620. The national shutdown has disrupted normal transportation routes. Furthermore, border closures may lead to substantive disruptions of informal trade flows in many developing countries. For instance, Taneja (2014) finds that informal trade was 50 percent of formal trade in South Asia, with processed and unprocessed food products and livestock representing a substantive share of informal flows between Bangladesh and India. Thus, informal trade disruptions may have an immediate impact on food security in Bangladesh especially for the poor.1 This note was prepared by Nora Dihel (Senior Economist, MTI) and Nadeem Rizwan (Consultant, MTI). Helpful comments were received from Paul Brenton (Lead Economist, MTI), John Keyser (Senior Economist, MTI), Nazmus Sadat Khan (Economist, MTI) and Sebastian Saez (Lead Economist, MTI). 2 The food security issues are likely to aggravate during the month of Ramadan (starting at the end of April) when the demand for import-dependent products such as edible oil and sugar is expected to rise....

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