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A blog about economics in the South Caucasus.

Food Security and COVID-19 in Georgia

Food supply systems are crucial to the economies of most developing countries, supplying the largest share of food production, and constituting livelihoods and a key source of income for the majority of the population (FAO, 2020). It is therefore vital to maintain the steady flow of goods and services required from local and international food supply chains to ensure the health of the population, and to protect their incomes and livelihoods.

Lockdowns from the COVID-19 pandemic have created logistical issues and posed challenges to the function of food supply chains all over the world. These disruptions have each affected the availability, pricing, and quality of food and raised concerns about food security (Barrett, 2020). As a part of global food value chains, Georgia has also experienced challenges related to the production, storage, import, and sale of agricultural products. Moreover, Georgia is highly dependent on imports for most types of food. As most strategically important food import markets are rather concentrated, it has led to increased risks due to COVID-19.

In order to lessen the adverse impacts of the pandemic, keep food prices stable, and to reduce input prices for farmers, the state has subsidized the import of nine food products (pasta, buckwheat, vegetable oil, sugar, wheat, wheat flour, milk powder, and beans); purchased additional stocks of sugar, vegetable oil, and pasta; and developed an anti-crisis plan – “Caring for Farmers and Agriculture” – offering farmers direct assistance and sectorial support. However, COVID-19 still posed significant risks to the food security in Georgia.


FOOD SECURITY INDICATORS

Food security is often understood as only regularly having enough food to eat; not just for today or tomorrow, but also next month and next year. In broader terms food security determines people’s general well-being. However, concept of food security is far more complex and multidimensional. According to FAO, food security is food availability, food access, stability of supplies and biological utilization.

Food availability is defined as sufficient quantities of food of appropriate quality, obtained from domestic production and/or imports. The second indicator – food access entails ensuring people have adequate access, both physical and economic to food through growing or purchasing it. Based on this concept the individual has to acquire and maintain appropriate foods for an adequate diet and nutritional level. As for food utilization, it is referred to sufficient energy and nutrient intake by individuals. It is related to good care and feeding practices, food preparation, diet diversity and intra-household distribution of food. The fourth indicator is the stability of the other three dimensions over time, which means that even if person’s food intake is adequate today, they are still considered to be food insecure if they have inadequate access to food on a periodic basis. Adverse weather conditions, political instability, or economic factors (unemployment, rising food prices) may have an impact on food security status.

Examining how food security indicators have performed in each dimension during the COVID-19 pandemic in Georgia proves interesting. However, due to the FAO’s irregular data collection, the most recent data for each indicator was collected across different years. Furthermore, the data for certain important indicators is not available for Georgia, nevertheless we have tried to assess the implications of the pandemic on Georgian food security based on the latest available figures.


AVAILABILITY OF FOOD

One indicator measuring food availability is the average dietary energy supply adequacy presented below (Table 1).

The dietary energy supply (kcal/capita/day) is calculated at the national level to serve as an estimate of the calories from foods available for human consumption. The average dietary energy supply adequacy is over 100% in Georgia and in its neighboring countries. Therefore, on average, food consumption is generally sufficient in simple calorific terms. It appears that over the years this indicator is, slowly, increasing for Armenia and Azerbaijan. However, between 2017-2019, Georgia had the lowest value in the past 10 years. Although there is no more recent data for the indicator, it is likely the rate worsened still under the pandemic.

Table 1. Average dietary energy supply adequacy

INDICATOR ARMENIA AZERBAIJAN GEORGIA UPPER-MIDDLE INCOME ECONOMIES
Average dietary energy supply adequacy (%, 2017-2019) 127 129 114 128

 Source: FAOSTAT, 2020


ACCESS TO FOOD

The income of populations, reflected by gross domestic product (GDP), plays an important role in relative accessibility to food. As can be seen in Table 2, comparatively, Georgia was doing fairly well in 2019.

Table 2. Gross domestic product per capita

INDICATOR ARMENIA AZERBAIJAN GEORGIA UPPER-MIDDLE INCOME ECONOMIES
Gross domestic product per capita, 2019 (in purchasing power equivalent, constant 2017 international $) 13,654 14,404 15,014 16,945

 Source: FAOSTAT, 2020

However, COVID-19 has affected the Georgian economy via reductions in FDI, export of goods and services, and remittances. In addition, uncertainties caused by the pandemic and containment measures have hit consumption and domestic investment. As a result, the reduction in aggregate demand, combined with increased production costs from pandemic-related constraints, have led to negative GDP growth. According to Geostat, the preliminary estimate of real GDP growth in September stands at -0.7%, while the real GDP growth estimate for the first nine months of 2020 is -5%.

Aside from economic access, as represented by income, physical accessibility is also an important determinant to access to food. The movement of foodstuffs via international trade was particularly affected by the lockdown measures, which resulted in the shortage of certain major commodities on the international and local markets. Thus, Georgia’s notable import dependency and inaccessible transport infrastructure translated into higher-priced imported goods.

As Georgia is a net importer of food commodities, disruptions in the supply chains further increased food prices. Moreover, depreciation of the Georgian lari placed further upward pressure on prices. During the first months of the pandemic in Georgia, food prices significantly increased year-over-year. The main explanation being the weakening of the lari against the US dollar; depreciating by 15.8% between March-May 2020 compared to March-May 2019. The GEL further continued to depreciate relative to the USD, with the average GEL/USD exchange rate in October 2020 being 3.22, compared to 2.97 in October 2019 (The National Bank of Georgia, 2020).


FOOD STABILITY

Another stability indicator is food production variability, an extremely important indicator for Georgia, especially during a pandemic. In 2007, the indicator was 32.2 in Georgia, and thereafter it maintained a decreasing trend, which is a positive tendency since the lower the variability the better. However, due to pandemic, the indicator is expected to have since increased.

Table 3. Per capita food production variability

INDICATOR ARMENIA AZERBAIJAN GEORGIA UPPER-MIDDLE INCOME ECONOMIES
Per capita food production variability ($, 2015), (constant 2004-2006 thousand int $ per capita) 32.1 5.7 16.7 2.6

 Source: FAOSTAT, 2020

 

Disruptions to food supply chains, as discussed above, have affected the stability of global and local food supply and access. The export restrictions placed on staples commodities has led to their higher prices. Even though most pandemic-related food export restrictions were temporary, the risk still remains that countries may impose new export restrictions (Espitia et al., 2020). Food system stability is also affected by such increased food prices and the ongoing economic uncertainty, and as currencies are affected, it creates a further risk to stability in global and local food markets. Furthermore, uncertainty over the evolution of the pandemic, and restrictive measures, influences the ability and willingness to invest in the agri-food sector (UNCTAD, 2020b).


FOOD UTILIZATION

FAO’s utilization indicators focus on healthiness and certain influences of healthy eating. One of the utilization indicators of food security is the prevalence of obesity in the adult population. This indicator is related to poor eating habits. Surprisingly, this indicator nearly doubled since 2000 and in 2016, the indicator was 21.7 percent in Georgia, which is 7.8 percentage points higher compared to the same value for upper-middle income countries.

The utilization indicators also specifically focus on children under 5 years of age – with three indicators concerning stunting, wasting, and being underweight – however these indicators have not been recently updated in FAO database.

Nevertheless, UNICEF Georgia has published the indicators for 2018, and their data from Georgia reveals that 1% of children suffer from moderate or severe wasting; 6% of children under 5 are overweight; 6% suffer from moderate or severe stunting; and 2% of children are moderately or severely underweight.

Table 4. Percentage of children under 5 years of age affected by wasting

INDICATOR ARMENIA AZERBAIJAN GEORGIA UPPER-MIDDLE INCOME ECONOMIES
Percentage of children under 5 years of age affected by wasting 4.4 (FAO,2016) 3.2 (FAO,2013) 1 (UNICEF,2018) 1.8

Source: FAO 2020, UNICEF 2020

While, compared to other countries, Georgia performed relatively well before the pandemic based on these indicators, the situation is expected to have worsened due to the virus and the current economic situation.


STRENGTHENING POLICY RESPONCE

In 2020, the COVID-19 pandemic threatens the lives and livelihoods of people throughout the world and Georgia as well. The poorest members of society are in position to fare the worst. Households that experience food insecurity lack access to enough food for an active, healthy life for all household members.  Due to COVID-19 there will be relatively higher number of food-insecure people. The pandemic related trade restrictions caused issues with availability of food. At the same time, worsened economic situation is expected to lead to the deterioration of access, utilization and stability indicators. While demand for food is inelastic, reduced incomes result in lower demand for relatively expensive food products (e.g. meat, milk etc.) with high nutritional value. This in turn leads to lower incomes for respective FBOs.

In order to ensure food security during shocks like a pandemic, it is recommended that policy-makers focus on the following areas:

• Invest in food supply chains, to ensure unhindered movement of food within and across national boundaries; and facilitate food system innovations. Given that social distancing and mobility restrictions may be in place for many months, governments, development partners, and microfinance institutions should seek ways to stimulate innovative and safe food delivery systems, particularly those that create jobs;

• Mobilize new investments to address key food supply bottlenecks at the production, collection, storage, processing, marketing, and distribution phases; encourage cooperation between the government and development partners to support adoption of innovation in food supply chain through investment in hardware and software infrastructure, and enabling a business and commerce environment for both SMEs and large companies eager to play their part in food security during the pandemic and recovery;

• Promote inter-regional trade to reduce risks, incentivize investment, and build food market resilience. The easiest market access, together with low transportation cost for most of the finished goods are in countries that are geographically nearby. This natural advantage has to be nurtured with transport infrastructure and appropriate policies in order to increase degree of trade integration;

• Recognize the importance of local, domestic food markets for smallholders and with regard to these types of markets strengthen national capacities for food security monitoring and analysis; invest in early collecting, analyzing, and publishing data on food security and nutritional health status to improve the efficiency and effectiveness of policy response;

• Recognize the need for initiatives that address the constraints faced by women and youth, by promoting opportunities and facilitating their access to resources.

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This blog has been produced within CARE Caucasus “COVID19 response and adaptation project”, funded by CARE International Emergency Relief Fund. The document has been created in close cooperation of ISET and CARE Caucasus teams. However, its contents are the sole responsibility of the authors and do not necessarily reflect the views of CARE International.


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Tuesday, 11 May 2021

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