Food systems provide essential services in terms of food security and nutrition and livelihoods. At the same time, food systems are vulnerable to a wide range of shocks, including natural disasters, conflicts, animal disease outbreaks, and policy shocks. Safeguarding the essential services provided by food systems in the face of shocks is thus critical.
COVID-19 put unprecedented stresses on food systems. Although food supply chains in OECD countries adapted relatively quickly, there were bottlenecks in farm labour, processing, transport and logistics amid a momentous shift in demand. The disruption of livelihoods due to COVID-19 also threatened many households' access to food.
The services provided by food systems are too important to rely on a “reactive” approach of dealing with shocks after they occur. Instead, farmers and supply chain actors, governments, and other stakeholders need to take a proactive approach focused on building resilience. Recent work by the OECD defines resilience in the context of food and agriculture as the ability to prepare and plan for, absorb, recover from, and more successfully adapt and transform in response to adverse events.
To be useful in practice, it is important to refine this definition by specifying the resilience of which outcome (e.g. livelihoods, food security) to which type of shock (e.g. climate change, price volatility, or all shocks in general), and at what scale (e.g. the level of the field, the farm, the region, the country, or globally). Some actions (e.g. better education and training for farmers) might increase resilience in more than one way, creating synergies. Other actions might improve resilience in one way while reducing it in others, creating trade-offs. For example, a farmer can use groundwater irrigation to become less vulnerable to drought, but this may reduce the availability of water for other farmers. Because of these synergies and trade-offs, it is important to take a systems view to develop a coherent approach – as is true for many other policy challenges facing food systems.
Applying a resilience lens also means making decisions and policies with a long-term focus in mind, and planning for a range of possible scenarios and a variety of adverse events. Participatory processes involving a wide range of stakeholders are key to the development of effective approaches to resilience. Setting the policy agenda in a collaborative participatory setting will allow all actors to consider relevant information on risks and evaluate the trade-offs in the various approaches. With this improved understanding, individual stakeholders are better positioned to make appropriate adjustments in their own behaviour.
In the context of agricultural production, the OECD has identified three layers of risks. Each layer requires a different response. First, normal variations in production, prices and weather do not require any specific policy response: such frequent but relatively low impact risks can be directly managed by farmers as part of their normal business strategy, for example by diversifying production or adapting their production technologies. At the other extreme, infrequent but catastrophic events can cause significant damage and can affect many or all farmers over a wide area – for example, a severe and widespread drought, or the outbreak and spread of a highly contagious disease. These will usually be beyond farmers’ or markets’ capacity to cope. Governments may need to intervene in such cases. In between the normal and the catastrophic risk layers lies a layer of “marketable risk” which can be managed through insurance and futures markets or through co-operative arrangements between farmers.
All stakeholders should clearly understand their responsibilities for managing risks. For example, risk-based due diligence, as recommended in the OECD-FAO Guidance for Responsible Agricultural Supply Chains, is a management framework through which enterprises operating along the agri-food value chain can identify and prevent supply chain risks and observe government-backed standards for responsible business conduct. But even in cases where farmers, supply chain actors or other stakeholders are best placed to take action, the government can play a supporting role by providing information, supporting knowledge systems, and creating an overall enabling environment. Initiatives such as investments in infrastructure, training, and R&D can improve long-term outcomes while at the same time building resilience in the short term.
Because domestic shocks tend to be more frequent and more severe than international shocks, international trade has an important role to play in reducing volatility of food supplies. Initiatives such as the G20-led Agricultural Market Information System and foresighting exercises such as the OECD-FAO Agricultural Outlook can improve transparency regarding supply, demand, stocks, and prices, and hence improve the effectiveness of trade. But in order for international trade to play its buffering role, it is important that policy makers refrain from using policy measures that undermine the functioning of international markets. During the 2007-8 food price spikes, export restrictions or bans in several key exporting countries exacerbated volatility in international markets. By contrast, during the COVID-19 crisis countries have mostly refrained from using such instruments, and global value chains for food and agriculture have withstood the shocks relatively well.
Unfortunately, current policy settings often do not contribute to building resilience in food systems, and in many cases undermine it. For example, fisheries policies often subsidise fuel or the construction of new vessels, thus stimulating overfishing. By contrast, investments in “no regret” policies that build resilience, such as R&D, account for only a small share of total support to agriculture or fisheries. For example, across the 54 countries covered by the OECD Agricultural Policy Monitoring and Evaluation 2020 report, total support to agriculture was more than USD 700 billion per year in 2017-19, but less than 20% of this total goes to investments such as R&D or infrastructure. Instead, the bulk of support tries to raise farm revenues through higher prices, subsidies, or direct payments. In many countries these policies stimulate the production of specific commodities, thus reducing farmers’ incentives to diversify or adapt.
