The COVID-19 pandemic has created enormous economic challenges across Latin America, Africa, and South Asia. TechnoServe’s new report tracks the changes to the livelihoods of farmers and entrepreneurs over the past year and highlights the private sector’s role in helping them navigate the crisis.
When COVID-19 began to sweep across the world a year ago, it became clear that farmers, agribusinesses, and entrepreneurs in Latin America, Africa, and South Asia would face disruptions to their livelihoods. But to effectively respond to the crisis, it was important to know exactly how they were being impacted: which challenges were affecting them the most, and how were these changing over time?
To find out, TechnoServe started asking more than 1,000 farmers, owners of food processors, and entrepreneurs. We carried out a series of monthly tracking polls for almost a year, and we’ve recorded the data and insights in the new COVID-19 Impact Report: Rebuilding Global Livelihoods. What we saw was that across sectors and continents, the challenges were significant and fell into three main categories: access to markets; access to supplies; and access to finance.
But even more importantly, the report identifies solutions and strategies that have worked to overcome these challenges. As the pandemic threatens to push 150 million people in extreme poverty, everyone has a role to play in helping to support hardworking people in developing countries, and the private sector has a particularly important opportunity to help. We’re lucky to work with companies that are deeply committed to inclusive supply chains, distribution networks, and local economies, and their visibility into the situation on the ground enabled us to work together to pilot a number of innovative, impactful responses.
So what can businesses do to overcome these challenges? Here are some lessons we’ve learned in our work around the globe.
Overcoming disruptions to markets
As measures to prevent the spread of COVID-19 closed markets, restricted store hours, complicated transportation, and changed consumer behavior, farmers, entrepreneurs, and food processors saw access to markets disrupted. In July, 65% of farmers reported market-access challenges and 64% of small business owners reported reduced demand. While the situation improved as lockdowns eased, by year’s end those figures still stood at 45% and 27%, respectively.
The private sector can play an important role in helping to overcome these challenges. Total Mozambique LNG has been working to build a sustainable horticulture and poultry sector in the country’s remote northern regions in order to support the diversification of the local economy, but COVID-19 forced the cancellation of many of the sales agreements that farmers had previously signed with businesses. As a response, the Catalisa program developed a WhatsApp platform to link producers with buyers and facilitate sales, providing smartphones to groups of farmers to enable their access.
Overcoming disruptions to supply chains
The other side of the coin to market disruptions, many entrepreneurs and farmers faced supply challenges: lockdowns and disruptions on trade often made it difficult and expensive to buy fertilizers, raw materials, merchandise, etc. In July, 54% of small business owners surveyed reported supply challenges. Creative solutions on the ground and the loosening of restrictions reduced that to 15% by December. Farmers reported a similar trajectory, with the share reporting supply challenges falling from 64% in July to 37% in November.
Partners can find innovative ways to help beneficiaries access needed supplies. In India, the Walmart Foundation has been working across the states of Uttar Pradesh and Andhra Pradesh to strengthen smallholder farmers’ access to profitable commercial markets, and one of the approaches to do this has been building the capacity and membership of farmer-owned producer companies that aggregate harvests. Amid the pandemic, however, transportation restrictions made it expensive for farmers to access the inputs they need. The Walmart Foundation and TechnoServe helped the farmer producer companies pivot and aggregate input demand for member farmers, improving access seeds, fertilizers, and other essential items at affordable prices.
Overcoming disruptions to finance
The pandemic also disrupted lending: while farmers and entrepreneurs needed cash to weather the crisis and adapt, many banks, microlenders, and other financial institutions slowed down their lending due to the perceived risk. Unlike in wealthier countries, governments in developing countries have been able to offer little or no aid, leaving farmers and entrepreneurs in a difficult position.
In July, 59% of surveyed farmers, 40% of food processors, and 38% of small business owners reported challenges with finance. While many have since adapted and learned how to manage with limited access to finance, some still have unmet needs: for example, 34% of farmers and 21% of small business owners still reported finance challenges in December.
However, we’ve seen real promise in solutions that couple technical assistance with targeted financial assistance to address key challenges in the value chain.
The Crescer program, an Anglo American-TechnoServe collaboration to strengthen local economic development in rural areas of Minas Gerais, Brazil, has made enormous strides in building technical and business capacity of dairy farmers and cheese producers, as well as improving the regulatory environment and ecosystem to open up national markets for their products. But surveys conducted on the ground found that these producers were particularly impacted by the closure of markets due to COVID-19 and the resulting reduction in cash flow. Anglo American created the Business Recovery Fund to provide emergency financial grants to these producers, and TechnoServe business advisors are providing technical assistance to help them develop and implement impactful plans for using the funds.
A Strategy for the Recovery
Having a comprehensive strategy to address issues around access to markets, supplies, and finance is an important tool for supporting supply chains in these moments. AB InBev, for example, has been tracking how its smallholder suppliers have been impacted by COVID-19 within its sourcing platform so that it can design and carry out effective and timely responses
While there are reasons to be optimistic that the worst of COVID-19 may be over in some countries, the pandemic continues to rage in many places. As a result, farmers and entrepreneurs around the world will continue to face many of the challenges they faced during the first year of the pandemic. But the private sector has an opportunity to play a central role in navigating the crisis and leading the recovery.