COVID-19: Border closures could lead to trade disruptions

With the pandemic, access to food has been a source of anxiety in the West. Panic buying by people in confinement has already demonstrated the fragility of supply chains, as supermarket shelves were emptying in many countries including Canada. Seeing shelves fill up across the network, most consumers felt reassured. Time and time again, experts have reassured the public that food security will never be compromised if borders remain open. The worst of the pandemic, though, is yet to come, which means that anything can happen.

Essentially, trade is based on the principle that no one country can be good and efficient at everything. Canada relies on its partnerships abroad to fill in the gaps in our agri-food economy. We buy and sell with the world and it's the same for other countries. Countries depend on each other. It’s a simple theory, and it’s been working for years.

But in times of crisis, such principles can easily be forgotten. Some governments react unpredictably when fear takes over and begins dictating their decisions. Since the beginning of the COVID-19 crisis, every effort has been made to ensure that trade flows as freely as possible, especially to avoid food shortages. This was the crux of the message from the United Nations and several governments around the world including Canada and the United States.

The UN has gone so far as to say that when acting to protect the health and well-being of its citizens, countries should ensure that any trade-related measures do not disrupt the food supply chain. But the global agency had a more provocative message in its press release this week. It said the world could face a food shortage if authorities fail to properly manage the COVID-19 epidemic.

Keeping markets open without interruption has been the focus, but as governments around the world try to curb the spread of COVID-19 by restricting population movements, international trade and food supply chains are beginning to show signs of slowing down. Agriculture is being affected with the thorny issue of foreign workers, and processing is being disrupted by impromptu factory closings. Trucking, which ensures the connections between links of the chain, is sometimes slowed by more road surveillance. In short, the entire supply chain is under extreme pressure.

The world is decidedly on the brink of a major slowdown in agri-food trades. Borders are becoming more fragile as we get closer to the peak of this pandemic. Uncertainty about the availability of food can literally trigger a wave of export restrictions, creating a shortage on world markets. Such a scenario is highly improbable, but not impossible.

For us, the United States is the wild card. The number of positive COVID-19 cases in the U.S. is alarming, as are the number of deaths. What’s adding more pressure is the 10 million Americans who applied for jobless benefits in March. Considering the size of our own economy, the situation in Canada is slightly worse. These are unprecedented numbers. These numbers are very, very alarming.

According to a recent survey by Angus Reid, a total of 71% of Canadians are either concerned or extremely concerned about the Canadian economy. When a crisis hits, populations tend to stay close to what’s familiar, which is why the buying local movement is getting a little bit of a lift these days. In fact, according to the same survey, 43% of Canadians intend to buy locally once the crisis is over. It's always nice to buy local and support our own economy, but we all need to think about the big picture. More than 60% of the Canadian economy stems from exports.

Things are already getting complicated across the globe. The Russian government has issued a decree establishing an export quota for certain grains until the end of June, as the number of COVID-19 cases in the country continues to rise. The correlation between the number of COVID-19 cases identified and the nervousness of governments is strong. Let’s hope cooler heads prevail in North America.