The Interdependence of Everything in Global Agribusiness
5 May 2020 When I visited Costa Rica with Business Director Rebecca Bartels in late February, the world was a much different place. The novel coronavirus was still considered a Chinese problem, as other regional outbreaks seemed to be tied to travel from China and cruise ships. Meanwhile public health agencies were starting to see evidence of community spread in Japan, South Korea, Italy, Iran, France, and other hotspots, and affected countries accounted for almost one-third of global GDP. When we returned from our trip in March, people in every part of the world were waking up to potential severity, significance, and impact of a global pandemic.
Still, there was a naïve optimism about the ripple effects, and many around the world considered the possibility that outbreaks could be contained or prevented from spreading throughout the population.
International travel had not been curtailed, and many in the Americas were blind to the potential impact on public health and the pressure it would put on the global economy. Manufacturers and distributors outside of Asia had a pervasive opinion: “We are fine. We have plenty of product in the channel, and it doesn’t look like this will affect us.”
One month later, everything changed. Food demand shifted away from restaurants to retail groceries. Farmers and ranchers watched normal seasonal buying patterns shift before they could react. Food processing plants closed as a result of sick workers. Quarantines and travel bans endanger migrant farm workforces. Job losses are driving and an unemployment boom that will further erode demand for nonessential items.
Stock markets including shares of agrochemical companies are plunging, putting additional pressure on food systems and jobs. Already in the U.S., about 22 million workers filed for unemployment benefits in the four weeks from March 15-April 11, eliminating a decade of new jobs. The IMF said April 14 we’re amid the biggest recession since the Great Depression with real global GDP falling 3% in 2020. Business contingencies change every few days, and we’re now in a state of uncertainty that is unleashing emotional and financial turmoil that will take months to fully understand.
It’s becoming clear the economic crisis will impact more people around the world than the epidemiological crisis that caused it. There is no script or historical guidance to help guide business decisions, and much of what we’re planning for is unknown and could last for the better part of 2020.
We’re also sharpening our understanding of the interdependence of everything. It goes far beyond the integration of our supply chains with our foreign partners and distributors. The chain reaction is so profound that it permeates every facet of operations including the susceptibility of our workforce, national infrastructure, transportation systems, and consumer spending at home and abroad. Even parts of our businesses that were predictable and closely controlled are now at the mercy of the butterfly effect.
Where do we go from here? We keep moving forward, perhaps in different ways. As essential businesses, consumers are developing a new appreciation for how they access safe and affordable produce year-round. We have a unique opportunity to discuss our role in creating stable food systems at a time when people aren’t worried about much else. And the economy will rebound. The IMF is projecting 5.8% real GDP growth in 2021, indicating modest growth, albeit dependent on consumer confidence and jobs.
The task now is to grow market share in the downturn, derisk your supply chain, and poise operations to be able to take advantage of the upturn.
In these times of unprecedented disruption, profound uncertainty, and rapid change, we’re continuing to tell the stories of crop input companies and market conditions during the pandemic. And we are eager for the days that we can look at all this in the rearview mirror. Until then, stay vigilant, safe, and healthy.
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