The COVID19 pandemic – a double edged sword for agri-SMEs in Africa and Southeast Asia

Something as small as a virus has managed to achieve the almost impossible: to put our globalised world on hold. Each of us now wonder: what does it mean for me, my family, my job and my community?  This pandemic has no borders and it is affecting all dimensions of our interconnected economies, including the systems that support the food we eat. And I find myself wondering: what will the new norm be for smallholder farmers in developing countries that depend on what they sell in national, regional and export markets?

Many countries have put in place measures to restrict movement and ‘locking down’ their countries to reduce the spread of the disease; resulting in unprecedented actions that will affect agricultural value chains. Closure of schools, restaurants, hotels, banning of public gatherings (where food and beverages are consumed) and cancellation of flights and ships that carry goods and agricultural commodities – means the loss of markets and business for farmers and for SMEs that ‘hustle and bustle’ in the agricultural sector.

During our last Adaptive Management meeting for the CASA teams in countries, we looked at the impact of the pandemic on our partners. The situation is dire for many SMEs engaging with the CASA value chain support teams.

In Nepal, large dairy companies have all but halted plans to invest in satellite dairy plants.  Siddarth Khadka, CASA Country Intervention Manager, is not surprised as ‘‘Dairy companies are throwing out milk’’. COVID-19 lockdown measures have resulted in a reduction of the supply of dairy products by 75% in Nepalese urban areas.

“Pond and cage-based fish farmers in Malawi rely heavily on imported floating feed from Zambia. The closing of boarders due to Covid-19 has compromised their ability to access quality feed which will potentially affect fish production during the subsequent season’’ says Mtendere Ngoma, CASA Malawi Country Manager. ‘Both small scale and large-scale aquaculture operators have been affected. In response to this potential squeeze to the sector, the Malawi CASA Country Team is planning to conduct a Rapid Market Assessment to investigate potential interventions to strengthen the capacity of existing public/private sector feed producers to expeditiously exploit the market opportunity emerging from the import restrictions. When all three targeted floating feed producers are running at full capacity, the country’s aquaculture sectors demand for floating feed will be fulfilled through domestic production – thus creating jobs and improving livelihoods of smallholders supplying soybeans and maize for feed production.  

In addition to this specific intervention, the Malawi CASA Intervention Team is also working on a broad-based response intervention to respond to the potential negative impacts of the COVID-19 pandemic. In this regard, the Team is engaging with potential partners to develop alternative platforms for delivery of not only production-related and marketing information but also public health messages to the farming communities and agri-SMEs. The key focus in this case is to exploit the use of online platforms, mobile phone messaging and community radio stations dissemination of these pieces of information.   

But not all is doom and gloom. Some SMEs are taking advantage of new opportunities that are arising as a result of the pandemic and lockdowns.

In Uganda, some SMEs have jumped on new business opportunities that have arisen from the pandemic.  Hans Muzoora, Country Intervention Manager for Uganda says ‘‘Some SMEs have quickly shifted into other business lines in response to the demand caused by the government emergency relief food distribution programme’’. This includes supplying both agricultural commodities such as beans and maize but also non-agricultural products such as salt. ‘‘In fact, some of the sesame famers that we have identified in our programme, are considering diverting to maize production to respond to these emerging opportunities’’ he adds.

A commonality in all the three intervention countries is that SMEs and agribusinesses are coming up with new ideas – mainly for the short term to keep their business afloat – during the lockdowns.  ‘‘Many SMEs feel that after the lockdowns are lifted, things will go back to normal, hence the focus on short-term solutions’’ says Mr Khadka.  ‘‘This however is not the case as the business environment has changed and will continue changing’’ he adds. So, the CASA programme has to assess the resilience of these value chains, even as it encourages their optimism.

The CASA programme is responding by providing strategic technical assistance and undertaking research to generate evidence of the impact of the pandemic on SMEs. This involves supporting SMEs to champion their short-term solutions while determining longer term feasibility and working with them to roll these into longer-term strategies for recovery. It will also include developing new programme plans and focusing on working with SMEs to restructure and reorganize their debt/credit and financing. 

All is not lost! I am hopeful that new opportunities and short-term solutions embedded in longer term innovations will help farmers and agri-SMEs adjust to the new norm.