Umar Hilmy
This article is published in and is part of our Vol 1. Issue 4 Journal with a special focus on Food Security - Editors
The COVID-19 pandemic has disrupted global supply chains, causing widespread alarm with regards to food availability and simultaneously caused an economic downturn so severe that, without the right policies in place, it could result in widespread famine throughout the Maldives. In response, the State Trading Organisation in collaboration with the Ministry of Fisheries, Marine Resources and Agriculture has set up the Agri Centre, an institution that is to purchase locally-farmed produce with the public being urged to grow starchy tubers, amongst other key crops. While this policy response is likely to bolster the agricultural industry in the short run and also potentially set the foundations for an industry that will be much larger in scale and output going forward, it risks being a misguided and a reflexive bid for self-reliance and a precursor to destructive protectionism. With fast dwindling usable foreign currency reserves to purchase essentials and a paralysed tourism industry unable to produce a significant enough tax yield to see us through the pandemic, an aggressive drive to grow our food locally is necessary. However, such an initiative must be sustainable and in the best medium- and long-term interests of our food security strategy as well.
The fundamental problem with a policy rooted predominantly on self-reliance is that it contradicts the theory, and practice, of comparative advantage and could eventually produce adverse results. To delve into this point, let us first explore what a comparative advantage is. An economy has a comparative advantage over another economy when it can produce goods and services at a lower opportunity cost than that of its trade partners. It is one of the foundational principles of international trade. And there is consensus amongst economists that world trade; with countries specialising in the production of goods and services that they can produce better or cheaper than the rest of their trade partners, increases economic growth and raises living standards. This is the reason that the iPhone is manufactured in China, though designed a world apart in Silicon Valley. China is simply better at manufacturing smartphones for various reasons. They have cheaper labour, different regulations, and strong manufacturing infrastructure.
However, with COVID-19, one of the key assumptions for international trade and the global food distribution system has been turned on its head. We have never had restrictions of movement and trade on a global scale after the world became this globalised. In the confusion a situation like this creates, it is possible to misguidedly attempt to overshoot.
STO and the Ministry of Fisheries, Marine Resources and Agriculture have informed the public that even staple foods like rice can be produced in Maldives. That maybe so. But the question of whether the public should invest savings or borrowed capital in the midst of a major economic downturn, to produce rice due to assurances that the Agri Centre will purchase their produce, must be asked. This is because global supply chains and international trade have not ceased for good. Despite the current economic climate, the world will most likely adapt and forge a ‘new normal’. The world has seen many pandemics and they were all disruptive until normalcy eventually crept in. So, in a post lockdown world, it is possible that the rice, or any other crop produced in Maldives cannot compete in terms of price or availability with rice or other such crops from countries that have long held a comparative advantage over the Maldives. This would not be the best outcome for those that are urged to invest time and money to produce staple foods. And it could be an outcome that is just a few months or a year or two away, depending on how long the pandemic lasts.
A sack of imported rice costs MVR 240, and a kilo costs MVR 4.80. While a technology driven agricultural revolution that could help the Maldives to compete with these prices would be a most welcome development, it is still questionable whether these crops can sustainably and competitively be produced here in the long run. Potentially game changing solutions like growing genetically edited rice in the ocean and turning to micro algae for an alternative source of protein, to name a few, all hold promise but are yet novel and require heavy investment.
Once global supply chains restart, the private sector would have the incentive to import cheaper crops from abroad, produced at scale with lower costs of production to be sold cheaper than local produce. To keep up with such developments, policy makers could be forced to support an industry that the public has heavily invested in; leading us down a path of protectionist tariffs and price controls that will ultimately be detrimental to the consumer as well as to our overall food security strategy.
It can however be argued, in the words of John Maynard Keynes, that in the long run we are all dead! That the alternative to not attempting such a feat, could potentially lead to severe food shortages and even famine. And we should make every attempt to avoid such a scenario. But to mistake necessity for longevity could also prove fatal. And for the public to be given the impression that this will be a permanent solution risks moral hazard. A more prudent approach might be to inform the public that growing locally is what is required now. And that we need to produce as much as possible at the moment and also that we can continue producing a much higher percentage of our nutritional needs going forward. This, combined with strategically sourced essential crops, be it in the form of aid or debt, might be an option worth exploring for the immediate future.
For the medium- and long-term, we can adopt successful strategies from countries that have done well on the food security front, and we need not look too far for good examples to emulate. Singapore, a similarly land scarce and small country, topped the Global Food Security Index for the last two years. Though they still highlight the fragility of their system in the context of a global pandemic, Singapore fared vastly better than most small import dependent nations, aided by their food stockpile, diversified import sources and generally robust food security policy. While it remains to be seen if Singapore can defend its score on the Index post pandemic; there are important lessons we can learn from them.
The Global Food Security Index, developed by the Economist Intelligence Unit and supported by Corteva Agriscience, considers in the annual study, the affordability, availability, quality and safety of food in the countries they assess (unfortunately Maldives is not yet on the Index). Singapore came in first with an overall score of 87.4 but still has room for improvement in comparison to developed western countries like Ireland and the United States that surpass Singapore’s score in the quality and safety category. Nevertheless, it is exceedingly impressive that a country like Singapore, with parallels to the Maldives in terms of land scarcity and a relatively small population, managed to surpass the rest of the world and top the Index for two consecutive years.
So, what is the Singaporean formula? The Singapore Food Agency, a statutory board with the mandate to ensure food security, has a multifaceted approach which we in the Maldives can borrow from while crafting a food security strategy that additionally factors in the unique logistical challenges we face owing to our dispersed nature. Such a strategy might look as follows:
Diversification of imports:
We can ensure that no single critical item comes from a single location however stable the supply is. Singapore imports food from more than 180 countries. Currently, we are overly reliant on our South Asian neighbours for essential crops and most other crops too. Importing essentials from a variety of sources would be a safer approach.
Growing locally:
While growing locally is a challenge for the Maldives, agricultural technology has evolved drastically, and it is now possible to grow a variety of crops via hydroponic and aquaponic systems along with a vast array of newly developed agri-tech solutions. These systems can even be made weather independent and require relatively small spaces and can even be setup in urban areas as well. Singapore had a ‘’30 by 30’’ goal – to produce 30% of their nutritional needs locally by 2030, pre-pandemic. This might now be revised with an even more ambitious goal. We too can set a similar goal; and we do arguably have an advantage in terms of land availability in the outer atolls that can be put to use to produce enough crops to cater to a significant percentage of our nutritional needs. The government can also invest in or promote initiatives like Singapore’s 18-hectare Agri-Food Innovation Park, a facility dedicated to high-tech farming and research and development in the sector.
Growing overseas:
Singapore grows a significant chunk of their food crops in neighbouring Malaysia, where they own large estates optimised to secure the supply of essential crops. We too can adopt a similar strategy where STO or any other such body can own similar ‘’grow overseas’’ estates in neighbouring countries like Sri Lanka, India or even Malaysia and Indonesia.
Strengthening distribution networks:
We require an efficient inter-atoll distribution system to ensure that locally produced crops get from farm to market to table feasibly and reliably. Hence, we must invest heavily in creating robust distribution systems that will allow crops, both imported and grown locally, to adequately and efficiently be distributed throughout the country.
Harnessing the power of big data:
Data backed policy making is a fundamental pillar of any successful national strategy. And data science has revolutionised agriculture by allowing us to eliminate inefficiencies and increase productivity by aiding our decision-making abilities. With sensors, we can digitally map soil and crops, recommend fertilisers, detect diseases, and manage pests and set up automated irrigation systems to name a few recent innovations. We also need to gather data on our nutritional needs, how best to cater to them, required yields of all crops, logistical requirements and how to produce essential nutrients that are currently lacking in our diets, to aid better decision-making.
Increasing economic growth:
Sustained economic growth is essential for any food security strategy. It is the common factor that contributes to availability, affordability, quality, and safety. It is the reason Singapore has been able to top the Global Food Security Index while no other Asian country made it onto the top 20. The security of having sufficient reserves to source essential food items during a possibly extended downturn can only be achieved through a period of growth where the state has been fiscally responsible. This needs to be a priority come the next upturn, lest we forget.
In recovering from this pandemic and creating a new normal, we as a nation could benefit from a reassessment of our food security strategy. We can harness innovative, climate resilient technologies and adopt a data backed, well-rounded strategy to ensure that we are resilient in the face of shocks to global supply chains and that the essential food needs of Maldivians are met without fail, come rain or shine.
About the author
Umar Hilmy is the Editorial Director of Dhiconomist.com, an online magazine on a mission to cover crucial issues spanning economics, finance, business, science, technology and society with a Maldivian focus.
Mr. Hilmy is also a practicing lawyer and holds a Bachelor of Laws (LLB) from the University of London.