COVID-19 could hit agriculture hard in 2020. But most importantly, social distancing and partial lockdowns have affected land preparation and disrupted the cropping calendar. According to the World Bank analysis, supply chain disruptions are also expected to affect food production and food availability through disruptions in supplies of such critical inputs as seeds, fertilizers, equipment, and veterinary medicines. Also, with the inability of domestic producers to reach consumer markets due to transport and movement restrictions.
As a result, the growth rate of agricultural valued-added products are projected to slow from 4.2 percent pre-COVID-19 to 3.4 percent. This projection according to the Bank is because the local food production system is so labour-intensive, worker isolation and illness could further push down food production and put upward pressure on local food prices. However, in 2021–22, post-COVID-19, agriculture is projected to rebound to average growth of 4.3 percent, based on robust growth in the crop and fishery outputs as both subsectors benefit from continuing reforms to enhance private sector delivery of inputs to farmers and better management of fisheries responding to new regulations designed to both maximize revenue and ensure sustainability.
The Economists at the Bank stated that government consumption will go up to 11.3 percent because of higher spending on health-related goods and services. Post-COVID-19, private consumption will pick up in 2021–22 to average growth of 10 percent, based on robust agricultural output, a gradual reduction in inflation, and a steady surge in credit to the private sector. Data from the bank indicated that, the supply shocks associated with COVID-19 are expected to worsen inflationary pressures in 2020. In 2020 Quarter 1, higher demand for essential imports especially for the food related imports that accounted for 19 percent of 2019 imports pushed up food inflation from 5.4 to 9.9 percent.
Also, in Quarter 1, headline inflation (annual average) went up from 14.8 percent in 2019 to 15.6 percent. However, by 2022, headline inflation is expected to moderate to 10.5 percent, supported by tight monetary policy, recovery of domestic food production, and exchange rate stability. “Strong domestic food production in 2021–22 will help dampen domestic inflationary pressures and sustain the downward path of headline inflation. The BSL is also expected to return to a tight monetary policy, which if complemented by fiscal consolidation could further reduce inflation.”
Agricultural exports more than doubled during 2019 as production of palm oil, coffee, and cocoa intensified, reflecting new private sector investments and better support for farmers from both Government and the private sector. ZIJ/17/08/2020
By Zainab Iyamide Joaque