For the rural poor, the coronavirus crash isn’t here yet

Since coronavirus lockdowns took hold across the world, there has been a spirited debate about the human costs of social distancing in low-income countries—where those who depend on daily-wage labor risk starvation by staying home—and how those compare against the benefits of limiting the spread of the disease. Lockdown politics and policy have shifted back and forth in countries such as India, Pakistan, Ghana, and Bangladesh. Governments have adjusted policies depending on how vociferous the complaints have been from consumers, business owners, and other interest groups. Leaders have had to weigh the economic toll of distancing, relative to the daily publicity surrounding the escalating numbers of infections and fatalities.

But such comparisons neglect a critical piece of information: Current economic hardships pale in comparison to the likely longer-term costs of continued lockdowns and the more acute deprivation that is likely to occur in the next few months. That's because the majority of the world's poorest people continue to live in rural, agrarian areas where incomes and work opportunities are seasonal and fluctuate with the crop cycle. Up to a quarter of respondents of large-sample surveys of poor rural Nepalis and Bangladeshis report being forced to restrict meals or portion sizes during the three-month lean season, even during normal years. This is true even for households that have enough to eat during the rest of the year.

A joint research team of the Yale Research Initiative on Innovation and Scale (Y-RISE) and the Centre for the Study of Labour and Mobility in Kathmandu tracked 2,600 households in rural Nepal over five rounds of surveys during both lean and harvest seasons, before and after the Covid-19 lockdown, to investigate.

The most pressing danger is that as lean seasons arrive and grain stocks from the last harvest are depleted, continued lockdowns may lead to even greater hunger, malnutrition, and desperation than what we have already observed.

Therefore, governments deciding whether to extend lockdowns must think carefully about whether the economic pressures that poor citizens are currently experiencing will get better over the next few months or worse. Unfortunately, in much of the world, the answer is worse.

That's because a continued lockdown could exacerbate the pre-harvest "hungry" season deprivation if the lockdown and lean periods overlap. A second concern is that a lack of agricultural investments in fertilizer and migrants traveling to cities temporarily for work—both of which are being held back now—will lower agricultural productivity, incomes, and savings in the near future, perpetuating cycles of poverty.

In 90 villages in western Nepal, our research team has tracked labor mobility, wages, remittances, food security, and mental health at monthly intervals since September 2019; we then conducted phone surveys in April, immediately after the lockdown measures were enforced. The sharp declines in post-lockdown work opportunities and income evident in the limited data are quite stunning. Total hours in income-generating (wage or non-farm business) work for men have decreased 75 percent since January. Total work hours in April are significantly below even the pre-harvest lean season in October. This reduced economic activity will push many families below the poverty line.

Those who travel in search of work face even larger declines in income. Social distancing has been especially difficult for families that rely on a migrant wage earner because there has been a 61 percent dip in remittance receipts since lockdowns began, forcing migrant laborers to remain idle. This is largely because migrant workers who would normally be away, earning income elsewhere, were forced to return home. In Nepal, 65 percent of the migrants who were in either India or urban areas of Nepal between Jan. 1 and April 1 returned home in a rush during the first two weeks of April. Further, migrants who remained in Nepali or Indian cities are remitting only half of what they used to send before the lockdown. The usual outflow of migration has almost stopped. A prolonged lockdown therefore implies lower future remittances.

When Y-RISE, in partnership with the Nepali NGO Backward Society Education, delivered loans to some of these rural households during the pre-harvest lean season in 2019 in a randomized controlled trial, they invested a large portion of that money buying fertilizer. As a result, agricultural investment in 2019 by loan recipients was significantly higher than those who did not receive such loans. The fact that parts of extra income are invested strongly suggests that the substantial erosion of income we observed in April will likely lead to lower investments in fertilizer in the upcoming planting season in June and July. This will lower yield during the November harvest, perpetuating the cycle of poverty and hunger.

The income loss has also caused food insecurity in April to rise to levels typically only observed during lean seasons. Indeed, 65 percent of survey respondents worried about having enough food in the house when we spoke to them in late April. As a benchmark, that number was 67 percent in September and October 2019 (during the pre-harvest lean season) and 43 percent in January, after the rice harvest. Similarly, 22 percent were forced to reduce the portion size of their meals in April, compared with 26 percent during the 2019 lean season and 13 percent in January.

What is most concerning about these numbers is that the deprivation reported in April took place during the wheat harvest—a period when people should have comparatively easy access to food. It is fortunate that this Covid-19 crisis hit during the season when poor rural households still have some grain stocks to draw down. If the lockdown is prolonged into July or August, then the crisis will be layered on top of the regular annual period of food insecurity, leading to even greater desperation, hunger, and malnutrition than now.

We have tracked the steady depletion of grain stocks in our data from rural Nepal, which have declined 40 percent on net compared with January and 25 percent between mid-April and mid-May. If this trend continues, the risk of hunger and malnutrition will reach dangerous levels during the upcoming lean season.

The seasonality inherent in agrarian economies has two important implications for policymakers in low-income countries. First, while the economic costs of lockdown are already quite concerning, they still do not provide a complete sense of how much worse it could get when the lean season arrives in August. After all, 2019 was a normal year by all accounts, and even then, food deprivation quadrupled between April and September. The double whammy of the upcoming lean season and an ongoing Covid-19 lockdown could lead to excess deaths from hunger and malnutrition.

The double whammy of the upcoming lean season and an ongoing Covid-19 lockdown could lead to excess deaths from hunger and malnutrition.

In the longer term, the investments that are being held back now—whether reduced fertilizer purchases or lower emigration rates—will have dramatic effects on agricultural productivity, remittance income, and food security in a few months. Even if the rural poor are surviving right now, governments cannot become complacent and extend the lockdown on that basis. Lower migration today will cause deprivation and hunger in a few months due to lack of remittances. And the current shortages and looming wave of food deprivation will permanently affect productivity, welfare, and the cognitive and physical development of children—perpetuating poverty for years to come.

Covid-19 remains an important public health threat that needs to be brought under control. Given the urgent need to balance disease and mortality risk stemming from both the coronavirus and economic deprivation, governments should pursue smart containment strategies that pay attention to the regional variation in disease risk, to specific activities that are critical for maintaining food security, and to the specific sectors the poor depend on for maintaining their livelihoods, instead of extending broad-based lockdowns that impose large human costs on the poor.

Ahmed Mushfiq Mobarak is an economics professor at Yale University, where he directs the Yale Research Initiative on Innovation and Scale.

Disclaimer: This article first appeared on foreignpolicy.com, and is published by special syndication arrangement.