The World Trade Organization (WTO) Secretariat’s latest report looks at the effect of the COVID-19 pandemic on world agricultural trade.
The outbreak of COVID-19, and its rapid spread, alarmed many governments and agricultural producers, triggering immediate policy responses leaders.
Many of the initial reforms had been projected to have a negative effect on the agricultural sector. But in fact agriculture has shown resilience, with an output in trade that has done better than other sectors.
The initial response steps were aimed at resolving the most pressing issues around the world, such as controlling the virus to save lives, and maintaining food security at home.
These initiatives, in addition to lock downs, included policies that both facilitated and limited trade in agriculture, tariff cuts and export restrictions. Stockpiling, the process of accumulating a large stock of materials, also increased.
Flows of agricultural trade have changed dramatically, owing in particular to a sudden change in consumption habits caused by the measures placed in place.
Initial steps focused on ensuring immediate food availability and this was followed by a second phase of policies aimed at mending disrupted supply chains and helping farmers cope with the “new normal” situation.
Although several governments have slowly eased lock down policies, removed many export restrictions and implemented domestic support measures to support the agricultural sector, the pandemic continues to spread through various parts of the world and is expected to continue to affect demand and supply for agricultural products.
Trade in agricultural products was more robust than trade at large. Even though overall merchandise trade dropped sharply in the first half of 2020, agricultural and food exports rose by 2.5 percent in the first quarter of the year compared to the same time in 2019, with an increase of 3.3 percent in March, followed by an increase of 0.6 percent in April, while the preliminary figures for May suggest a slight decrease of 1.3 percent compared to 2019.
This overall picture conceals the fact that demand for some agricultural products such as raw fur skins, wool or flowers has fallen significantly, while demand for staple food, processed fruits and vegetables rose reflecting initial panic buying and increased home-based consumption.
In April 2020, exports also fell for several food items, especially for items of higher value, such as fresh produce, dairy and meat, which are generally more dependent on sales to restaurants, schools and the tourism sector than on households.
As of the beginning of 2020 food prices were already on a downward trend. The COVID-19 crisis has further worsened it. While June saw the first rise in world food prices since early 2020, prices are expected to remain at low levels in the midst of economic downturn.
Although world food supplies and production rates are at or near all-time high for the most commonly consumed staples – rice, wheat and maize – and lower prices make food more accessible, the COVID-19 pandemic has increased the number of hungry people due to its impact on employment and incomes.
According to the most recent estimates from the World Food Program, by the end of 2020, 270 million people could be severely food insecure, representing an increase of 82 percent from before the pandemic.
