As more countries go into lockdown to fight the coronavirus outbreak, the impact on agriculture and food is still very unclear. There has been a lot of talk of lost consumption, especially with the closure of restaurants, but some analysts point out that people are likely to eat just as much – if not more – while they are confined at home.
Governments are urging citizens not to resort to panic buying, arguing that it was a bigger threat to the food supply than the coronavirus itself. A Spanish official explained that with one supermarket for 1,000 people or less, the country was well equipped to keep everyone supplied. Labour shortage is an issue, however, especially in Italy where most of the food is transported in trucks. However, Italian consumers have reportedly responded well to a call from the authorities to focus on buying local products to support local farmers and businesses.
In the UK, where almost half of all the food is imported, the government confirmed that there would be no shortages as planes and ships continue to supply the country. Having said that, a food policy expert warned that UK supermarkets had stopped storing significant quantities of food in the last few decades in favour of a “just in time approach” which could easily be disrupted. As such, supermarkets have started rationing what people can buy. One online shopping service, Ocado, had to interrupt operations as it could not deal with the huge demand.
Psychologists have been attributing panic buying in supermarkets to people’s need to regain control in a situation where they have little to no control. An expert at University College London explained that toilet paper had become, quite literally, an “icon of mass panic” because people tend to look for “value and volume” when panic buying and toilet paper definitely fits the bill. In Turkey, meanwhile, thousands of people rushed to buy lemon cologne. But what’s probably more telling is what is being left behind. In the UK, buyers have focused on the cheapest options, like baked beans and ready-made meals. Premium products, which often include low sugar and fat versions, tend to still be on the shelves. Similarly, the gluten-free aisles continue to be full.
Beverage alcohol companies have offered to supply hospitals and governments with ethanol amid sanitiser and disinfectant shortages. Greek customs are planning to transform confiscated bootleg alcohol, for instance. In Sweden, Absolut offered to supply alcohol, as did France’s luxury brand LVMH. There have been multiple warnings, however, not to use vodka directly to wash hands because the alcohol content is too low to kill the bacteria. Talking of alcohol, those stuck at home have come up with new cocktails, including the Quarantini which seems to have gone viral.
In the US, the closure of restaurants and schools is having a catastrophic impact on small farmers, many of which supply these establishments directly. The impact of the virus could be especially devastating for the farm community given that over one-third of farmers are above 65 years old. Besides, farmers are struggling to get the labour they need, a situation that is expected to get worse.
On the other hand, the fall in fuel prices will help lower costs of production, especially for farmers who are just starting to plant. However, farmers who grow biofuel feedstocks, notably corn, are very concerned about the ramification of the collapse in oil prices and demand. Some say that the US ethanol demand could fall by as much as 40% this year, which would mean a lot of unused corn. The effects could be felt for years and many ethanol plants, which are reeling from several years of hardship, might have to permanently close down.
Brazilian farmers, on the other hand, are already benefiting. The Real dropped to a record low last week, falling below the BRL 5/USD level and almost 20% below its value at the start of 2020, which is translating into record-high prices for farmers. As such, farm exports from Brazil in March and April are expected to surge.
There was a moment of panic, however, when workers in Brazil’s Santos port announced a strike because of the exposure risk to the coronavirus. A state official pointed out that the worker union’s decision to gather several hundred people to decide on whether they should strike completely defeated the point of reducing the exposure risk. He warned that the government would declare a state of emergency which would scrap their right to strike as so much of the economy is dependent on ports operations. In the end, port operators managed to find an arrangement, including avoiding large gatherings during operations.
In China, the agricultural sector could end being the least impacted by the virus outbreak. The government has released millions in subsidies to help farmers acquire machines and tools to ensure they can start planting and harvest again as soon as possible. For instance, agricultural drone maker XAG expects revenue to go up fourfold this year. Smaller farmers are expected to be worse hit, however, which could lead to a wave of consolidation.
The other good news coming out of China is that food consumption is coming back, with a vengeance. A consumer survey in Jiangsu Province showed that 90% of respondents aimed to catch up on consuming what they had missed out as business goes back to normal. Restaurants that reopened reported a surge in bookings, with one barbeque shop saying it had consumers ordering the entire menu. Another tea shop reported one consumer ordering 77 cups of tea.
This summary was produced by ECRUU
