The Covid-19 outbreak has rattled food supplies around the world and is disrupting the agriculture sector.
Could food supply shortages be on the cards?
Worried consumers have emptied supermarket shelves in what has become a frenzied panic-buying spree as they try to prepare for national lockdowns aimed at curbing the spread of the coronavirus pandemic.
Fruit and vegetable farmers as well as dairy and meat producers have faced disruptions and difficulties in delivering produce to supermarket chains as the Covid-19 lockdowns become more and more strict; this has triggered the misconception that there are widespread food shortages.
Government officials and retailers have reassured concerned consumers that the food industry is not dealing with any sort of supply shortages as supply and demand is being matched by producers. Food production in the Eurozone and parts of the US has increased as a result of the surge in panic-buying consumers.
Food producers and farmers have reported a dip in panic buying as households have filled up their stocks after a spout of bulk shopping. However, the process of getting produce from farms and factories to consumers faces delays and disruptions which could hint at underlying long-term issues. As the coronavirus continues to spread, industries are feeling the brunt of the pandemic. Economic and business activity has been reduced to record level lows with industries such as the airline sector facing mountainous issues as tourism and demand for flights have fallen to a near standstill. With fewer cargo flights and as companies reduce their workforce and operations to deal with the consequences of a sluggard economy, the delivery of food produce faces disruptions.
As food businesses cutback their workforce and workload, the smooth flow of planting and harvesting could face disruptions in the near future which has the potential of causing supply shortages which would in turn trigger a rise in prices making it more expensive for consumers amidst a challenging time. Consumer sentiment has already been brought to its knees, as economist and investors fear a global economic recession is imminent, disruptions to food supplies could send the economy over the edge.
What is responsible for the food supply disruption?
Following the outbreak of the new coronavirus pandemic in Wuhan, China, airports have been grounded to a near halt and ship containers becoming a rarity, exports and imports of fruit and vegetables from Africa to the bloc and from South America to the US now face disruptions. In addition, workforce reductions could threaten the livelihood of crops.
As harvest season approaches and the spring season moves into action, farmers are struggling to gather enough employees to harvest ripe crops, as travel restrictions and tightened border controls have strangled the stream of migrating foreign workers. For example, France has turned to its own national citizens to counter a massive lack of workers, reportedly somewhere around 200,000 vacancies.
Elsewhere in the world, India is facing workforce shortfalls on a much larger scale. Lockdowns sparked by the spread of the coronavirus have forced masses of employees to stay at home, leaving farms and fields to harvest themselves. The disruptions come during peak harvest season where essential crops such as wheat are ready for gathering.
Could food become more expensive?
Last month wheat futures jumped to the highest level of this year, following the surge in demand for food products like pasta and bread. On the other hand corn futures plummeted to levels last recorded 3 years ago partly because of its role in the production of biofuels left it vulnerable to the escalating oil price war that has erupted after Russia and Saudi Arabia fell out over a proposal to cut oil production ahead of the slump in demand for fossil fuel energy.
Fluctuations in commodity markets do not always affect prices of food products, because food companies traditionally purchase raw materials such as wheat and corn ahead of time to deal with sudden spikes in demand. Nevertheless, if prices continue to increase it will eventually have a domino effect on consumers, making food produce more expensive.
Certain developing nations fund food produce to keep consumer prices balanced.
According to an article entitled World food prices drop in March by the Food and Agricultural Organization of the United Nations, the coronavirus pandemic has led to a slump in demand for certain foods driving the price of staple food commodities.
‘World food prices declined sharply in March, driven mostly by demand-side contractions linked to the effects of the COVID-19 pandemic and the drop in global oil prices due mostly to expectations of economic slowdown as governments roll out restrictions designed to respond to the health crisis.’
‘FAO Director-General QU Dongyu told national leaders at last week’s G20 summit “to make sure that agricultural trade continues to play its important role in contributing to global food security” and to avoid policies that stymie trade flows that underpin food-supply systems. FAO is closely monitoring prices and logistical issue for food commodities with an eye to alerting countries of emerging problems that could exacerbate potential disruptions during the pandemic.’
‘The FAO Meat Price Index fell by 0.6 percent, led by drops in international quotations for ovine and bovine meats, for which export availabilities are large and trade capacity dampened by logistic bottlenecks. But pig meat quotations rose amid surging global demand and as processing facilities were hampered by the restrictions on the movement of workers.’
To read the full article, click here.
There are growing fears amongst experts and economists that panic buying by nations that depend on the constant flow of imports of basic and essential foods could instigate worldwide food inflation, regardless of adequate stocks of staple foods.
Prices of fresh foods including fruit, vegetables and staple grains are more sensitive to shifts in supply and demand levels.
Is there a risk that we could run out of food if the coronavirus pandemic continues to spread?
Experts say that global supplies of the most popular food produce are ample to deal with the increase in consumer panic buying.
But as export restrictions and workforce reductions dominate, food supply chains and operations could face disruptions, especially in terms of fresh produce imported from abroad.
Another potential spanner in the global food supply works could be the birthplace of the coronavirus, China. The world’s second-largest economy is slowly recuperating from the Covid-19 crisis, with early indications that it is gathering its imported agricultural supplies to deal with the demand for certain foods.