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A closer look at how the coronavirus is affecting global food supplies

03 April 2020

The COVID-19 pandemic has already disrupted the world’s food supplies and is causing labour shortages in the agriculture sector – how resilient is our food system?

In a recent analysis published in Reuters, Gus Trompiz explains the market trends around the global coronavirus pandemic.

He begins by exploring the possibility of food shortages and the effects of erratic consumer demand. Earlier this month, panic buying by shoppers cleared supermarket shelves of staples such as pasta and flour as populations worldwide prepared for lockdowns.

Meat and dairy producers as well as fruit and vegetable farmers struggled to shift supplies from restaurants to grocery stores, creating the perception of shortages for consumers.

Retailers and authorities say there are no underlying shortages and supplies of most products have been or will be replenished. Bakery and pasta firms in Europe and North America have increased production.

Food firms say panic purchasing is subsiding as households have stocked up and are adjusting to lockdown routines.

The logistics to get food from the field to the plate, however, are being increasingly affected and point to longer-term problems.

In the short-term, lack of air freight and trucker shortages are disrupting deliveries of fresh food.
Longer-term, lack of labour is affecting planting and harvesting and could cause shortages and rising prices for staple crops in a throwback to the food crises that shook developing nations a decade ago.

With many planes grounded and ship containers hard to find after the initial coronavirus crisis in China, shipments of vegetables from Africa to Europe or fruit from South America to the United States are being disrupted.

A labour shortage could also cause crops to rot in the fields.

When looking at the commodity markets, Trompiz notes that swings in commodity prices aren’t necessarily passed on in prices of grocery goods. Food firms typically buy raw materials in advance in an effort to keep prices stable. However, sustained price hikes will eventually be passed onto consumers. Some poorer countries subsidise food to keep prices stable.

The United Nations' Food and Agriculture Organisation has warned that a rush to buy by countries that rely on imports of staple foods could fuel global food inflation, despite ample reserves of staple crops.

When exploring the possibility of wider food shortages, analysts say that global supplies of the most widely consumed food crops are adequate. Wheat production is projected to be at record levels in the year ahead.

However, the concentration of exportable supply of some food commodities in a small number of countries and export restrictions by big suppliers concerned they have enough supply at home can make world supply more fragile than headline figures suggest.

Read the full analysis here.



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