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Agricultural Trade & Policy Responses during the first wave of the COVID-19 pandemic in 2020

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EXECUTIVE SUMMARY

The Coronavirus disease 2019 (COVID-19) pandemic has had unprecedented effects on all dimensions of human life. The full economic and social impacts are still unfolding, as the disease continues to spread in all regions around the world. On top of the death toll and overstretched health systems, the virus and the measures to contain its spread have caused a deep global economic recession and increased extreme poverty and acute and chronic food insecurity.

Concerning agricultural markets, COVID-19 has resulted in a dual shock affecting both supply and demand. Measures to control the spread of the disease have affected many supply chain related activities, including production, processing, logistics, and retailing. Border and travel restrictions have often led to shortages in agricultural labour; limited access to inputs such as seeds, fertilizers and pesticides; lower capacity in the food processing industry; and challenges in the distribution of food products. At the same time, significant reductions in income, restrictions on the movement of people and the closure of restaurants and food services induced rapid changes in food consumption patterns.

Despite these shocks, however, the efforts of governments and agricultural sector stakeholders worldwide to keep agricultural markets open and trade in food flowing smoothly have contributed to remarkably resilient agricultural commodity markets.

Overall, effects on global trade in food and agriculture remained limited to short-term disruptions at the very beginning of the pandemic. While disruptions of global trade in basic foods such as cereals, oilseeds, fruits and vegetables were minimal, trade in products affected by shifts in consumption patterns (e.g. beverages and fish) and non-food commodities (e.g. cotton, live plants and cut flowers) declined more sharply during the first months of the COVID-19 outbreak.

The pandemic and its potential effects on agricultural value chains and the global trading system induced concerns over food security and food safety worldwide, leading countries to implement policy measures to curb potentially adverse impacts on their domestic markets.

These policy responses covered a wide range of measures, including export restrictions, lowering of import barriers, and domestic measures. Most of the trade restricting measures were short-lived.
Some major exporting countries imposed export bans or quotas on specific commodities. A few countries imposed import restrictions or introduced requirements for certificates attesting negative COVID-19 test results for the shipments. In most cases, such measures were temporary in their application.

Trade restricting measures can alter the balance between global food supply and demand, with harmful effects on both exporters and importers. In order to avert the pandemic causing a global food crisis, it is crucial to keep markets open, trade flowing smoothly and supply chains functioning properly. The international community played an important role in limiting the use of trade restricting measures during the pandemic. Through several joint ministerial declarations and statements, many countries made non-binding commitments to refrain from using trade restrictions.
Such international political commitments were pivotal in the coordination of a global response to the crisis and in deterring countries from taking unilateral measures that could have further harmed the food security situation in other countries.

At the same time, to ensure the availability of critical food items and contain potential food price increases, many countries lowered existing import tariffs while some countries, even temporarily relaxed technical barriers to trade (TBT) measures on food products, including on content and labelling requirements and standards.

Moreover, several countries increased flexibilities and efficiencies in trade-related procedures and implemented measures to facilitate the flow of agricultural goods and food products. Acknowledging the role of COVID-19 containment measures in hampering trade operations, including the need to provide certificates and other licenses and approvals for trading agricultural products, some governments implemented measures to accept electronic phytosanitary and veterinary certificates on a temporary basis, and simplified import-licensing procedures for selected products.

Measures to support producers and other value chain actors differed among countries. In highincome economies, policies were largely aimed to protect incomes of farmers and processors through direct transfers and loans and promoted food procurement for domestic food aid. They also aimed to support importers and exporters to overcome international logistics and marketing disruptions, for example, through airfreight assistance programmes. In developing countries, policies were aimed to support specific groups of farmers through input subsidies or direct transfers to ensure sufficient domestic availability by expanding food reserves (comprised of both imports and domestic procurement), and to support consumers through domestic price controls and stock release from national reserves.

With the overall global market situation being robust and prospects favourable, the challenge of food security continues to be one of food access, rather than availability. In many developing countries, acute and chronic food insecurity are expected to increase due to the effects of slower economic activity, rising unemployment and reduced remittances from workers abroad. In this context, social safety nets, including unemployment payments and cash/in-kind transfers represent fundamental means to secure incomes and access to food for the poor and vulnerable.
As the full economic and social impacts of the pandemic are still unfolding, and as the disease is still spreading, COVID-19 will continue to be a serious source of uncertainty in the markets with potentially severe implications for access to food and longer-term shifts in global demand and supply of food and agricultural commodities. It is therefore of utmost importance that countries and the international community as a whole continue supporting vulnerable groups in promoting access to food, ensuring open markets and uninterrupted trade flows, and avoiding actions that can jeopardize the food security situation particularly in developing countries dependent on food imports.