Impacts of the COVID-19 Pandemic on the Global Agricultural Markets

Abstract

This paper analyses the impacts on global agricultural markets of the demand shock caused by the COVID-19 pandemic and the first wave of lockdown measures imposed by the governments in the first semester of 2020 to contain it. Specifically, we perform a scenario-based analysis on the IMF economic growth forecasts for 2020 and 2021 using a global multi-commodity agricultural market model. According to our results, the sharp decline in economic growth causes a decrease in international meat prices by 7-18% in 2020 and dairy products by 4-7% compared to a business as usual situation. Following the slowdown of the economy, biofuel prices fall strongly in 2020, followed by their main feedstocks, maize and oilseeds. Although the income losses and local supply chain disruptions associated with the pandemic undoubtedly has led to an increase in food insecurity in many developing countries, global food consumption is largely unaffected due to the inelastic demand of most agricultural commodities and the short duration of the shock. From an environmental viewpoint, the COVID-19 impacts point to a modest reduction of direct greenhouse gases from agriculture of about 1% or 50 million tonnes of carbon dioxide equivalents in 2020 and 2021.

Keywords: Aglink-Cosimo; Agricultural markets; Biofuel markets; COVID-19; GDP shock.

Fig. 1

Real GDP. Percentage difference between Baseline and Scenario

Fig. 2

Impacts on world prices. Percentage difference from the baseline. Same commodities as in Table 1

Fig. 3

Impacts on fuel demand in Brazil, EU and USA. Percentage difference from the baseline

Fig. 4

World prices of grain and biofuels in the baseline and scenario. The grey bands represent uncertainty arising from variation in international oil prices

Fig. 5

GHG emission from agricultural production. Percentage difference from the baseline

Fig. 6

GHG emission from agricultural production. Difference from the baseline