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Covid-19, Agricultural Markets, and Trade

Paper Session

Saturday, Jan. 8, 2022 12:15 PM - 2:15 PM (EST)

Hosted By: Agricultural and Applied Economics Association
  • Chair: Colin Carter, University of California-Davis

Has Global Agricultural Trade Been Resilient Under Coronavirus (COVID-19)? Findings from an Econometric Assessment

Shawn Arita
,
USDA Office of the Chief Economist
Jason H. Grant
,
Virginia Tech
Sharon Sydow
,
USDA Office of the Chief Economist
Jayson Beckman
,
USDA Economic Research Service

Abstract

Global agricultural trade has been described as being “resilient” to the coronavirus pandemic. However, the nature and size of this resiliency across countries and products is not clear. Using a reduced-form, theoretically consistent gravity-based model of monthly bilateral trade, we estimate the effects of COVID-19 on global agricultural trade using incidence rates, policy restrictions imposed by governments, and de facto reductions in human mobility. We find that while agricultural trade remained stable, the sector as a whole did not go unscathed. First, COVID-19 reduced agricultural trade by 5 to 10 percent; a quantified impact two to three times smaller in magnitude than the trade effect in the non-agricultural sector. Reductions in human mobility and policy restrictive responses imposed by governments were the most evident
drivers of trade losses. Second, we find sharp differences across individual commodities, with non-food items (hides and skins, ethanol, cotton, etc.), meat and seafood, and higher valued agri-food products most severely impacted by the pandemic. The COVID-19 trade effect for major bulk commodity sectors were found to be insignificant, or in some cases, positive. Third, examining the effect across countries, we find mixed evidence that low-income countries’ trade flows were more sensitive to the pandemic. Fourth, we find evidence that trade flows adjusted to these disruptions over time, consistent with an ‘adaptation effect’ to better manage heightened restrictions and lockdowns. Finally, the pandemic also impacted the extensive margin of trade with more severe disruptions detected in air shipments. Findings from this study provide new insights into the dimensions of global agricultural supply chains most resilient and most vulnerable to global market disruptions.

Covid-19 Trade Actions and Their Impact on the Agricultural and Food Sector

Soojung Ahn
,
University of Connecticut
Sandro Steinbach
,
University of Connecticut

Abstract

This study investigates the determinants of trade actions in the agricultural and food sector related to the coronavirus pandemic and their impact on global trade. These emergency trade measures aim to prevent the inflow of certain products and promote the import of others. We investigate the determinants of these trade actions using detailed trade action data for all WTO members at the product level. The two-stage Heckman selection model results show that trade actions relate positively to the import value and the severity of the coronavirus pandemic. We also find that the implementation probability varies according to trade action type and product characteristics. We then investigate the impact of these trade actions on agricultural and food trade. Our results indicate that Covid-19 trade actions had a significant, but heterogeneous effect on global trade flows. Although trade-restricting policies had the expected impact, we do not find similar evidence for trade actions supposed to facilitate trade flows. The results point to assymmetric trade responses to Covid-19 trade actions.

Seafood Supply and Demand Disruptions: The Covid-19 Pandemic and Shrimp

Ly Nguyen
,
University of Florida
Andrew Schmitz
,
University of Florida

Abstract

The disruptions of the Covid-19 pandemic on the global seafood market have been positive and
negative. This research determines the overall effects of the Covid-19 pandemic on the supply, demand, and market prices for shrimp. We develop a theoretical trade model and apply it empirically to the shrimp sector specifically. Shrimp is a major seafood traded worldwide. The U.S. is the largest shrimp importer in the world, where over 85% of the U.S shrimp consumed is imported. To deal with trade, our theoretical model is based on excess supply and demand curves for shrimp, from which it is possible to determine the net effects of the virus when both consumers and producers are considered. We estimate the net impact of the Covid-19 pandemic on shrimp for two stages. Stage 1 represents the impacts during the period from March 2020 to July 2020, where the social distance requirements and lockdown caused negative effects on both net importers and net exporters. Preliminary results suggest that most of the negative effects of the Covid-19 was on U.S. consumers, where the net demand cost was $2.2 billion. Taken together, when both consumers and producers are considered, the net loss was approximately $2.3 billion. Stage 2 covers the period from August 2020 to April 2021, when the consumption of shrimp recovered. Consumer welfare increased due to higher demand, but suppliers were still faced higher transportation costs, labor shortages, and higher input prices. Even so, our preliminary results show that although U.S. consumers on the net gained $5.6 billion, suppliers lost approximately $5.7 billion. Thus, there was a net welfare gain in the second stage. However, when the net effects of stages 1 & 2 are added together, the net loss was approximately $2.4 billion.
Discussant(s)
Steven Zahniser
,
USDA Economic Research Service
JEL Classifications
  • M2 - Business Economics