COVID benefits agriculture trade: WTO

A new report from the World Trade Organization suggests agricultural trade has performed better than other sectors throughout the COVID-19 pandemic, but contends producers are feeling the pressure of lower food prices.

“While overall merchandise trade fell sharply in the first half of 2020, agricultural and food exports increased by 2.5 percent during the first quarter of the year compared to the same period in 2019,” reads the report.

It isn’t all good news, however. The WTO noted “the crisis has exerted further downward pressure on food prices, and therefore on producer revenues” while the number of hungry people continues to rise.

According to the World Food Program’s most recent estimates, 270 million people could be acutely food insecure by the end of 2020, representing an 82 percent increase from before the pandemic.

Initial response measures helped restrict and facilitate more agricultural trade, according to the report. New sanitary and phytosanitary measures, plus tariff or otherexport barriers, restricted trade, while the actual flow of agricultural trade was changed significantly as consumption patterns were altered.

“Initial measures focused on guaranteeing the immediate availability of food have been followed by a second phase of policies seeking to mend broken supply chains and to help agricultural producers to cope with the ‘new normal’ situation,” said the report. “While many governments have gradually relaxed lockdown measures, removed several export restrictions, and introduced domestic support measures to support the agricultural sector, the pandemic continues to spread in different parts of the world and is expected to continue to influence the demand for and supply of agricultural products.”

The WTO noted impacts have varied across different regions of the world. Asia saw its agricultural exports decline in March, which was followed by April declines for Europe and North America. Meanwhile, South America saw significant increases, largely due to demand in Asia.

For producers, the pandemic has resulted in lower revenue. At the beginning of 2020, food prices were already declining, according to the report, and they continued to drop as the pandemic settled in. The WTO says prices are expected to remain at low levels “amid the economic downturn.”

“While there is currently no reason why the ongoing health crisis should turn into a food crisis, disruptions to food supply chains constitute a risk, with governments’ trade policy choices likely to determine how the situation evolves.”

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