On Wednesday, August 26, the WTO Secretariat put out an Information Note entitled “COVID-19 and Agriculture: A Story of Resilience”. It is one in an impressive line of information notes providing useful information on how COVID-19 is affecting global trade in goods and services. The full array of information notes published to date can be found on the WTO webpage, https://www.wto.org/english/tratop_e/covid19_e/covid19_e.htm. Wednesday’s Information Note is embedded below.agric_report_e
The note focuses on the fact that trade in agricultural goods have fared better than total trade in goods during the pandemic. The Secretariat, at the time of preparing the Information Note, had access to trade data through April 2020 and for May 2020 for some countries. A key summary paragraph from the note states:
“Trade in agricultural products has been more resilient than overall trade. This reflects the essential nature of food and the resulting relative income-inelasticity of demand for it, as well as the fact that most agricultural trade (notably cereals and oilseeds) takes place in bulk marine shipments that have not been subject to major disruptions. While overall merchandise trade fell sharply in the first half of 2020, agricultural and food exports increased by 2.5 per cent during the first quarter of the year compared to the same period in 2019, with an increase of 3.3 per cent in March, followed by a 0.6 per cent increase in April, although the preliminary data for May indicate a small decrease (-1.3 per cent) compared to 2019.2
“2 Data for May 2020 were available for a limited set of 64 countries at the time of writing.”
Importantly, while some governments imposed export restrictions on some agricultural products early in response to COVID-19, some of those restrictions have been lifted and there have been other initiatives to liberalize trade in agriculture.
However, the note reviews the challenges for many people to get adequate food despite food stocks and good harvests. A prior August 15 post of mine reviewed the challenges facing many nations in accessing adequate food supplies in 2020. See August 15, 2020, Food security and COVID-19 – how World Trade Organization Members could fill a pressing need, https://currentthoughtsontrade.com/2020/08/15/food-security-and-covid-19-how-world-trade-organization-members-could-fill-a-pressing-need/
The Information Note’s conclusion provides a note of caution on agricultural trade despite the greater resilience of such trade over other trade in goods:
“The COVID-19 crisis has had a major impact on the global economy and trade. Countries are still fighting the pandemic, and its repercussions for food supply chains are still unfolding. While agricultural trade has proven more resilient than trade in other goods owing to the essential nature of food products, additional disruptions to supply chains could start to undermine this resilience, with damaging consequences.
“There is currently no supply-related reason why the ongoing health crisis should turn into a food crisis. However, disruptions to food supply chains constitute a risk for global food security. Governments’ trade policy choices will play a major role in shaping how the situation evolves.
“Transparency remains crucial for food security. Incomplete or insufficient information creates uncertainty that, in turn, leads to sub-optimal policy decisions. Sharing timely information on trade-related measures, as well as making information available on production, consumption, stocks and food prices, would help markets function efficiently and contribute to ensuring global food security.”
U.S. example on agricultural exports suggests greater contraction in 2nd quarter of 2020
U.S. trade data are available through June 2020. At least for the United States, U.S. domestic exports of agricultural products (HS Chapters 01-24) through June 2020 were off from 2019 levels (which were themselves below 2018 levels). On a monthly basis, the contraction worsens month by month after February as the below data on U.S. domestic exports of agricultural goods show (exports are FAS values in billions of US $):
|1st half 2018||$69.3|
|1st half 2019||$65.6|
|1st half 2020||$64.0|
|% change 2019-2020||-2.50%|
|% change Jan. 2019-2020||+0.13%|
|% change Feb. 2019-2020||+5.04%|
|% change March 2019-2020||-1.46%|
|% change April 2019-2020||-3.95%|
|% change May 2019-2020||-7.17%|
|% change June 2019-2020||-7.67%|
U.S. domestic exports of agricultural goods show dramatic differences in trends in 2020 based on the 2-digit HS chapter involved. Chapter 02, meat and edible meat offal, increased in the first half of 2020 by 8.4%; Chapter 04, dairy produce and other products, increased 17.27%Chapter 10, cereals, increased by 1.13%; Chapter 15, animal fats and oils and their cleavage products, increased 23.19%; Chapter 23, residue and waste from the food industry, prepared animal feed, increased 2.43%; the other nineteen Chapters showed declines up to 15.17%.
For the United States, the U.S.-China Phase 1 Agreement appears likely to improve U.S. agricultural exports in the last months of 2020 and hence may change the U.S. trade trend for agricultural goods in the third and fourth quarters. See August 8, 2020, U.S.-China Phase 1 trade agreement – review of U.S. domestic exports through June 2020, https://currentthoughtsontrade.com/2020/08/08/u-s-china-phase-1-trade-agreement-review-of-u-s-domestic-exports-through-june-2020/.
But the above data for the U.S. suggests that global agricultural trade may be harder hit in the second quarter than the Secretariat Information Note tracks through April (and for partial data for May). All of which simply says the Information Note’s conclusion that transparency and accuracy and timeliness of data are critical at the present time to prevent the COVID-19 health crisis from becoming a food security crisis of even greater proportions than is already projected by the World Food Programme.