Global trade in food and agricultural products grew by 3.5% last year, according to the WTO, leading to descriptions that the sector was robust and resilient in the face of the worst pandemic in a century. However, a USDA working paper says the impact of the coronavirus was obscured by such factors as the de-escalation of the Sino-U.S. trade war.
“Holding other factors constant, our estimates suggest that COVID-19 reduced overall agricultural trade by the approximate range of 5% to 10%, an effect two to three times smaller than our estimated effect for nonagricultural trade,” said the working paper from the USDA’s office of the chief economist.
Nonfood items, such as hides, ethanol, and cotton, suffered the steepest declines. Rice and soybeans showed gains. The majority of agricultural commodities “were not found to experience a significant trade impact from the pandemic,” said the paper, written by Shawn Arita, Sharon Sydow, and Jayson Beckman of the USDA and Jason Grant of Virginia Tech.
The Trump administration sent more than $23 billion in coronavirus relief payments to farmers and ranchers in response to the sudden and steep declines in most commodity prices in early 2020 as the pandemic struck. The global economy went into recession. By year’s end, U.S. agriculture was rebounding, thanks in part to an unexpected surge in commodity prices. Farm exports of $145.7 billion during 2020 were the second highest for a calendar year and up 7% from 2019.
“Has agriculture trade been resilient under COVID-19? The findings of our study suggest a qualified yes,” wrote the four economists. “The econometric results found relatively small (but still statistically significant) negative effects of the pandemic … which could be interpreted as a testament of the stability of agricultural trade, at least in the aggregate. However, we would temper any broad conclusions.” Some commodities saw severe disruptions and the pandemic is ongoing, they cautioned.
In teasing out the impacts of the pandemic, the economists arrived at different results than those seen just by comparing 2019 trade volumes with 2020 totals. “According to our estimates, global pork trade was reduced on average by 2%, given a one standard deviation-size shock in COVID-19 policy restrictions and de facto lockdown effect.” By contrast, pork trade rose 20% from 2019’s level due to a swine epidemic that forced China, the world’s largest pork consumer, to import tons and tons of the meat. Similarly, the pandemic suppressed beef trade by 4%, but other factors resulted in an increase in trade overall.
The working paper said hides and skins were hit the hardest, a 15% reduction, by the pandemic. A quarter of commodities saw “very large and significant negative effects,” while 10% “experienced a positive impact from COVID-19, likely through demand shifting.”
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May 20, 2021 at 08:39PM
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Looking beneath the surface, USDA paper gauges pandemic's impact - Successful Farming
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