The economic crisis of 2007-2008 caused a rise in food prices and, at the same time, deepened the negative consequences for the agricultural sector. The coronavirus crisis has been compared to that of that time. But WTO experts note that now the market has experienced the influence of new factors – social distancing and closed borders.
Hromadske explains how the coming crisis threatens the food sector, in which countries the consequences are already felt, and whether empty shelves should be feared.
How many products are thrown away due to lack of orders
Customers of agricultural products are not only shops and supermarkets, but also hotels, restaurants, cafes, educational institutions, which are now closed in many countries due to quarantine. Therefore, some of the products that now have no one to buy, manufacturers simply have to throw away.
In the United States, 10 to 14 million liters of milk are poured every day – this is 7% of the total industry. Dairy farms cannot stop production because cows provide milk every day. At the same time, 2020 was supposed to be a year of growth for the American dairy industry – for the first time in 4 years, product prices began to rise.
In Idaho, farmers were forced to dig ditches to “bury” about 500 thousand kilograms of onions. Other states do the same with beans, lettuce and cabbage. Suppliers are forced to crush hundreds of thousands of eggs. Some farmers donate food to charity, but the reception centers do not have enough refrigerators to accept that amount of food.
In India, the beginning of quarantine – March 25 – fell on the economic season: fruits and vegetables ripened, wheat ripened. The country is the world’s second largest supplier of fruits and vegetables and the world’s largest exporter of cereals. At the same time, almost half of the population is involved in agriculture. Markets in the country were not closed, but food is still bought in much smaller quantities.
The banana market also suffered – the unpicked fruits were left to rot, because there are no buyers or transportation routes. And in the province of Satara, cows are fed strawberries or salad – foods that tourists usually buy.
At the same time, the country expects an increase in the harvest by 2.4% this year compared to the previous year. Stocks of wheat and rice are three times higher than what the country needs for its own use – there are now more than 77 tons of grain in storage. Therefore, it will be enough for export. And although at first prices fell, in the future, experts predict their growth and fall in sales by 10-12%. Therefore, this season, due to the lockdown, India will experience a crisis of spices, wheat, melons, bananas and some vegetables – due to a lack of buyers, disruption of transport routes and a lack of workers, products are simply left on the field.