Impact of COVID-19 on agricultural markets: assessing the roles of commodity characteristics, disease caseload and marke
- PDF / 1,035,605 Bytes
- 21 Pages / 439.37 x 666.142 pts Page_size
- 101 Downloads / 125 Views
Impact of COVID‑19 on agricultural markets: assessing the roles of commodity characteristics, disease caseload and market reforms Deepak Varshney1 · Devesh Roy1 · J. V. Meenakshi2
© Editorial Office, Indian Economic Review 2020
Abstract This paper assesses the impact of the spread of COVID-19 and the lockdown on wholesale prices and quantities traded in agricultural markets. We compare whether these impacts differ across non-perishable (wheat) and perishable commodities (tomato and onion), and the extent to which any adverse impacts are mitigated by the adoption of a greater number of agricultural market reform measures. We use a granular data set comprising daily observations for 3 months from nearly 1000 markets across five states and use a double- and triple- difference estimation strategy. Expectedly, our results differ by type of commodity and period of analysis. While all prices spiked initially in April, they recovered relatively quickly, underscoring the importance of time duration for analysis. Wheat prices were anchored in large part by the minimum support price, while tomato prices were lower in some months. Supply constraints began easing in May with greater market arrivals perhaps reflecting distress sales. Market reform measures did help in insulating farmers from lower prices, but these effects are salient for the perishable goods, and not so much for wheat where the government remained the dominant market player. Taken together, these results point to considerable resilience in agricultural markets in dealing with the COVID-19 shock, buffered by adequate policy support. Keywords COVID-19 · Wholesale prices and trade · Market reforms · Government policy JEL Classification O13 · Q02 · Q18 · L78
* J. V. Meenakshi [email protected] 1
South Asia Region, International Food Policy Research Institute, New Delhi, India
2
Department of Economics, Delhi School of Economics, University of Delhi, Delhi, India
13
Vol.:(0123456789)
D. Varshney et al.
1 Introduction There is no gainsaying the fact that in addition to its impact on public health, COVID-19 and the lockdown that was undertaken beginning in March 2020 in an attempt to contain its spread have had a major economic impact that has affected all sectors of the economy. The agricultural sector and agricultural markets are no exception. Unlike many other countries, the agricultural sector in India accounts for 60% of all rural employment and is thus the single largest source of livelihoods. Notwithstanding the fact that food comes under the ambit of essential commodities that in principle are exempt from movement restrictions, India’s food markets have been significantly impacted by the spread of the novel coronavirus (and COVID-19 disease). The impact has manifested itself in the form of demand as well as supply shocks. The employment and income shocks that translated into an across-the-board demand compression have been further exacerbated by the closure of hotels, restaurants, and institutions. Also, consumers’ buying behaviour has change
Data Loading...
