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Spurt in Demand for Food Products amid Covid-19 Outbreak

Ashish M. Shaji

| Updated: Mar 25, 2020 | Category: Covid-19, Latest News

Covid-19 outbreak

The novel coronavirus continues to spread rapidly. Since its outbreak in China in December, the pandemic has spread to more than 100 countries in less than three months. The outbreak of the novel covid-19 has sent the demand for food products soaring. The global market has seen unprecedented demand for food products. The Trade Promotion Council of India stated that there is a huge demand for food products in global markets due to coronavirus outbreak. It further claimed that there is above 100% spike in demand for essential commodities such as rice, pulses, wheat etc. People have been stocking up in order to avoid repeated purchases, especially at a time when the government has asked residents to maintain social distancing. 

Despite scenes of empty shelves and customers hoarding all the essential items, the grocery industry said that they are doing everything to ensure that they remain open, safe and well-stocked amid the covid-19 outbreak and emphasized on the fact that the supply chain is still flowing.

What Has Caused High Demand for Food Products amidst Covid-19 outbreak?

The high demand for food products has been caused mainly due to the fear that there will be a shortage of food in the coming days. The covid-19 outbreak has instilled fear in the minds of people, and people fear a complete lockdown in the near future. Therefore consumers have started hoarding essential food products. Rumour mongering has also contributed to the huge demand for food products. People have been found spreading rumours related to the pandemic outbreak without checking its credentials, thereby sending the people in panic.

Another reason why there has been huge demand is that people have now become more concerned about their health so now they are buying more and more immunity building food products. People now seem to be opting for highly nutritious food products to fight this pandemic. The coming few days is going to be critical to know how the covid-19 outbreak impacts the global markets.

What are the possible consequences of high demands?

There can be serious consequences owing to higher demands in food products. There are concerns that further spread of this pandemic can jeopardize food security. Other pandemics like SARS, avian influenza and MERS, had led to serious price hikes and market panics in affected areas. Fortunately, thus far, we have not seen major signs of food shortages or price hikes due to covid-19 outbreak. However, to prevent such a situation in the near future consumers must be made aware that there is no need to panic and hoard food items. High demands of food products may lead to an increase in prices and a shortage of food products.

Impact on Supply Chain

The novel covid-19 outbreak has hit the business world at an unprecedented scale and speed. It has caused the closure of businesses, disruption to global manufacturing units and their supply networks. With the supply networks disrupted due to the pandemic, the impact on the supply chain is twofold-

The companies must closely monitor short term and long term demand and inventory to cover the production loss due to factory closure and economic slowdown.

The retailers are facing inventory depletion because consumers are stocking up in preparation for the potential quarantine and extended stay at home. Panic buying may have an adverse impact on production and supply.

How is India’s commodities market impacted by the Covid-19 outbreak?

The Trade Promotion Council of India (TPCI) said that there is a surge in demand for food products in global markets due to covid-19 outbreak, and India has the potential to tap this in order to boost its exports.

TPCI Chairman Mohit Singla, who organizes the largest food show in South Asia, told that more than 100 per cent spike has been registered in demand for essential commodities such as rice, wheat and pulses. On the other hand, other food categories, like confectioneries, sweets, organic processed food, spices, too, have witnessed 15-20 per cent rise this month. He further said that there is a huge surge in demand in March with respect to the exports of food items amidst the Covid-19 outbreak crisis gripping the world. He added that there are huge opportunities amid this crisis for the Indian food sector. Though the crisis is a short-term phenomenon, it offers Indian exporters huge opportunity.

The spurt in demand is primarily driven by the fear that there will be a shortage of food in the coming months, and consumers have started hoarding essential food commodities.

The major destinations where the Indian food sector has seen an increase in demand are countries like the US, Europe, Australia, New Zealand, Israel, Palestine, and Egypt. It is critical to note that the coming few months are crucial for leveraging to India’s advantage in terms of exports.

However, as said by the TPCI chairman, there are also certain challenges for exporters, including shortage of containers, vessels getting delayed owing to fumigation and complying with norms of various countries, delays in clearances, advisories for not entering particular port, and delay in payments.

Quoting Organic Tattva, a leading brand for organic food in India, TPCI said there is a huge surge in demand for food items from overseas in the month of March. The highest surge has been seen in the essential organic commodities and 20 per cent rise in the organic processed food sector from overseas market.

E-commerce platforms, retail chains and kirana stores reported a sharp increase in sales of staples, daily necessities and personal hygiene products in the last few days as panic buying took hold across India amid the fear of lockdowns as Covid-19 cases rise.

Grofers CEO Albinder Dhindsa said that Supply has not been an issue so far and that they are also taking a hard approach to hoarding of essential commodities. A lot of people are trying to game the system to hoard items, and he told that they are working proactively to block them and make sure essential supplies are available to genuine customers.

The online grocery firms specified that the unprecedented demand has led to delays, with the shortage of delivery personnel adding to the bottleneck. Some fast-moving staples like onions, potatoes, rice, and wheat, are stocked out across platforms, said online grocery firms.

How the surge in such demands for food due to Covid-19 outbreak can be checked?

Panic buying is an issue, and this can only be checked if people realize that the supply lines are secure. The people must be made aware that there is no risk of food supplies, but if they keep on hoarding food products, then it may lead to adverse impact. The awareness among the consumers regarding food security can ensure that the high level of demands can be checked. 

It is also critical that the government of different countries don’t panic and stay calm. The 2008 food price crisis taught us a valuable lesson. The crisis was caused by droughts in Australia and Argentina, increasing oil prices, rising use of food grains for biofuel production and trade policy failures. It prompted many countries to impose various export policies to restrict the export of food products. For instance, there was no shortage of rice supply, but due to panic behaviour, many countries imposed higher taxes on rice exports or banned rice exports altogether. Rice prices doubled in the global market within six months, thereby causing severe disruptions in rice trade, leading to a food price crisis. If countries panic this time too, food trade and markets could be disrupted and on a much larger scale.

The novel coronavirus is still spreading, and it is not possible to predict when it would be contained. In order to ensure food security to all, we need to take urgent actions at the global and country levels. Firstly there is a need to closely monitor food prices and markets. Transparent dissemination of information will strengthen government management over the food market, prevent people from panicking and hoarding up food products, and guide farmers to take rational production decisions. In order to nip market speculation oversupply in the bud, the government must strengthen market regulation.

Secondly, it is crucial to ensure international and national agricultural and food supply chains function normally. China has set a good example of how to ensure food security during the current epidemic by, for example, opening a “green channel” for fresh agricultural products, and banning unauthorized roadblocks.

Conclusion

The Covid-19 outbreak has really impacted not just a nation but nations. So in order to fight the pandemic, nations must unite and work unitedly to contain the spread of the virus. We must strive to be a responsible citizen and the government must inform the general public or the consumers about adverse effects of hoarding and ensure that no one is deprived of basic food products in this hour of need.

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Ashish M. Shaji

Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on criminal and corporate law. He is a creative thinker and has a great interest in exploring legal subjects.

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