Covid-19 and food prices: what do we know so far?


Geneva, 4 May 2020 - 

Since the Covid-19 pandemic and associated control measures began affecting food systems around the world, many of us who care about nutrition and livelihoods have been thinking anxiously about food prices: would they be affected? If so, how badly, for which foods, and for how long?

Food prices are important for several reasons. First, they are a bellwether for stress within the food system: greater than normal food price volatility often indicates that something is not right in the fundamentals that get food from farms to forks. For example, internal movement barriers and lack of transportation can lead to food not making it from rural areas to urban markets (1) - leading to a supply-demand mismatch and perhaps upward pressure on prices. In some cases, price changes result from consumer demand shifts, such as a shift in preferences towards less perishable foods. Larger drivers outside the food system - e.g., changes in currency values or oil prices (2)(3) - also influence prices, food emphasising the interconnectedness of economies and how food systems are embedded within even larger economic systems. 

Second, food prices affect the incomes of farmers and other supply chain actors who make their living from selling food: falling food prices are good for net consumers of food but can cause real economic pain for net producers. And third, food prices play a critical role in determining what foods people can afford to purchase. Most consumers in low- and middle-income countries purchase the majority of their food (4)(5) , with these purchased foods making particularly important contributions to dietary diversity, even in rural households (6) . When the most nutritious foods, such as fresh vegetables or animal-source foods (which are already comparatively pricey, (7)), become more expensive, people tend to purchase less of them; when staples become more expensive, people tend to protect their consumption of these ‘essential’ foods by reducing consumption of more ‘optional’ foods – often those highly nutritious fresh vegetables, fruits, and animal-source foods. Alternatively, they may substitute with poorer-quality versions. The result is a decrease in diet quality.

While economic models suggest Covid-19 will not have a major impact on global food prices, it is anticipated to put upward pressure on food prices in some areas of the world (8). Similar food price shocks have had large consequences in the past (9)(11).

What price data is available?

Unfortunately, it can be a challenge to get real-time data on food prices in many low- and middle-income countries (LMICs). While national market information systems as well as several international systems and dashboards exist (for example (12)(13)), the data often focuses just on key commodities or is collected with a frequency (e.g., monthly, quarterly) that does not allow for detecting rapidly emerging change, as has been experienced during this pandemic.

Fortunately, a new tool has recently been made publicly available. FAO has developed a Big Data tool on food chains under the Covid-19 pandemic (14), which includes price data on 14 foods scraped from Numbeo, a cost-of-living comparison website. Numbeo uses crowd-sourced (user-reported) data, with the frequency of reporting based on how often users report. This introduces potential biases – e.g., in LMICs, users probably overrepresent English speakers, well-educated people, and the middle- and upper-class living in the capital city; the prices reported are thus likely to be more reflective of the outlets such people would be more likely to use (e.g., supermarkets) as opposed to those that might be used by a poorer, more local, or more rural population (e.g., wet markets, village markets, small kiosks) or those outside the capital. There may also be biases in reporting frequency, if users are more likely to report a short-term but surprising price increase that a slower return to normal prices. The data also do not allow us to separate out normal seasonal price variations or price changes that could be due to something other than the pandemic and associated control measures. At the same time, this tool makes a useful contribution of new data to fill a critical void.

Woman buying food in the streets

While economic models suggest Covid-19 will not have a major impact on global food prices, it is anticipated to put upward pressure on food prices in some areas of the world. © GAIN / Unsplash

What do the data say?

We at GAIN took a look at the data to see what we could glean in terms of preliminary, potential impacts on consumers in the 10 African and Asian countries where we work (Bangladesh, Ethiopia, India, Indonesia, Kenya, Mozambique, Nigeria, Pakistan, Rwanda, and Tanzania). We examined food price changes (in percentage terms) over the 2.5-month period from 14 February (pre-pandemic) to 30 April. 

Out of 136 country-food combinations, 118 showed price increases (see graph). The average change was a 6.4% increase in price, with every country showing a price increase for at least eight of the 14 foods examined (apples, bananas, bread, cheese, eggs, lettuce, beef, chicken, onions, oranges, potatoes, milk, rice, and tomatoes). The greatest average price increases were seen in Rwanda (a frightening 23.5%), Tanzania (12%), and Mozambique (10%) and the smallest in Nigeria and Bangladesh (under 2%). Some of this variation may be due to inconsistencies in the underlying data – e.g., Nigeria has about five times as many data points as Rwanda, helping minimise impacts of outliers. But it also may reflect real-world dynamics. Rwanda, for example, imposed a strong and strict lockdown earlier than many other countries in the region, and local stakeholders have reported considerable disruptions to their supply and distribution chains (15)

In terms of food type, there was no clear trend, with some perishable nutrient-dense products (e.g., cheese and chicken) seeing large average increases in price (13% and 9%, respectively) but others (e.g., eggs and milk) seeing only small price changes (3.5% and 2%, respectively). 

Altogether, this data leads us to conclude that price increases for many foods in all countries have occurred since the pandemic began. Some of these are minor, but others are considerable and could have a real impact on diet quality - particularly if happening alongside job losses or other income reductions, as is currently happening around the world, particularly for those in the informal sector. 

What to do?

Given the data issues noted above, this analysis should be interpreted cautiously, but it does suggest action is needed on two fronts. The first is getting better food price data in terms of frequency, coverage of foods, and representativity of consumer experiences to better inform food system responses to the pandemic in LMICs. Drawing on the FAO example, other price monitoring systems can aim to provide more regular (close to real-time) reporting - perhaps by using other crowd-sourcing mechanisms. It will be essential to ensure that this data is drawn not only from higher-income consumers and the major supermarkets of capital cities but truly represents the prices faced by lower-income consumers in both urban and rural areas. It must also cover a diverse food basket, as needed for a healthy diet.

Second, governments and other stakeholders can work to lessen food price changes by keeping their food supply chains functioning and buffer any effects of food price changes on their most vulnerable consumers (and, where needed, producers), through efforts such as subsidies, fixed prices, food distribution, or other social protection programmes. Keeping borders open and food flowing is also key to preventing food shortages and resulting price increases (16). Any such actions need to focus not only on main staples but also on highly nutritious foods (such as legumes, vegetables, and animal-source foods), the consumption of which is crucial for preventing malnutrition - as opposed to just alleviating hunger.

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References


  1. Torero, M. 2020. Without food, there can be no exit from the pandemic. Nature 580, 588-589 (2020)
  2. Headey, Derek and Shenggen Fan. 2010. Reflections on the global food crisis. Washington, DC: IFPRI
  3. Africa's largest economy braces for big hit as oil prices plummet
  4. Tschirley, DL et al. 2015. Africa’s unfolding diet transformation: implications for agrifood system employment", Journal of Agribusiness in Developing and Emerging Economies 5:2.
  5. Global Panel on Agriculture and Food Systems for Nutrition. 2016. Food systems and diets: Facing the challenges of the 21st century. London, UK.
  6. Sibhatu KT, Qaim M (2017) Rural food security, subsistence agriculture, and seasonality. PLOS ONE 12(10): e0186406
  7. Derek D Headey, Harold H Alderman. 2019 The Relative Caloric Prices of Healthy and Unhealthy Foods Differ Systematically across Income Levels and Continents, The Journal of Nutrition, 149: 11
  8. Will COVID-19 cause another food crisis? An early review
  9. Henk-Jan Brinkman, Saskia de Pee, Issa Sanogo, Ludovic Subran, Martin W. Bloem. 2010. High Food Prices and the Global Financial Crisis Have Reduced Access to Nutritious Food and Worsened Nutritional Status and Health, The Journal of Nutrition, 140:1.
  10. Marc F. Bellemare. 2015. Rising Food Prices, Food Price Volatility, and Social Unrest, American Journal of Agricultural Economics, 97:1.
  11. Kumar, N and A. Quisumbing. 2013. Gendered impacts of the 2007–2008 food price crisis: Evidence using panel data from rural Ethiopia. Food Policy 38, 11-22
  12. GIEWS FPMA Tool - monitoring and analysis of food prices
  13. WFP Food Security Analysis
  14. FAO’s Big Data tool on food chains under the COVID-19 pandemic
  15. GAIN Countries
  16. Covid-19: Trade restrictions are worst possible response to safeguard food security

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