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Impact of COVID-19 on agricultural markets: assessing the roles of commodity characteristics, disease caseload and market reforms

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  • Deepak Varshney

    (International Food Policy Research Institute)

  • Devesh Roy

    (International Food Policy Research Institute)

  • J. V. Meenakshi

    (University of Delhi)

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.

Suggested Citation

  • Deepak Varshney & Devesh Roy & J. V. Meenakshi, 2020. "Impact of COVID-19 on agricultural markets: assessing the roles of commodity characteristics, disease caseload and market reforms," Indian Economic Review, Springer, vol. 55(1), pages 83-103, November.
    • Handle: RePEc:spr:inecre:v:55:y:2020:i:1:d:10.1007_s41775-020-00095-1
    DOI: 10.1007/s41775-020-00095-1
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    References listed on IDEAS

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    1. Kanika Mahajan & Shekhar Tomar, 2020. "Here Today, Gone Tomorrow: COVID-19 and Supply Chain Disruptions," Working Papers 28, Ashoka University, Department of Economics.
    2. Ariella Kahn-Lang & Kevin Lang, 2020. "The Promise and Pitfalls of Differences-in-Differences: Reflections on 16 and Pregnant and Other Applications," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 38(3), pages 613-620, July.
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    4. Hiroyasu Inoue & Yasuyuki Todo, 2020. "The propagation of the economic impact through supply chains: The case of a mega-city lockdown against the spread of COVID-19," Papers 2003.14002, arXiv.org.
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    Cited by:

    1. Katsushi S. Imai & Nidhi Kaicker & Raghav Gaiha, 2020. "The Covid-19 Impact on Agricultural Market Arrivals and Prices in India: A Panel VAR Approach," Economics Discussion Paper Series 2010, Economics, The University of Manchester.
    2. Cariappa, AG Adeeth & Acharya, Kamlesh Kumar & Adhav, Chaitanya Ashok & Sendhil, R. & Ramasundaram, P., 2022. "COVID-19 induced lockdown effects on agricultural commodity prices and consumer behaviour in India – Implications for food loss and waste management," Socio-Economic Planning Sciences, Elsevier, vol. 82(PA).
    3. Varshney, Deepak & Kumar, Anjani & Mishra, Ashok K. & Rashid, Shahidur & Joshi, Pramod K., 2021. "India's COVID-19 social assistance package and its impact on the agriculture sector," Agricultural Systems, Elsevier, vol. 189(C).
    4. Pallavi Rajkhowa & Lukas Kornher, 2022. "COVID-19 and distortions in urban food market in India," Indian Economic Review, Springer, vol. 57(1), pages 133-164, June.
    5. Selvaraj, K. N. & Parimalarangan, R. & Karunakaran, K. R., 2021. "Vegetables Supply Chain Challenges and Salvage during the Pandemic in Tamil Nadu, India," 2021 ASAE 10th International Conference (Virtual), January 11-13, Beijing, China 329404, Asian Society of Agricultural Economists (ASAE).
    6. Syed Abdul Rehman Khan & Pablo Ponce & Muhammad Tanveer & Nathalie Aguirre-Padilla & Haider Mahmood & Syed Adeel Ali Shah, 2021. "Technological Innovation and Circular Economy Practices: Business Strategies to Mitigate the Effects of COVID-19," Sustainability, MDPI, vol. 13(15), pages 1-17, July.
    7. Bossman, Ahmed & Gubareva, Mariya & Teplova, Tamara, 2023. "Asymmetric effects of market uncertainties on agricultural commodities," Energy Economics, Elsevier, vol. 127(PB).
    8. Arhan Sheth & Tulasi Sushra & Ameya Kshirsagar & Manan Shah, 2022. "Global Economic Impact in Stock and Commodity Markets during Covid-19 pandemic," Annals of Data Science, Springer, vol. 9(5), pages 889-907, October.
    9. Lowe, Matt & Nadhanael, G.V. & Roth, Benjamin N., 2021. "India’s food supply chain during the pandemic," Food Policy, Elsevier, vol. 105(C).
    10. Consoli, Sarah & Opazo, Cristian Morales & Yerovi, Juan José Egas, 2021. "Realigning Policy Interventions on Agricultural Prices: Monitoring Incentives to Facilitate Economic Recovery in the Post-COVID-19 Era," 2021 Conference, August 17-31, 2021, Virtual 315904, International Association of Agricultural Economists.
    11. Ruvuna, Eric & Mweruli, Fidèle & Uwingenzi, Marthe & Jeyakumar, Rufus, 2022. "Farmers’ perspective of COVID-19 effects on demand and supply of agricultural commodities in Nyamasheke district, Rwanda," African Journal of Food, Agriculture, Nutrition and Development (AJFAND), African Journal of Food, Agriculture, Nutrition and Development (AJFAND), vol. 22(10).
    12. Tomas Baležentis & Mangirdas Morkūnas & Agnė Žičkienė & Artiom Volkov & Erika Ribašauskienė & Dalia Štreimikienė, 2021. "Policies for Rapid Mitigation of the Crisis’ Effects on Agricultural Supply Chains: A Multi-Criteria Decision Support System with Monte Carlo Simulation," Sustainability, MDPI, vol. 13(21), pages 1-31, October.
    13. Consoli, Sarah & Egas Yerovi, Juan José & Machiorlatti, Matteo & Morales Opazo, Cristian, 2023. "Real-time monitoring of food price policy interventions during the first two years of COVID-19," Food Policy, Elsevier, vol. 115(C).
    14. Francisco Ceballos & Samyuktha Kannan & Berber Kramer, 2021. "Crop prices, farm incomes, and food security during the COVID‐19 pandemic in India: Phone‐based producer survey evidence from Haryana State," Agricultural Economics, International Association of Agricultural Economists, vol. 52(3), pages 525-542, May.
    15. Khan, Syed Abdul Rehman & Razzaq, Asif & Yu, Zhang & Shah, Adeel & Sharif, Arshian & Janjua, Laeeq, 2022. "Disruption in food supply chain and undernourishment challenges: An empirical study in the context of Asian countries," Socio-Economic Planning Sciences, Elsevier, vol. 82(PA).
    16. Shreekant Gupta, 2020. "Pandemics, COVID-19 and India," Indian Economic Review, Springer, vol. 55(1), pages 1-12, November.

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    More about this item

    Keywords

    COVID-19; Wholesale prices and trade; Market reforms; Government policy;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • L78 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Government Policy

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