COVID-19

During the current COVID-19 crisis, some national governments have moved to restrict food exports. This behavior can, in aggregate, have dire unintended consequences for vulnerable people in food-importing countries, increasing prices and exacerbating issues of food insecurity already inflamed by the COVID-19 pandemic. It may also negatively affect producers in the export-restricting countries. Similar trade policies contributed to the 2007-2008 food price crisis; may history not repeat itself.

Food prices strongly influence the livelihoods and dietary choices of farmers, traders, processors, and consumers. When markets are tight, prices are sensitive to shocks such as a bad harvest or, in today’s context, supply disruptions caused by COVID-19. For the poor who spend most of their income on food, any food price increase may put their food security at risk. The Food Security Portal COVID-19 Food Price Monitor serves as a temperature check of market conditions for staple and non-staple foods at the local level.

Cases of COVID-19 worldwide have grown exponentially since our previous analyses of the pandemic’s impacts on global staple food markets and poverty and hunger. More than half of the world population is currently under some form of social distancing to contain the health crisis. With COVID-19 and its economic fallout now spreading in the poorest parts of the world, many more people will become poor and food-insecure.

While the impacts of rising food prices may be clear, the root causes of such price increases often are not. The role of various short- and long-term factors, such as the growth of commodities futures markets and changing levels of grain stocks, continues to be debated.

The spread of COVID-19, as well as the wide range of policy responses enacted around the world to contain the pandemic, have exerted wide-ranging effects on agri-food systems and livelihoods. To analyze the direct and indirect impacts of these responses in a comparative way, the COVID-19 Policy Response (CPR) Portal systematically captures policy responses through multiple channels, including population restrictions, social protection, trade, health, fiscal, and monetary measures.

The Excessive Food Price Variability Early Warning System is a tool of the Food Security Portal that identifies periods of excessive price variability (i.e. price variability that exceeds a pre-established threshold), and it is updated on a daily basis to identify days that are within periods of high, moderate, and low price variability. The tool is based on a statistical model that formally models the behavior (fluctuations) of commodity price returns (i.e. day-to-day percentage changes of commodity prices) using futures market prices closest to maturity.