The Impacts of Trade Restrictions on World Agricultural Price Volatility during the COVID‐19 Pandemic

Abstract

During the COVID‐19 pandemic, countries applied trade restrictions to insulate their domestic markets from the world market. However, these trade policies could have amplified international market price fluctuations. This paper explores the effects of trade restrictions on international agricultural price volatility. A theoretical model is developed to quantify how trade policies amplify the initial shock. Using panel data covering 71 countries from January 2020 to July 2021, we examine empirically the effects of trade policies on world agricultural price volatility. The results show that trade distortions further induced volatility of world agricultural prices by around 22 percent during the COVID‐19 pandemic. The multiplier effects are much more substantial in agricultural exporting countries than in importing countries. Large countries like China and the US could make significant contributions to stabilizing world prices by limiting the extent of unilateral trade policy interventions.

The economic impact of COVID-19 on biotech companies

“…As we can see from the data in Figure 4, the global economic recession is directly related to covid-19. We know that before the epidemic started, the economy had a downward trend, but it was under control, but after covid-19 started, the whole world started to blockade countries, trade between countries became difficult, and even access to cities was strictly limited, resulting in city-to-city trade also becoming difficult, thus the whole world experienced an economic downturn [13].…”

Transforming Chinese Food and Agriculture: A Systems Perspective

“…They increased food price volatility and decreased the food production. Trade distortions further induced volatility of world agricultural prices by around 22% during the pandemic [23] . In addition to trade and price risks, the regional conflict leads to increased uncertainty in the global food market.…”

“…It calls for increasing investment in protection of land, water and other resources, strengthening the construction and enforcement of the agricultural environment, promoting the management of natural resources, and protecting the ecological environment [37] . Upgrading the agricultural production mode to circular and renewable agriculture and strengthening the agricultural ecological system is significant [23] . Third, funding reorientation should consider inclusiveness for the better livelihood of small stakeholders.…”

A short descriptive analysis of the European evolutions of input price indices of agricultural products between 2008-2017: Patterns, trends and implications

“…Due to this, the prices of agricultural inputs trigger a long sequence of factors in contemporary agricultural systems, adding to their dynamics and complexity. Several dedicated studies (De Roest, Ferrari & Knickel, 2018;Morales, 2018;Lanfranchi, Giannetto, Rotondo, Ivanova & Dimitrova, 2019;Yan, Cai, Lin & Ambaw, 2021;Viganò, Maccaroni & Righi, 2022) claim that the analysis of inputs price indices of agricultural products makes it necessary to render a no lesser attention to the degree of volatility of this category of prices, which, in agriculture as a complex economic system, must be able to reflect the sector's capacity to mobilise specific resources. When analyzing the drivers of grain price volatility, (Gaetano, Emilia, Francesco, Gianluca & Antonio, 2018) point out that a thorough analysis of the critical factors of price instability is mandatory, because the interpretation of the curve of prices of farm inputs will help predict the role and dynamics of demand and supply for agricultural produce in complex economic markets.…”