The Covid-19 pandemic is an unprecedented health situation that is also having a major impact on the world’s economy. As many countries decided to take measures to try and limit the spread of the virus, it affected food and commodity markets in multiple ways. You have probably experienced it yourself, and we are interested in hearing your opinion about it. We would like to receive testimonies from various actors in the sector. This piece is a summary of what we have read and heard on the subject so far.
In Asia and later Europe, lockdowns shifted demand coming from restaurants and hotels to more retails. In Asia, many festivals are cancelled, which is greatly affecting demand compared to the previous years, and therefore prices. During lockdowns in Europe, supermarkets became the main sourcing place for food products. When the pandemic reached developed countries, panic reactions with impulsive purchases of food created a short but intense pic in demand. The situation was rapidly under control.
As everybody had to adapt to the situation, daily consumption habits changed with an increased demand for processed and comfort food. As an example, when lockdowns started, peanut butter sales boomed. Now that measures are being relaxed, consumption is slowly shifting back to previous levels again. However, some changes occurred, for instance in terms of packaging. Bulk purchases decreased severely and shifted to small packaging. During these difficult times, healthy food is popular. Therefore, nuts, like peanuts and cashews are enjoyed for their nutritional values.
As the evolution of the pandemic in the coming months remains uncertain, evolution of demand is hard to predict. The situation is unprecedented, and nobody knows whether new waves of cases will develop and what measures will be taken to limit their effects.
Covid is also affecting the supply of commodity products. Lockdowns and social distancing measures reduced the availability of labour for production, processing and distribution. In many countries, workers are asked to remain at home as much as possible. Only “essential” activities are possible with special measures taken to limit contacts between workers. As the virus was spreading, most countries closed their borders. Limited mobility of people contributes to labour shortages, especially in agriculture. Labour intensive activities, such as the harvest of certain crops, is complicated. In developing countries, some farmers have encountered difficulties to source inputs for production, such as seeds, fertilizers or pesticides because little stocks are available on site and imports are slowed down.
When the crisis hit Asia, processing industries had to shut down. In India, most processing facilities remained closed for three months rendering impossible to fulfil the contracts that had been signed. Today, supply chains are still affected, closure of factories or reduction in workforce slows down the transformation of products. Disruptions on the distribution channels are occurring. It manifests through delays in the delivery of products because the workforce is reduced in ports, and additional procedures and checks are made. Activities such as custom clearance take more time. Nevertheless, we observe that measures are relaxing in most countries. Economic activities become easier, and the supply of nuts is possible.
Unusual supply and demand are affecting market prices. Markets of most edible nuts dropped during the crisis. Uncertainty about future demand creates confusion in the market. It is still unclear whether this ‘traumatic’ event will imply potential changes in consumption habits. Nevertheless, transactions are still happening, and most nut markets seem to have already reached their bottom for now.
What do you think is the impact of Covid-19 on supply and demand of edible nuts? Do you agree with the above? Did you experience something similar or different? Please send us your views on the subject in the comment section below or by email. We are planning to gather all your reactions in a future post on our website. Thank you in advance for your contribution!