Pandemic Led Food Price Anomalies and Supply Chain Disruption: Evidence from COVID-19 Incidence in India
40 Pages Posted: 28 Aug 2020
Date Written: August 27, 2020
COVID-19 induced lock down has disrupted the food markets and commodity prices in India. This paper uses evidence from the official statistics on daily wholesale and retail prices (n=284) for major commodities by adopting interrupted timeseries analysis (ITSA). The results revealed that prices shot up immediately since lockdown, for chickpea, mung bean, and tomato. We find no evidence of structural break in food prices due to lockdown implying that the changes in prices caused by lockdown was not sufficient enough to alter the long-run price movement. ITSA confirmed the result as a majority of the commodity prices reverted indicating a negative post-intervention trend. We also triangulated the results with an online survey of 729 consumers coupled with a dipstick (telephone and personal interview) survey of 225 farmers. Despite the relaxation allowed for agricultural related activities during the lockdown, farmers reported disruption in disposing their winter produce barring wheat, covered by state procurement. The lockdown period coincided with the wheat harvest, the second most produced and consumed cereal in the country, resulting in a record procurement of 38.98 million tonnes in 2020. Consumers’ survey indicated that the pandemic restricted the access to food markets and a majority (75.31%) experienced an increase in the price of food items across intensity of COVID incidence. The pandemic has impacted the consumers’ livelihood from moderate (59.53%) to severe (3.3%) with 92 per cent reporting a change in shopping behavior. The Kruskal-Wallis test on Composite Consumption Behavior Change Index (CCBCI) indicated a significant shift among consumers who reported income change during the lockdown. The paper affirms that the pandemic has caused dramatic and unprecedented panic purchase by consumers as revealed by the survey. We strongly recommend for creation and functioning of suitable social safety nets to insulate vulnerable consumers and producers from the persistence and recurrence of pandemics.
Keywords: COVID-19, retail price, wholesale price, supply disruption, interrupted timeseries
JEL Classification: D12, E31, Q11, Q18, Q13, L51
Suggested Citation: Suggested Citation