Deciphering the Short- and Long-Term Impacts of COVID-19 on the Agricultural Industry

“These are crazy times!” This is the most common response given by everyone in the agricultural supply chain when asked for opinions on the impact of the COVID-19 pandemic. The easy-to-spread virus has changed the working conditions for many different industries, and the agricultural industry is no different. Increased food demand, especially in grain and cereal products, highlighted the importance of a good agricultural supply. Now, more than ever it is clear that Agriculture is an essential industry.


SHORT-TERM EFFECTS
LABOR
One of the leading impacts of global COVID-19 measures concerns the agricultural labor force. The peak of the spread of the disease in early spring 2020 coincides with spring planting time for many crops. Labor-intensive crops, as well as some small to medium farms that use labor for planting and harvestings such as soft fruits, are most affected by the changes. Social distancing has been recommended so that people stay at least two meters/six feet apart from each other to help prevent the spread of airborne particles. The practicality of this measure may become difficult to enforce. There is also an increased measure for increasing sanitation practices for farmers, increasing purchases of cleaning products and disinfectants. Seasonal labor is the most problematic aspect for many countries, especially Europe, India, and the United States. Many farms use cross-border workers for short- and long-term employees. Some farmers have lost staff members, who chose to return to their home countries to be with family. Many countries have closed their borders, effectively shutting out the possibility of seasonal labor from abroad. It remains to be seen when many borders will reopen, but in the short term there will be a labor shortage.

TRADE
In the current term, trade seems to be continually working. The U.S./China agricultural deal seems to be pushing through, but it remains to be seen how it will pan out. Some factories in China shut down for two weeks, but overall production is ongoing. While borders have closed to people, cargo supply of goods and food are continuing but at a lower rate. Some regions may fall behind on their supply of pesticides and/or goods. As many stores are closed, there is an increase in online sales of fertilizer and pesticide products, especially in the western countries, as preparation for planting season continues.

LONG-TERM EFFECTS
The biggest long-term concern will be what the full effect of this crisis will have on the global economy. As the stock market and global oil prices have crashed, it seems inevitable that there will be a global recession to some degree. Companies have started to shift their financial outlooks toward a more risk-averse strategy. Small and medium enterprises will likely be hit harder by a weaker economy than larger ones. Investments, especially riskier ones, will likely slow down for 2020. However, there is potential for more mergers or acquisitions and trade partnerships between larger and smaller companies to overcome challenges and risks. The loss of labor inputs has also highlighted the potential for growth from mechanical and digitalization of the agricultural industry. This signals good news for companies investing into Precision Agriculture and other innovative crop protection methods, such as the use of drones to aid in accurate pesticide applications and timings without the need for manual labor.

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Posted in Ag/Specialty Pesticides.