PRELIMINARY IMPACTS OF THE COVID-19 PANDEMIC ON EUROPEAN AGRICULTURE : A SECTOR-BASED ANALYSIS OF FOOD SYSTEMS AND MARKET RESILIENCE - Francesco ...
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PRELIMINARY IMPACTS OF THE
COVID-19 PANDEMIC ON
EUROPEAN AGRICULTURE : A
SECTOR-BASED ANALYSIS OF
FOOD SYSTEMS AND MARKET
RESILIENCE
Francesco Montanari
Arcadia International
15/06/2021 Presentation for the Committee on Agriculture and Rural Development 1Structure of the Presentation
1. Overall impact of COVID-19 on the EU agri-food supply chain
2. Impact of COVID-19 on selected EU agri-food sectors
3. Analysis of EU and national responses to mitigate the effects of COVID-
19 on the agri-food supply chain
4. Lessons learnt and policy recommendations
15/06/2021 Presentation for the Committee on Agriculture and Rural Development 21. Overall impact of COVID-19 on the EU agri-food supply
chain
Primary Processing & Wholesale
production manufacturing & retail
• Value of the output of the • Temporary shortages of certain • Severe disruptions for
agricultural industry declined by raw materials and equipment wholesalers with high level of
1.4% in 2020 compared to 2019 essential for food production commercial dependence on food
(+2.9% compared to 2015-2019 • Rise in demand for some service
average) convenience and/or shelf-stable • Consumers stockpiling and
• Labour shortages (1M seasonal foods increase in retail sales
workers in agriculture) • Challenges regarding the • Shift of consumer preference
• Delays in the delivery of application of necessary sanitary towards convenience and
agricultural inputs in the first measures and protocols to proximity stores
months of the pandemic protect workers • Increase in e-commerce
• Excessive stock at farm level • Local sourcing policies during the
• Creation of short supply chains first wave of the pandemic
• Occasional reports of Unfair • Variety of restrictions in retail
Trading Practices during the first stores, namely opening hours and
outbreak maximum capacity
15/06/2021 Presentation for the Committee on Agriculture and Rural Development 31. Overall impact of COVID-19 on the EU agri-food supply
chain
Food service Consumers
• Closure of food service sector • Panic-buying and stockpiling
• Financial losses up to 80-90% • Significant reduction in food
during Q1 2020 waste
• Unsold stocks • Online food sales increased by
• Hospitality operating through 45% during the first months of the
alternative trade channels pandemic
• Widespread consumer reluctance • Healthy eating
to go back to pre-pandemic social • Attention for food safety
habits • Risk of food insecurity: +50%
requests for assistance to food
banks
• Affordability and economic
convenience as key drivers in the
short term
15/06/2021 Presentation for the Committee on Agriculture and Rural Development 42. Impact of COVID-19 on selected EU agri-food sectors
Sector Main impacts / findings Increase (in value) Decrease (in value)
2020/ previous 2020/ previous 5-year
5-year average average
• Drop in demand of EU high-value cuts, e.g. veal due to the closure of EU production (-6%)
food service Intra-EU trade (-7%)
• Private storage dai for bovine animals aged 8 months or more (1 959 Extra-EU exports (-3%)
Beef and veal meat tonnes of meat benefitted)
• Drop in demand of suckling pigs EU production (9%)
• Overall, sector managed to remain stable during the pandemic Intra-EU trade (5%)
Extra-EU exports (54%)
Pig meat
• Drop in demand for duck, guinea fowl and quail Intra-EU trade (7%) EU production (-0.4%)
• Slaughterhouses and processing plants were forced to switch production Extra-EU exports (-3%)
from products in bulk intended for food service to retail products
Poultry meat
• Drop in sales in the food service channel and lower demand for at-home Extra-EU exports (26%) EU production (-3%)
consumption Intra-EU trade (-6%)
• Private storage aid for ovine and caprine animals aged less than 12
Sheep and goat meat months (only 15 tonnes benefitted)
• Increase demand for drinking milk. Conversely, cheese consumption EU production (6%)
affected due to the closure of the food service channel Intra-EU trade (6%)
• Prices remained stable, though farmers’ revenues still low Extra-EU exports (15%)
Milk and milk • Private storage aid for skimmed milk powder, butter and cheese
products
• Increase in retail sales during the first wave of the pandemic EU production (1%)
• Negative impact on eggs destined for food service Intra-EU trade (1%)
Extra-EU exports (3%)
Eggs
15/06/2021 Presentation for the Committee on Agriculture and Rural Development 52. Sector analysis and marketing resilience of EU food systems
in face to COVID-19
Sector Main impacts / findings Increase (in value) Decrease (in value)
2020/ previous 2020/ previous
5-year average 5-year average
• Increase retail sales during the first wave Intra-EU trade (-2%)
• Conversion of refineries production of fuel ethanol into alcohol for Extra-EU exports (-44%)
disinfectant
Sugar and ethanol • Negative impact on global market sugar prices in the first half of 2020
• Negative impact due to closure of food service Intra-EU trade (4%) EU production (-5%)
• Targeted support by EU and MSs (e.g. State-aid schemes) Extra-EU exports (-2%)
Wine
• Shortages of seasonal workers, restrictions to Intra-EU agri-food EU production (10%)
transport and an imbalance between market demand and supply at Intra-EU trade (10%)
the beginning of the crisis Extra-EU exports (4%)
Fruits and vegetables • Targeted EU measures (e.g. flexibility in expenditure for crisis
prevention and management and in aid applications)
• Increase in demand for fresh potatoes at retail level during the first EU production (5%) Extra-EU exports (-24%)
wave Intra-EU trade (7%)
• Negative impact due to closure of food service for processed potatoes
Potatoes • Potato Extra-EU trade severely hit by lockdowns in foreign markets
• Flowers and plants with 4.12 billion EUR of estimated losses in the EU production (5%)
first wave Intra-EU trade (9%)
• Limited EU support and asymmetrical support across MSs Extra-EU exports (6%)
Ornamental products
15/06/2021 Presentation for the Committee on Agriculture and Rural Development 63. Analysis of EU and national responses to mitigate the
effects of COVID-19 on the agri-food supply chain
Period of time covered: March 2020 – January 2021
Transport and free movement
Single
market Competition
measures
Food safety
EU
response
Agriculture Flexibility in the application of CAP rules
measures
Exceptional temporary support measures under EAFRD
COVID-19 Derogations from CMO competition rules
Temporary private storage aids (80M EUR)
Specific measures for the wine sector
Specific measures for the fruit and vegetables sector
Calls for promotion of products of certain agricultural sectors (10M EUR)
Member State
response
Degree of effectiveness according to EU stakeholders: High Medium Low
15/06/2021 Presentation for the Committee on Agriculture and Rural Development 73. Analysis of EU and national responses to mitigate the
effects of COVID-19 on the agri-food supply chain
Specific for the agri-food sector as n=103 63.9B EUR Focus: wine sector
a whole
State-aid
schemes • Crisis distillation (398.1M
General under ‘umbrella schemes’ 251.7B EUR EUR)
• Private storage (77.4M
EUR)
• Other (690.7M EUR)
Financial support measures n=70
Other
support
measures
Non-financial support measures n=37
Unused additional instruments to tackle market crisis
• The crisis reserve established under the CAP
• Appropriations-in-aid
• MFF margins
• Special flexibility instruments
15/06/2021 Presentation for the Committee on Agriculture and Rural Development 84. Lessons learnt and policy recommendations
Lessons learnt
• The EU agri-food sector as a whole performed relatively well in 2020 with production
and trade levels remaining stable
High degree of • Actors of the EU agri-food supply chain proved their capacity to adjust quickly to new
resilience circumstances
• EU intervention guaranteed the smooth functioning of the Single market
• CAP measures had mixed results having been implemented partially or inconsistenly
across MSs
• Economic burden of the sanitary crisis will be borne primarily by MSs.
Key policy recommendations
• Future policy responses to crises affecting the EU agri-food supply chain must be designed taking into
account that such crises can affect ALL actors and stages of the chain
• EU contribution via CAP in times of crisis can be strengthened by ensuring the decoupling of the CAP crisis
reserve from farmers’ direct payments and improved market management measures
• Monitoring market impacts of State aids provisioned by MSs during the pandemic while assessing whether
they may have resulted in any competition distortion in the Single market
• Strengthening of food assistance programmes particularly for the most deprived taking into the economic
consequences that the pandemic is likely to have on European households
15/06/2021 Presentation for the Committee on Agriculture and Rural Development 9THANK YOU FOR
YOUR ATTENTION
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