Alex Barrett

Agriculture Marketing

November 14, 2022

Impact of COVID-19 on Agriculture Marketing

Abstract

The year 2020 was a tough year for many different aspects of life. In this paper, there is a

review that investigates how the COVID-19 pandemic affected different parts of the agriculture

industry. During the thick of the COVID-19 pandemic, different aspects of agriculture were

affected in various ways. Throughout this review, a look into how the COVID-19 pandemic

affected agriculture markets will be discussed. Within this topic, commodity futures marketing,

transportation, and pricing, and the impacts of the COVID-19 pandemic will be reviewed. The

COVID-19 pandemic had major effects on more aspects of the agriculture industry and the

world, in general, but a look into this more specific part of the agriculture industry is a very

interesting one.

Introduction

The first case of COVID-19 in the world was diagnosed in the closing time of 2019.

Cases of COVID-19 started to rise and eventually make their way to the United States of

America. A state of emergency was declared by President Donald Trump in March 2020. A

national quarantine started for many different jobs. Schools shut down and many jobs went

remote or just ended up being lost. A shutdown for one industry, in particular, was not plausible.

The agriculture industry could not shut down, but the COVID-19 pandemic did affect the
industry, nonetheless. Approximately three years since the start of the COVID-19 pandemic, a

look into the effects that the pandemic had on the industry is much clearer and more interesting.

There are many ways to examine how the COVID-19 pandemic affected the agriculture industry.

One major aspect of the agriculture industry that was affected by the COVID-19 pandemic was

the agriculture markets. A look into this broader subject will show three major, more specific

parts of the agriculture industry. These parts that will be discussed are commodity futures

marketing, transportation, and pricing.

Literary Review

The first specific part of how the COVID-19 pandemic affected agriculture marketing is

to look at how the COVID-19 pandemic affected commodity futures marketing. The first journal

being analyzed is named “COVID-19 impact on commodity futures volatilities,” written by

Yongmin Zhang and Ruizhi Wang. These writers explained how the COVID-19 pandemic had

effects on most parts of the global economy, but it more specifically affected commodity futures

marketing. They used a model named the ARMA-GARCH to look and dive into the impact of

the pandemic on both long-run and short-run volatilities. They also looked at more than just

marketing for agriculture, they looked into how the COVID-19 pandemic impacted commodity

futures marketing for energy and industrial and precious metal commodities as well. The four

commodities that they looked at were copper, soybean, oil, and gold. Their research found that in

the long run, the COVID-19 pandemic increased the volatilities for all of the commodities that

they had looked at. In contrast, in the short run, the COVID-19 pandemic had mixed effects on

the four commodities that were being looked at. The volatilities increased for the copper and

gold futures while the soybean and oil futures had decreased volatilities. They made assumptions

that these volatilities in the short run were most likely due to the different usages, supply and
demand, and price stabilization measures made by the government. The next journal that was

examined was named “Price overreactions in the commodity futures market: An intraday

analysis of the Covid-19 pandemic impact.” This was written by Oliver Borgards, Robert L.

Czudaj, and Thi Hong Van Hoang. In this, the writers looked at the overreaction behavior of

commodity futures marketing. They looked at data between the dates of November 20, 2019, and

June 3, 2020. The writers found that the overreactions of many commodity futures markets

caused opportunities for traders to exploit the markets. The overreactions provided many traders

with great opportunities for profits in their trading returns. This journal looked at twenty

different commodity futures markets and found many overreactions in the intraday data between

the dates November 20, 2019, to June 3, 2020. They found that the reason for this was that all

classes of commodities have strong involvement with the supply chain. Recent studies had

shown that there were large effects of the COVID-19 pandemic on the supply chain and

commodity markets. A lot of the markets had very similar effects, but the journal and its writers

found some differences as well. While the data showed that energy prices had fallen and

decreased, the data also showed that the prices increased for commodities such as agricultural

commodities, raw materials, and metals. The lockdowns put on by the government had the

greatest impacts on the commodities futures markets.

The second part of how the COVID-19 pandemic affected agriculture marketing is to

look at how the COVID-19 pandemic affected agricultural transportation. The first journal being

analyzed is named “Agriculture, transportation, and the COVID-19 crisis,” written by Richard S.

Gray. The solo writer of this journal explores the disruptions of transportation and how it affects

the supply chains in Canadian agriculture. This also has similar impacts on all agricultural

transportation. The writer of this journal looked at multiple types of different transportation
methods. The writer looked at “bulk ocean freight, rail movement, intermodal containerized

movement, trucking, and home delivery.” He says that agricultural goods are mainly transported

by truck and train to the port and then ocean freight from the port to other countries. First, he

looks at the bulk ocean freight. He shows a graph from the Baltic Exchange Dry Index which

shows a decrease of eighty percent over a six-month time range during the early parts of the

COVID-19 pandemic. Next, he looks at the rail movement for agricultural goods and

commodities. As he is looking at Canadian agriculture, he states that trains and railroads are very

essential to western Canada. In western Canada alone, railways are used to move forty to fifty

million tons of grain. He noticed some drops in the amount of grain being moved in western

Canada. He says that this is not due to the COVID-19 pandemic because the transportation of

grain was slow due to “delayed wet harvest, early onset of winter temperatures, labor strike, and

protest-related blockages.” Mr. Gray states that the grain movement by railway accelerates in

March 2020. This shows that the railway was not impacted much by the COVID-19 pandemic.

He assumes that this is because rail movement continues to become less labor-intensive,

therefore, not needing as many people. Finally, he looks at trucking services. This had more

impact from the COVID-19 pandemic than the railways due to the lockdown and social

distancing measures that the government placed. He states that the trucking systems had to make

a lot of changes to make sure that there was much less face-to-face contact. Due to grocery

stores, restaurants, and other food places in the food supply chain being closed, the trucking

system was impacted due to there not being as much need for it. The only impact that helped the

trucking industry was the fact of the decreased fuel prices. The next journal that is being

examined is “Food and Agricultural Transportation Challenges Amid the COVID-19 Pandemic,”

written by Lurleen Walters, Tara Wade, and Shellye Suttles. This journal looked at how the
COVID-19 pandemic affected food supply chains. During the COVID-19 pandemic, many parts

of the economy were deemed nonessential and were closed during shutdowns. In March 2020,

food, agriculture, and transportation systems were announced to be essential by the U.S.

Department of Homeland Security. Due to many of the “nonessential” businesses being closed,

many restaurants were a part of this. Having restaurants and other stores in the food supply chain

closed, affected the transportation needs of agricultural goods and commodities.

The third and final part of how the COVID-19 pandemic affected agriculture marketing is

to look at how the COVID-19 pandemic affected agricultural pricing. The first journal being

analyzed is named “Impacts of the COVID-19 Pandemic on the Global Agricultural Markets,”

written by Christian Elleby, Ignacio Pérez Domínguez, Marcel Adenauer, and Giampiero

Genovese. The writers of this article explain how some agricultural goods and commodities

prices were affected by the COVID-19 pandemic. The writers put their research into different

tables to show the price changes and projections for later price changes for biofuels, dairy,

grains, meat, oilseeds, and other processed products. These tables for all of the aforementioned

agricultural goods and commodities have a lot of similarities. The prices for these agricultural

goods and commodities sharply decreased in 2020 and then rise in 2021 and 2022. After the

great increase in price, the graphs look to lower again and then flatten by the time 2030 would

come around. These prices look to be higher than the prices before the COVID-19 pandemic.

The next journal that is being examined is “Oil prices and agricultural commodity markets:

Evidence from pre and during COVID-19 outbreak,” written by Ngo Thai Hung. The writer

examines the price changes of crude oil and agricultural commodities right before the outbreak

of the COVID-19 virus and during the COVID-19 pandemic. Ngo Thai Hung states that global

economic performance can be determined by basically just looking at how crude oil prices and
agricultural commodity markets are doing. According to the writer of this journal, crude oil

prices plummeted to just above a dollar per barrel in early 2020. It was found that due to the

plummeting prices of crude oil and fuel, agricultural commodity prices were influenced by

restrictions put on the production and transportation of agricultural goods and commodities. The

changes in prices for agricultural goods and commodities during the COVID-19 pandemic

caused other problems as well. Global hunger problems were getting worse or at least

experiencing more pressure than before the outbreak.

Conclusion

After looking at these various articles and journals about how the COVID-19 pandemic

affected different parts of the agriculture industry, some conclusions can be made. In more depth,

the review paper looked into commodity futures marketing, transportation, and pricing, and the

impacts of the COVID-19 pandemic. The COVID-19 pandemic affected everybody’s life in

some way or another. It was very interesting to see how it affected the agricultural industry,

specifically commodity futures marketing, transportation, and pricing. The pandemic affected

different parts of the agriculture industry very differently.

Work Cited

Elleby, C., Domínguez, I.P., Adenauer, M. et al. Impacts of the COVID-19 Pandemic on the

Global Agricultural Markets. Environ Resource Econ 76, 1067–1079 (2020).

https://doi.org/10.1007/s10640-020-00473-6

Gray, RS. Agriculture, transportation, and the COVID-19 crisis. Can J Agr Econ. 2020; 68: 239–

243. https://doi.org/10.1111/cjag.12235

Ngo Thai Hung, Oil prices and agricultural commodity markets: Evidence from pre and during

COVID-19 outbreak, Resources Policy, Volume 73, 2021, 102236, ISSN 0301-4207,

https://doi.org/10.1016/j.resourpol.2021.102236.

Oliver Borgards, Robert L. Czudaj, Thi Hong Van Hoang, Price overreactions in the commodity

futures market: An intraday analysis of the Covid-19 pandemic impact, Resources Policy,

Volume 71, 2021, 101966, ISSN 0301-4207,

https://doi.org/10.1016/j.resourpol.2020.101966.

Walters, Lurleen, et al. “Food and Agricultural Transportation Challenges Amid the COVID-19

Pandemic.” Choices, vol. 35, no. 3, 2020, pp. 1–8. JSTOR,

https://www.jstor.org/stable/27098566. Accessed 29 Nov. 2022.

Yongmin Zhang, Ruizhi Wang, COVID-19 impact on commodity futures volatilities, Finance

Research Letters, Volume 47, Part A, 2022, 102624, ISSN 1544-6123,

https://doi.org/10.1016/j.frl.2021.102624.