PURDUE AG ECONOMIST ON THE FOUR IMPACTS OF CORONAVIRUS ON FOOD MARKETS
Mar. 25, 2020
Source: blog by Dr. Jason Lusk, Purdue University Ag Economics Dept Chair
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Last week was a whirlwind of trip and event cancellations, movement of courses online, and the dusting off of emergency and contingency plans. This week is likely to bring more social-distancing and quarantining measures. The ultimate toll and impacts of the coronavirus are highly uncertain at present. Nonetheless, it might be useful to speculate a bit about impacts of coronavirus and the events surrounding it on food markets.
1. Grocery buying behavior. It has been fascinating to watch online, and in my own local grocery stores, which items consumers are choosing to stock-up on. The run on toilet paper, for example, seems on the surface of it, downright irrational. After all, COVID-19 does not cause digestive issues. As irrational as the initial movement to toilet paper may seem, it isn't crazy for subsequent consumers to then stock up too.
After all, it doesn't take much for a reasonable person to see that if all other consumers are buying up all the toilet paper, that they'd better off getting theirs before none is left. There is a long and interesting economics literature on information cascades and herding behavior, which shows that even if you disagree with what other people are doing, it is sometimes sensible to go along with the crowd.
Much of the information we have at this point on which items are stocking-out is anecdotal, but there do seem to be some common trends in what I see in my own local stores and commentary online. For example, it seems many of the new plant-based burgers are being left behind while the rest of the meat case is being cleared (see here or here).
I was surprised to see in my own local store, that virtually all the beef was gone (except for a bit of ground beef), about half the pork was gone, and chicken was plentiful. This must say something about people's psychology to go for the highest-price, perishable produce in this time of panic; that or differences in supply chain issues, but more on that later.
In other aisles, rice and pasta went quickly, presumably for issues related to the long shelf life, should quarantining result. Still, I noticed what was left in those aisles were the gluten-free options and the lesser-known brands or unusual flavors, suggesting stock-outs are related to item popularity.
I hope we can learn more about this behavior after the fact. Unfortunately, it's difficult to study stocking-out phenomenon because stores are usually well stocked, and because grocery store scanner data only shows us what people bought, but we can't see what people didn't buy because it wasn't available.