In 2020, the agriculture and food sector experienced significant supply chain disruptions due to the COVID-19 crisis and associated lockdown measures. Yet relatively limited economic impacts were observed on the sector due to the agility of producers, supply chain actors and retailers, but also to the rapid and broad response by governments. Close to 800 measures were undertaken by governments in 54 developed and emerging countries, aimed to avoid aggravating disruptions, absorb supply and demand shocks, provide relief to affected producers and consumers, or to bolster the recovery of affected production activities. At least USD 157 billion was earmarked to the agriculture sector to support these measures, with a large part going to food assistance. As the impact of the COVID-19 pandemic on this sector subsides, policy makers will need to pivot and shift spending to investments that can enhance sector-wide resilience.
In 2020, the agriculture and food sector faced significant supply chain disruptions due to the COVID-19 pandemic and associated lockdown measures in a number of countries. This brief presents a snapshot of the overall performance of the agriculture and food sector in 2020 and analyses the broad set of agriculture and food policy responses adopted by governments in response to the pandemic and associated lockdown measures. While national policy evaluations have not yet been completed, the analysis offers an overview of the diversity and potential effect of policy responses. It also outlines some of the next steps required to ensure that the recovery can help improve the capacity of the agriculture and food sector to become more productive, sustainable and resilient.
Three main types of impacts were observed on the agriculture and food sector . First, the production of certain agriculture goods was reduced due to the unavailability of seasonal labour, restrictions in the access to intermediate agriculture inputs, and the incapacity to sell output. Second, there were impacts on consumer demand driven by unemployment and income shocks associated with the containment measures, reduced demand for high value products, consumer shift in demand from food services, and decline in biofuel demand. Third, supply chain disruptions were observed in many countries, due in part to the contamination of employees in processing firms, the adoption of distancing and sanitary requirements, and transport and logistic issues.
On an annual basis, available evidence suggests that, on average, the agriculture and food sector had an economically successful year. In particular:
The global production of major commodities ‒ including wheat, maize, rice and soybean ‒ increased in 2020 .
Gross farm receipts (GFR), which capture farmers’ overall income, increased by 5% from 2019 to 2020 in 54 OECD and emerging economies (Figure 1). The increase was higher in emerging countries (7%) than OECD countries (2%). This increase was largely driven by the People’s Republic of China (hereafter “China”) (+12%), but also the United States (+3%), the European Union (+1%), and 14 other countries. In contrast, India (-3%), Mexico (-5%), the United Kingdom (-2%), and eight other countries saw decreased GFR.
While international agricultural trade dropped during the first few months after the outbreak, trade recovered rapidly , and on average grew between 2019 and 2020 (Figure 2).
Despite some early turbulences in specific markets, average food prices remained relatively stable on an annual basis (Figure 3) .
The outbreak of the pandemic and subsequent lockdown and regulatory measures led to multiple adjustments by actors along agriculture and food supply chains ;;.In particular, fruit and vegetable producers looked for new sources of labour, foods processors and wholesalers adopted new sanitary measures, retailers adapted to shifts in consumer demand, while food services developed deliveries at home.
Governments and public services also undertook multiple actions to limit risks for the sector. They had to balance their fight against the spread of the virus with measures to ensure accessible and affordable food supplies to their population. Internationally, they made efforts to ensure that supply chain disruptions remained limited to avoid global food price hikes like those seen in 2007-08.
This section presents an overview of government measures introduced in 2020 in 54 OECD and emerging countries, using a variety of categorisations, focusing mainly on the number and type of measures, their potential impact and associated budget figures. The dataset used for analysis was compiled from information on domestic and international trade-related COVID-19 policy developments collected by the OECD.
Governments of the covered countries and the European Commission introduced 776 unique policy measures to respond to the COVID-19 related crisis during 2020, of which 496 were introduced in the first four months ;.
The nature of the government responses varied widely. Seven categories of measures can be distinguished to characterise the scope of governments’ response: 1. Sector-wide and institutional measures; 2. Information and co-ordination measures; 3. Measures on trade and product flows (enhancing or restricting trade); 4. Labour measures (biosafety and worker measures); 5. Agriculture and food support (or support for agriculture and food companies); 6. General support (including packages that apply to the sector); and 7. Food assistance and consumer support (demand side interventions). As shown in Table 1, each of these categories can be further broken down, resulting in twenty sub-categories.
Government measures were distributed across those seven categories, with 37% of the 776 measures focusing on agriculture and food support, 5% on institutional measures, and 8% on food assistance measures, with the remaining four categories covering between 11% and 14% of measures (Figure 4).
Sub-category of measures
1. Sector-wide and institutional measures
1.A. Declaration of essential sector
1.B. Measures related to the functioning of the government
2. Information and co-ordination measures
2.A. Websites, campaigns
2.B. Monitoring the agriculture market
2.C. Co-ordination with the private sector
2.D. International coordination
3. Measures on trade and product flows
3.A. Trade easing measures
3.B. Logistics and transport facilitation measures
3.C. Trade restricting measures
3.D. Rechannelling product flows
3.E. Facilitating internal market integration
4. Labour measures
4.A. Measures to ensure the health of workers
4.B. Agriculture labour measures
5. Agriculture and food support measures
5.A. General financial support for the sector
5.B. Specific product support
5.C. Administrative and regulatory flexibility
6. General support applicable to agriculture and food
6.A. Overall economic measures
6.B. Social safety nets
7. Food assistance and consumer support
7.A. Food assistance
Source: OECD .
Governments in the countries covered adopted policy responses in many categories. Thirty-eight of the 54 countries applied measures in all seven categories, while ten countries applied measures in six of the seven categories. Fifty or more countries applied trade and product flow measures, information measures, or agriculture and food support measures, while the other categories of measures were each applied by at least 46 countries (Figure 5).
At the same time, differences in the number of measures by category can be seen among regions and countries. In particular, 54% of measures undertaken by governments in OECD countries focused on the three categories of financial support (categories 5. Agriculture and food support, 6. General support, and 7. Food assistance and consumer support measures), with the largest share of measures in the agriculture and food support category (35%). In contrast, 58% of measures undertaken by emerging economies were in the non-support categories of measures (categories 1. Sector wide and institutional, 2. Information and co-ordination, 3. Trade and product flows, and 4. Labour measures), with the largest proportion of measures (26%) in the trade and product flow category.
Most measures were new programmes, funding or approaches to respond to the crisis. Only 11% of the unique measures recorded explicitly built on existing policy measures already in place; almost all of that in the agriculture and food support category in the form of flexibility or changes in existing policy programmes. Innovative approaches were used, for instance, to re-channel food unused by closed schools towards families, to hire temporarily unemployed workers from cities in fields, and to use digital tools to ease market and trade controls.
Government responses also differed in purposes, timing and scope, and therefore potential impacts, as characterised by the following grouping of measures:
Urgent measures to ensure supply: These emergency measures were taken at the onset of the crisis to ensure supply and keep the sector functioning. Examples include measures to ensure the safety of food systems actors; declaring agriculture and food as an essential sector; measures to ensure the functioning of government agencies; co-ordination of responses with the private sector; and national and international logistic and transport measures, including setting up green lanes to ensure the continuation of trade. These measures are intrinsically linked to the pandemic and could be lifted after the COVID-19 crisis. This group includes 150 unique measures (19% of the total).
No-regrets measures: These measures improve market functioning and thereby contribute to improved resilience. They could have been taken before, and should be maintained or even scaled up after the COVID-19 crisis. This group includes measures supporting digital innovations that facilitate e-commerce; exchange of information; agriculture job-matching information centres; and training or trade facilitation measures. This group includes 75 unique measures (10% of the total).
Temporary relief measures: These measures seek to contain the impact of the crisis on agriculture and food sector actors, from producers to consumers. Governments considered them necessary but they should include sunset clauses to avoid outliving their original rationale and creating unnecessary market distortions. These measures comprise largely temporary trade and markets measures to relieve domestic economic pressure, agricultural support measures, including those that compensate producers and agro-food chain actors for damages incurred; consumer and food assistance measures; and measures that lifted or limited regulatory requirements for farmers. This group is the largest, with 537 unique measures (69% of the total).
The remaining 14 measures (2%) could not be attributed to any of the groups.
Measures in the three support categories (5, 6 and 7) are overwhelmingly temporary relief measures, but measures in other categories belong to different groups (Figure 6). Urgent measures to ensure supply include institutional and informational measures, but also labour measures and trade and product flow measures (categories 1 to 4). No-regrets measures were mostly information and co-ordination measures and product and trade flow measures that enhance the functioning of markets (categories 2 and 3).
A large majority of countries implemented measures that belong to each of these groups, even if some differences are observed across countries. All but two countries (52) applied one or more urgent measures to ensure supply, and the same number of countries applied temporary relief measures; fewer countries (46) applied at least one no-regrets measure. OECD countries applied relatively more temporary relief measures than emerging economies, who applied relatively more of measures in the other two groups.
An additional distinction was made to identify measures that could at least temporarily be potentially market and trade distorting or environmentally harmful. Eighty-five unique measures (11% of the total) introduced by 47 countries were identified to have potentially negative impacts on markets or the environment, belonging to the agriculture and food support category, the trade and product flow, and the food assistance categories. These included temporary trade bans or export restrictions, market price controls, relaxed environmental regulations, and specific support measures for different agricultural commodities.
Governments in many countries adopted comprehensive economic recovery packages with measures that included new liquidity, flexibilities in taxes, or subsidies which applied to firms in the agriculture and food sector. At the same time, governments in many countries created specific financial support measures to the agriculture and food sector.
A preliminary assessment of budgetary allocation in response to the COVID-19 impact based on collected information suggests that governments dedicated a minimum USD 157 billion in response to impacts to the sector (Table 2). Of this total, USD 116 billion was earmarked in the form of grants, payments or other funding, while USD 41 billion was offered in the form of subsidised rates loans, new credit lines, and other mechanisms. At the same time, USD 5.6 trillion was provisionally identified in general recovery packages, an undetermined share of which applied to the food and agriculture sector (category 6. general support).
Category of measures
5. Agriculture and food support
7. Food assistance and consumer support1
3. Measures on product and trade flows2
4. Labour measures3
Note: Reported support in this table was promised but not necessarily spent in 2020.
Specifically food assistance measures.
Measures facilitating market functioning, logistics and infrastructure (general services).
Including biosecurity measures.
Source: OECD .
Sector specific earmarked funding primarily focused on relief measures for agriculture and food actors, and food assistance measures (83%). Twelve per cent of financial support focused on general services, such as infrastructure development, e-commerce development, and measures easing trade, which are listed under the category of measures on product and trade flows. The remaining 5% of support was directed towards addressing labour shortfalls and implementing bio-sanitary measures, including compensation for the culling of minks potentially infected by the COVID-19 virus and equipment support.
OECD countries and emerging economies allocated funding differently. OECD countries’ financial support amounted to USD 75 billion, almost entirely dedicated to relief measures expressed in terms of agriculture and food support (USD 32 billion) and food assistance (USD 41 billion), with the remaining funding going towards labour and biosafety measures. In contrast, emerging economies reported USD 82 billion of financial support, including USD 34 billion going to agriculture and food support and USD 24 billion to food assistance, implying lower shares of overall support in these categories and a higher share of funding allocated to general services enhancing market and trade than in OECD countries.
Despite significant disruption to the agriculture and food supply chains, particularly in the first half of 2020, most sector shocks were absorbed rapidly, with trade and markets recovering during the year. Average gross farm receipts for OECD and emerging economies actually increased in 2020, and the sector was the best performing or least affected economically in several countries. At the same time, restricting measures impacted the food security of many low income or unemployed consumers.
This relative economic resilience of the agriculture and food sector was largely due to sector specific policy measures undertaken by governments in response to the COVID-19 pandemic and associated restrictions. Many governments moved swiftly to keep agricultural supply chains functioning, including by designating agriculture and food as an essential sector and by ensuring international co-operation to limit trade disruptions.
An estimated 776 unique policy response measures were adopted by governments of 54 OECD and emerging economies in 2020. These measures were widely diverse, highlighting the breadth and responsiveness of public actions to address the impact of the crisis. Close to 20% of the total were urgent measures, adopted in order to contain the pandemic while keeping food and agriculture supply chains working. Just under 70% of measures took the form of temporary relief, seeking to contain the impact of the crisis on agriculture and food sector actors, and should be phased out as the crisis recedes. Most of the remaining measures (10%) were “no regrets” policies with the potential to improve the long-term resilience of the agro-food sector, and which have the potential to be scaled up further. At the same time, 11% of measures had the potential to distort markets or be harmful to the environment.
A first assessment of budgetary expenditures in response to the COVID-19 crisis suggests that a minimum of USD 157 billion was earmarked in funding or offered in financing means to the sector in 2020, including USD 75 billion in OECD countries and USD 82 billion in emerging economies. Actual disbursements have so far been lower, partly reflecting the overall resilience of agriculture to the COVID-19 shock, and the fact that recovery packages in several countries include multi-year investments.
While governments should remain particularly vigilant with respect to food insecurity and the potential for aftershocks as the virus evolves, agriculture and food policies should gradually shift focus towards improving the overall resilience of the sector to future shocks and crises, not least those resulting from climate change. Key priorities include no-regrets investments (for example, in infrastructure and biosecurity), strengthening agriculture and food innovation systems, and bolstering the capacity of food sector actors to respond to risks. The climate crisis provides a longer term imperative to reorient policies in ways that encourage sustainable agricultural productivity growth and strengthen resilience, and help address broader food system challenges in view of fulfilling the 2030 Sustainable Development Goals.
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Guillaume Gruère (✉ guillaume.gruè[email protected])
Thirty-seven OECD countries, non OECD EU members, and 13 emerging economies: Argentina, Brazil, China, Colombia (which became an OECD member late in 2020), Costa Rica, India, Indonesia, Kazakhstan, the Philippines, Russia, South Africa, Ukraine and Viet Nam.
This section is largely drawn from OECD .
While the reported set of measures is comprehensive and covers all the most important policy responses, it does not claim to capture all measures introduced in the 54 countries.
The overall number of unique measures for the year 2020 increases to 1 086 applied policy measures if EU-wide measures, applicable to all Member states, are added to unique measures for each of the EU Member States (including for the period covered, the United Kingdom).
Examples of individual country measures in each sub-category are available in OECD .
While targeted food assistance for low-income households can also be considered urgent, the implemented measures essentially aim to cushion consumers from the economic impacts rather than cope with the urgency of the crisis for the delivery of agriculture and food products.
Gaps in the data strongly suggest that it is an underestimate of budgetary expenditure. In particular, the assessment focuses on the subset of measures for which financial information was available (in total 119 unique measures in 41 countries). Furthermore, general recovery packages used on the agricultural sector was not identifiable for all countries. For more information, see OECD .