initial food price surges -up to 6.3 percent on average. Under escalating export restrictions, the ultimate impact on world food prices would be 17.9 percent on average. While results are sensitive to the size of the initial shock, in all cases uncooperative trade policy makes the impact on export supplies and food prices around three times higher than what would happen under no trade policy change.

**Table 4: Food export supply and price effects of Covid-19 under different trade policy scenarios and different initial shocks (percentage change)**

|||**Supply sho**|**ck**|**Price effect**<br>**from**|**using product l**<br>**Fontagne et a**|**evel elasticities**<br>**l(2019)**|
|---|---|---|---|---|---|---|
||**i. Covid-19**<br>**shock**|**ii. Export**<br>**restriction**|**iii. Retaliation**|**i. Covid-19**<br>**shock**|**ii. Export**<br>**restriction**|**iii. Retaliation**|
|Downward scenario(supplyshock 10 lower)|5.7|11.5|21.0|1.8|3.6|6.6|
|Baseline<br>|12.7<br>|23.1<br>|40.1<br> <br>|4.0<br>|7.4<br>|12.9<br>|
|Upward scenario(supplyshock 10 higher)<br>|19.7<br>|33.9<br>|55.4<br> <br>|6.3<br>|10.9<br>|17.9<br>|
|_Note:_The formula used to compute the<br>the importer and k is the product. Dire<br>elasticities from Fontagné, Guimbar an<br>aggregated using the share of country-pr<br>pre and post shock global imports.|changes in price<br>ct price effects<br>d Orefice (2019<br>oducts imports|s is:DpIdI<br>are calculat<br>) and are a<br>over global i|PIpddedIi<br><br>ed at the country<br>ssumed to be co<br>mports of food. S|= <sup>∆QpcdIpIQ</sup><br>-product leve<br>nstant. For e<br>upply shocks|<sup>i</sup>EcIpdpIQ<br>�<br>l using HS4 d<br>ach scenario,<br>are calculate|i<br>. Where i is<br>igit product<br>results are<br>d comparing|

# 7. **Conclusions**

This paper takes a first look at how Covid-19 might affect global food markets. We provide a quantification of the initial impact of the spreading of the virus and government containment policies on food export supply based on the assumption that sectors that require more labor would be more affected. We show that escalating export restrictions would multiply by a factor of 3 the decline in export supplies and surge in global food prices caused by the initial shock. Import food dependent countries, which are to a large extent developing and least developed countries, are expected to be most at risk of these developments in food markets.

Governments can limit these negative outcomes. Restrictions to exports are inherently beggar-thyneighbor policies: as a result of these measures, the domestic supply of food increases in the short term by an amount equal to the reduction in global export supply. This is the reason why export restrictions induce retaliation rather than cooperation. A first-best approach to address the challenges that Covid-19 presents to food security would consist in actions aimed at minimizing the disruption to food supply, such as ensuring that workers in food sectors can continue producing under good and secure health conditions, removing bottlenecks that impair food supply chains, and ensuring that trade in key inputs in food production can smoothly flow across borders. This approach, by increasing the domestic supply of food, would reduce global supply shortages and mitigate price surges, thus having a positive spillover effect on other countries.

This is admittedly a first attempt at quantifying the implications of the current crisis on food markets. There are several avenues for future research. First, the analysis on the sectoral impact of Covid-19 could be enriched to take into account other factors that differ across food products, such as differences in time sensitivity or in the production cycle of different crops. Similarly, the impact of supply shocks on prices would be mitigated by factors that vary by sector, such as the availability of buffer stocks. Second, our analysis is based on a partial equilibrium model that does not consider the fact that demand for food would be affected by the crisis. While, as noted by Baldwin (2020), governments’ stimulus packages are 17