UK Food Supply Challenges in 2020

This project provides information on the UK food supply challenges in 2020. It analyzes the impact of COVID-19 on the food supply, government interventions, and strategies to address market failures.

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EXECUTIVE SUMMARY
This project provides information on the UK food supply challenges in 2020. In this
report presented the business economics, description and use of economic theory of Demand and
Supply. The explanation of the law of the demand and supply is made through the representation
of graphs. The representation shows the shifts in the demand and supply curve along with the
equilibrium price and quantity with examples. Further the explanation of the shortage and
surplus food supply is provided. What are its effects in the market? Also outlined failures of
market of the United Kingdom and the interventions made by the UK government to cope-up
with the failures. Different government strategies viz. Quotas, Taxation, Fiscal Policy, and social
welfare strategies is mentioned, and the details are explained. In the end a statement of an
argument is provided how the UK government effectively addressed food supply market failures
in 2020 and what are the measures that can be taken to further improve the policies. The
conclusion is made on the findings of the analysis of the UK markets and the application of the
law of the demand and supply on the food supply during the crisis of COVID-19 in 2020.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
TASK 1.......................................................................................................................................4
Law of Supply and Demand and its application to UK food supply.........................................4
1.a Movements in Supply Curve.................................................................................................4
1.b Equilibrium in demand and supply Curve............................................................................8
TASK 2.....................................................................................................................................11
Market Failures and interventions of the United Kingdom Government in 2020...................11
2.a Government Strategies........................................................................................................12
2.b Argument............................................................................................................................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................15
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INTRODUCTION
Economics is a study related to the behaviour of the human being how it relates to the
production and consumption of the goods and services. It is divided into two parts viz.
Microeconomics that relates to the human being and their businesses. Other is Macroeconomics
that relates to the whole nation's economies. Business economics studies the various factors that
relates to the business and the behaviour of the parties related to the business environment
(Krugman and et.al, 2019). In this report macroeconomic factors which is the supply and
demand, that affected the United Kingdom’s food supply has been analysed and its impacts over
the country is presented. Further in the study highlighted the impact of COVID-19 and the
interventions of the UK government to address the issue of food supply in the country. Facts and
examples of the government interventions from the news and publications is being added to
support the study.
MAIN BODY
TASK 1
Law of Supply and Demand and its application to UK food supply.
The principles of the Demand and Supply shows the interrelationship of the supply of the
product and services with that of demand. It shows how much the buyers of the product/service
have the willingness to pay and supply of the Product/services in the market. The principles
stated the general relationship that when the demand increases, and the supply is low the price of
the products or services increases and vice-versa when supply increases and the demand
decreases (Krugman and et.al, 2019). In the context of the UK food supply during the pandemic
of COVID-19 people tend to increase in stockpiling goods which in result cause the scarcity of
the goods in the UK markets. The COVID-19 outbreak hindered the food supply which the
retailers are not able to cope-up due to agile and insufficient supply systems.
1.a Movements in Supply Curve
A supply curve is a representation of the movement in price and the quantity supplied in
the market. It stated that with increase in the price of the product or services in the market the
supply is also increase and because of the interrelationship the supply curve always slopes
upward (Krugman and et,al, 2017).

Example: Food supply of the United Kingdom is also influenced by the change in income with
that of the availability of the of goods and services in the market at a particular point of time.
Income of a person increases with it the person have more money to spend. The person tends to
purchase more which increase the price of the food products and as a consequence the supply of
the food products also increases.
Shifts in the Supply Curve
1. Left shift: The shift in the supply curve indicates that with the increase in the prices of
the goods in the United Kingdom the suppliers of the goods are not able to produce more
push supply into the markets of UK. The food supply during the COVID-19 event
experience the same situation the supply is limited. Example: if income of the people of
UK increases they purchase more products and to avail the benefits the manufacturer
increase the price of the products but supply remains the same.
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With the shift in supply curve to left the supply curve move to S position to S1 position in
upward direction.
2. Right shift: The shift in the supply curve indicates that the prices of the goods in the
United Kingdom did not much increase and stayed stable but the suppliers of the goods
increases the supply of what is needed. Example: With the increase in Income of people
of UK they had more to spend but the prices of the products did not increase but only
food supply. With high supply people have plenty of products that can purchase at low
prices.
With the shift in supply curve to right the supply curve move to S position to S1 position in
downward direction.
Movements in Demand Curve
A demand curve is a graphical representation of the movement in price and the quantity
demanded in the market. It stated that with decrease in the price of the product or services in the
market the demand increase and because of the interrelationship the demand curve always slope

downward. Example: It is because when the income increases and with the decrease in prices
the consumers purchasing power is increasing and they tend to purchase more goods and services
thus, increase in demand in the point of time.
Shifts in the Demand Curve
1. Left Shift: The shift in the demand curve indicates that with the decrease in the price of
the goods in the United Kingdom the demand of the goods decreases. Example: It is
because due to COVID-19 the income level of the population of the United Kingdom
decreases and the result in the reduction in the price of the goods that in turn decrease the
demand of the food supply.
With the shift in demand curve to left the demand curve move to D position to D1 position in
downward direction.
2. Right Shift: The shift in the demand curve indicates that with the increase in the price of
the goods in the United Kingdom the demand of the goods also increases. Example: If the
income level of the population of the UK is increase, they tend to buy more that in turn
increase the price of the food supply because the consumer is ready to spend more. That
will result in the increase of the demand of the goods.
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With the shift in demand curve to right the demand curve move to D position to D1 position in
upward direction.
1.b Equilibrium in demand and supply Curve
The equilibrium is formed when the demand and supply curve intersect at a point. It
represents the same price level at which the supplier of the goods wants to sell and the same
quantity level at which the consumers want to buy the goods. Equilibrium is achieved when the
supply of the goods is equal to the demand of the goods. The equilibrium will change with the
shift in the demand and supply.
Shift in Equilibrium with the left shift in supply curve
In this case the equilibrium is achieved at higher price of the product and low supply.
With the left shift in the supply curve the equilibrium price of goods increases, and the
equilibrium quantity decreases. Example: At the point of time. The price of the product
increases and the supply decreases as supply chain so the equilibrium point also shifted upward
but supply remain the same.

With the shift in supply curve to left the supply curve move from equilibrium position E to E1
position. The equilibrium Price shifted to P to P1, and equilibrium Quantity Shifted to Q to Q1.
When supply of the goods decreases in the market the prices of the goods increase in the market.
Shift in Equilibrium with the right shift in supply curve
In this case the equilibrium is achieved at lower price of the product and high supply.
With the right shift in the supply curve the equilibrium price of goods decreases, and the
equilibrium quantity increases. Example: If the income of the people of UK is increasing and the
supply is also increasing. The prices of the products decreases and the product becomes cheaper.
With the shift in supply curve to right the supply curve move from equilibrium position S to S1
position. Price shifted to P to P1 and Quantity Shifted to Q to Q1. When Prices of the goods
decreases in the market the quantity of the goods increases in the market.
Shift in Equilibrium with the Left shift in Demand curve
In this case the equilibrium is achieved at lower price of the product and low demand.
With the left shift in the demand curve the equilibrium price of goods decreases, and the
equilibrium quantity demanded also decreases. Example: If the income of the UK population
increasing and supply of the product is decreasing. The equilibrium point shifted downwards as
with the decrease in quantity supply the prices also decreases but the demand remains the same.
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With the shift in demand curve to left the demand curve move from equilibrium position E to E2
position. Price shifted to P to P1 and Quantity Shifted to Q to Q1.
Shift in Equilibrium with the Right shift in Demand curve
In this case the equilibrium is achieved at higher price of the product and high demand.
With the right shift in the demand curve the equilibrium price of goods increases, and the
equilibrium quantity demanded also increases.
Example: if the income of the people of the UK increasing at the same time the prices of the
products and supply also increasing then the equilibrium point shifted upward but demand
remains the same. With the shift in demand curve to right the demand curve move from
equilibrium position E to E2 position. Price shifted to P to P1 and Quantity Shifted to Q to Q1.
When Demand of the goods increases the prices of the goods increases along with supply of the
goods in the market.
Shortage of the food supply in United Kingdom

The demand of the food supply during the COVID-19 pandemic increases and the
non-availability of supply due to shortage results in the increase of the prices of the food
products. The people of UK started stockpiling of the goods in the fear get infected and
disorganisation of the supply chain that leads to food shortage in UK.
Surplus of the food supply in United Kingdom
The suppliers are producing more to satisfy the food supply demand which result in the
over production of the food products that leads to excessive supply of the food products and in
turn decrease in the prices of the products. With more product in the market having high demand
the supplier tries to gain more profit. But the surplus in the market leads to wastage of the
excessive produced goods that are not distributed and consumed.
TASK 2
Market Failures and interventions of the United Kingdom Government in 2020
With the outbreak of the COVID-19 pandemic crisis on 2020 the economy of the Britain
was likely to suffer worst damage than any other developed country (UK economy likely to suffer
worst Covid-19 damage, says OECD, 2021). The United Kingdom's national income decline
around 11.5% during 2020. Britain had forecasted an unemployment of 9% which had worsened
the situation of the economy of UK.
Further, the consumers of the country hoarding the goods because of the fear of getting infected
with of the virus. The delaying of goods to the retail markets due to disturbance in the food
supply chain as transportation got hindered as lock-down was imposed by the government.
Government had made interventions to recover the market conditions that are as follows:
 Simplification of the regulations on industries so, better co-ordination is achieved
between the food supply and the transportation.
 To ensure ample personnel level in the food businesses and provide recognition to those
personnel.
 Food labelling rules were simplified.
 The Food Standard Agency (FSA) eases the hygiene and audits requirements.
 Defra liasoning had been adopted by the public as well as private organisations.
 The grant for COVID-19 emergency surplus food to lease-up the challenges faced by the
United Kingdom's not-for-profit food distributors.
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It has been found out that the drastic impact was on UK fresh produce sector because of the
COVID-19 pandemic due to international trade restrictions. A review on food processing
facilities had been made and find-out that the cool atmosphere of the facilities has more prone to
the spread of the virus. United Kingdom's food supply was disturbed due to high food prices
caused by the trade restrictions by the several countries and financial effects due to high
predictions of the highly demanded commodities. The pandemic had also led to wastage of food
that had increased at 40% of what is produced and consumed by the population (Effects of
COVID-19 on the food supply system, 2021).
2.a Government Strategies
Tariff Quotas
The preference is provided by the European Union which address the limited amount of
goods allowed to circulate freely at low rates of charges and custom duties.
Quota information in the UK Trade Tariff
The goods that are eligible for the quota’s relaxation are prescribed in the UK Trade
Tariff schedule. Certain hand-made products originated from the 23 countries eligible for duty-
free (UK Trade Tariff: tariff quotas and ceilings, 2021). Various Tariffs have been levied on the
products included in the quotas. The items included in the quotas are hand-made products, hand-
loom fabrics, re-imported textiles, and yarns.
Taxation
The government of UK has stated a taxation policy on according to which tax is levied on
the income of the residents of United Kingdom. The people of the country have allowed a
personal allowance of £12,500 that the residents do not have to pay tax. The government in the
budget 2020 made commitment in reducing taxes on the wages which will result in the £104
saving to an employee. The government has waived the import duty and VAT on the products
like medical equipment’s, supplies, and protective wears.
Tax Relief
Allows on contribution of pension, charities, maintenance payments and time spent on a
voyager outside the country. It also provides relief on what is been spent on the businesses.
Fiscal Policy
The government in response to the outbreak of COVID-19 takes drastic measures in
concerned with the population concerned of the effect on their livelihood, downfall of the

demand, interference in the supply change and its workforce. The Public budget provide £12
billion to support individuals, organisations, and public entities. A COVID-19 Business
interruption loan scheme to lend £1 billion to Small & Medium Enterprises and £2.2 billion grant
to small businesses. The government also announces £640 billion investment for infrastructure
development in UK by 2024-2025.
Social Welfare Strategies
The government of UK has provided the priority to the care home protection by infection
control. In the month of April 2020, the government had published an action plan to support
25,000 adult social care providers. It had been supported by the £3.2 billion funding to local
authorities and £1.3 billion for NHS.
2.b Argument
Although the UK government had made many interventions to correct the food supply
challenges during 2020 but the crises has raised a question on the flexibility of the food supply
system. For the government it is not possible to plan for every uncertainty arises. The current
crisis had identified the gaps which can be improved. It has been found out that no such order
present which prioritise food into the food policy-preparation (Market Failure & Government
Intervention (Revision Presentation), 2018). A few departments are involved in the policy
formulation of the country which had due to COVID-19 gets disconnected and creation of the
doubt between these departments had been seen. The government must create more robust
system to facilitates the food supply and to control hoarding of the products during the crises
situations like COVID-19. A more rigid policy formulation is required to support social security
and health of the people of the country. A disagreement is made as the food supply system is
nimble and not been able to adjust to the uncertainty arises. The UK government had made
several interventions but the late effect of it did not able to cope-up with the impact of failure of
the market. The government should have to made mitigation strategies in the advance if such
types of contingencies will arrive in the future.
CONCLUSION
In this report it has been observed that the price level changes due to different factors like
change in income, introduction of government policies, economic factors and so on which results
in the change in the demand and supply. During the COVID-19 crisis the UK food supply system
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fails which highlighted the brittle systems of the government and uncoordinated work
management. Although the UK government had taken significant steps to uphold the breakdown
of the food supply (MOD003327: Economics for Business UK Food Supply Challenges in 2020
– Economics Assignment Help, 2021). Flexibility is given to the food manufacturers, distributors,
and suppliers during the crisis to improve the situation. An analysis of the government strategies
is conducted to understand what has led to the failure of the UK market. During COVID-19 the
government acted to-late to address the severity of the crisis.

REFERENCES
Books and Journals
Krugman and et.al, 2019. Macroeconomía. Reverté
Krugman and et,al, 2017. Volkswirtschaftslehre. Schäffer-Poeschel
Online
MOD003327: Economics for Business UK Food Supply Challenges in 2020 – Economics
Assignment Help, 2021 [Online]. Available through:
<https://www.tvassignmenthelp.com/questions/mod003327-economics-for-business-uk-
food-supply-challenges-in-2020-economics-assignment-help>
Market Failure & Government Intervention (Revision Presentation), 2018. [Online]. Available
through: <https://www.tutor2u.net/economics/reference/market-failure-government-
intervention-revision-presentation>
Effects of COVID-19 on the food supply system. 2021 [Online]. Available through:
<https://post.parliament.uk/effects-of-covid-19-on-the-food-supply-system/>
How the government plans to get the UK back to work. 2021 [Online]. Available through:
<https://www.bbc.com/news/business-52496636>
UK economists’ survey: recovery will be slower than in peer countries. 2021 [Online]. Available
through: <https://www.ft.com/content/21abdaf0-b3b6-4cf9-93f2-007fc1b1b1c8>
UK economy likely to suffer worst Covid-19 damage, says OECD. 2021 [Online]. Available
through: <https://www.theguardian.com/business/2020/jun/10/uk-economy-likely-to-
suffer-worst-covid-19-damage-says-oecd>
UK Trade Tariff: tariff quotas and ceilings. 2021 [Online]. Available through:
<https://www.gov.uk/government/publications/uk-trade-tariff-tariff-quotas-and-ceilings/
uk-trade-tariff-tariff-quotas-and-ceilings>
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