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Understanding UK Food Crisis during COVID-19 Pandemic

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Added on  2022/12/27

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This report analyzes the food crisis in the UK during the COVID-19 pandemic, including the impact on supply and demand, market equilibrium, shortages, and government interventions.

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EXECUTIVE SUMMARY
As COVID-19 pandemic have stroked entire world it have not only impacted health
scenario in the world up-surging needs of good health infrastructure worldwide, it have
interrupted many other activities and changed normal global order completely. Besides health
sector, other most affected activities and sectors include freedom of movement of people and
economic activities. In consideration of one of the most affected country by the pandemic,
United kingdom (UK) have experienced many adverse effects. Agriculture sector and disrupted
food supply are clear, certain and live evidences of this scenario. Affects of this disruption were
noticed in both ways. From the market factors side scarcity of food was seen in market,
movement of agricultural goods from cross borders further triggered this scenario and market
inflation was hiking constantly. However, inflation can be more attributed to second factor of
mismanagement by government. When government allowed retail marketers to pile stocks of
food but not household users. Further logistics, labelling and packaging problems added to many
other problems, affecting market order and incomes of people. Looking holistically, UK food
crisis cannot only be attributed to pandemic only, and many other developments seen in UK such
as Brexit, climate change, social inequalities and weak mechanisms were also playful.
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Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Studying Supply curve...........................................................................................................1
Studying Demand curve.........................................................................................................6
Studying Equilibrium.............................................................................................................9
Explaining Shortages and Surplus........................................................................................10
TASK 2..........................................................................................................................................11
Economic Principles of Market Failure................................................................................11
Intervention by Government.................................................................................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
Books and Journals...............................................................................................................14
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INTRODUCTION
Lock-down imposed in UK, to contain spread of Coronavirus left a large number of
population economically vulnerable. Also, restricted economic activities, trade barriers and
hurdled supplies from other countries triggered demand of emergency food relief, but supplies
were insufficient (Lin, Lloyd and McCorriston, 2020).
In this report, an attempt is made to analyse situation of food crisis erupted at that time in
UK. Report starts from understanding problem from basic standards and principles of demand
and supply pertaining to crisis of UK. Followed by, basics of market equilibrium disturbances,
its causes and effects relating to crisis only. Thirdly, issues of shortages and surpluses in relation
to UK crisis are discussed. Also principles of market failure and government interventions in
addressing crisis are discussed in report, analysing how far they were successful.
TASK 1
To understand problems faced by UK under the umbrella of COVID-19 pertaining to
food availability and supply, disrupted supply chain mechanisms,, rising inflation, disturbances
caused to demand of food products by households and other users and its supply from cross
borders and inland suppliers as well as many other associated scenarios and developments, it is
necessary to look at them with support of economic tools and techniques. This becomes
important as there are specified standards in economic studies, some of them are universal as
well, which provide good and deep insight of any particular situation in economy (Galanakis,
2020). Report have used these standards, supported by graphs and figures for comprehending
UK food crisis. Discussion on this report is made on the basis of theories and studies of Krugman
and Wells.
Studying Supply curve
As per Krugman and Wells, Supply curve is the graphical representation of economic
situation which defines amount of a commodity which supplier is willing to offer at a given price
and at a given point of time. Supply curve basically suggests supply of products will rise with
rise in prices. At the time of UK food crisis in 2020, suppliers have been very worried about
current and future availability of food products to them. Therefore, they were reluctant in making
supply in market and opted for piling stocks in their warehouses, which further triggered
problems of rising prices and soaring of food supplies.
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The situation arose thereon in UK economy studied in report with help of graphs and
economic theories of Krugman and Wells and economic standards.
Movement along supply curve
Movement along supply curve means changes in amount of supply of commodity that
occurs only due to changes in prices while other determinants of supply, such as consumer
preference and taxation policy of government remains constant. This indicate fluctuation at
different points over the supply curve only.
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In above figure, points like A, B, C and D indicates changes in quantity supplied by
supplier or producer at different prices prevailing in market. This standard specifies normal
economic scenario where quantity is supplied more when prices rises, so more revenue can be
generated. In UK food crisis this situation was not seen as prices of food commodities was rising
due to other socio-economic factors.
Leftward shift in supply curve
A leftward shift in supply curve occurs when supply of product offered by producer
decreases from existing amount of commodity supply in market because of Non-price factors.
Factors besides price, affecting supply can be change in consumer preference, technology,
taxation policy etc. acting in manner non-favourable for suppliers.
3
Illustration 1: Movement of Supply curve

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Above graph indicate leftward shift of supply curve, where supply is decreased from Q to
Q1 and the curve shifted inward form S to S1 at existing price of P only. As a result, whenever
this situation occurs, when supply decreases due to non-price factor, piece are seen eventually
rising. This is indicated by price P rising to P1.
This exact situation was confronted by UK in its food crisis of 2020. The supply of food
products in economy was affected by restricted movement of cargo from other countries,
especially from France which dominant supplier of fisheries for UK and other countries as well.
The situation triggered more when new strain of mutated SARS-COV 2 was detected in UK only
(Lang, 2020). Supplies of food products fell of inland suppliers which eventually affected market
supply and supply decreased even at existing price. Situation of decreased supply became more
critical when suppliers feared of deficit in future supplies as there were trade barriers. Therefore,
these suppliers opted for piling up food stocks, further permitted by government, to meet any
deficit needs of future. Hence, supply of food decreased more. However, demand of food
commodities in economy was all time high. Market forces of demand and supply played their
role and prices went up constantly in extraordinary manner.
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Illustration 2: Leftward shift of Supply curve
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Therefore, as per standards of economics studied by Krugman and Wells, situation that
erupted in UK at the time is reflected by leftward or inward shift in supply curve.
Rightward shift in Supply curve
Rightward shift in supply curve points out at positive shift in supply curve. When non-
price factors affects supply and suppliers' sentiments in such way that they opt to increase supply
at existing prices as well. This is known as rightward or outward shift in supply curve. For
example taxes decreased by government leads to more income to people and they start buying
more even at existing price in market.
In the above graph, applying theories of Krugman and Wells, it is indicated that, when
prices were constant at P, even then supply have been increased to Q1 from Q, resulting in shift
of supply outwards from S to S1. Although, a later effect of this situation is that even if
procurements are made more at existing prices, prices will fall after some time, indicated by shift
in price from P to P1. This can be mainly to beat competition as well to increase revenue.
This situation do not pertain to crisis in UK as supplies are not rising but soaring.
However, this situation is feared when situation will normalise in economy, when piled up stocks
with suppliers would release at existing prices. But there will be not much demand to cater
supply and eventually prices may fall to level of deflation.
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Illustration 3: Rightward shift of Supply curve
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Studying Demand curve
According to Krugman and Wells, Demand curve is the graphical representation of
relationship between prices of commodity and demand of product in economy. It mentions that
there is adverse relation between the two, and positive change in one factor would most
obviously lead to negative change in another.
In food crisis prevailing in UK, demands of food products are very high among
households especially. But, due to insufficient supply, rising demand is uplifting prices. This is
an abnormal situation, but can be explained by help of economic principles of shifts in demand
curve.
Rightward shift in Demand curve
Rightward or outward shift in Demand curve indicate rise in demand of product even
when prices of product don't fall. This happens when some extraordinary situation occurs and
non-price factors plays role, as seen in United kingdom due to COVID-19. Supplies were
reduced to restricted movement of goods, but demand of products were same and triggered
higher when supply was restricted more due to stock piling by inland suppliers, resulting in
scarcity of food products (van der Werf, Seabrook and Gilliland, 2020). People demanded more
and prices went up.
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Illustration 4: Rightward shift in Demand curve

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As it is evident from above diagram, due to forces played by non-price factors demand
curve is seen shifting from D to D1 even when prices were constant at P. Due to effects of trade
barriers and stock piling by suppliers in UK, there was seen scarcity of food products whereas
demand was high and got higher, demand curve shifted.
Leftward shift in Demand curve
Leftward shift in Demand curve means decrease in demand of products which is not due
to increase is prices, but due to some other reason like change in consumer preferences or
decrease in income or any other reason but not price. in such case, demand curve shifts leftward
or inward and price is unchanged.
In above diagram, leftward shift in demand curve is clearly visible from D to D1 at the
same price of P. However, this situation was not seen in UK food crisis of 2020, because demand
of food products went up due to scarcity of supply. In normal economic situation when such shift
happen it results in decrease in prices because due to decreased demand and constant supply
producers would need to maintain there revenues and thus will supply at decreased prices.
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Illustration 5: Leftward shift in Demand
curve
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Movement along Demand curve
Described in Krugman and Wells theories, Movement along Demand curve is economic
phenomenon which tells about expansion and contraction of demand over the demand curve
itself. When demand moves from one point to another over the curve, its effect is caused by
change in prices. As it is clear that, increase in demand at time of UK food crisis was due to
decreased supply from restricted trade barriers, therefore this economic phenomenon doesn't
pertain to crisis of 2020 (Souza-Monteiro and Hooker, 2017).
Thus it is clear from above diagram, when prices got decreased from P1 to P2, quantity
demanded is seen increasing from Q1 to Q2, as decreased price means more income at disposal
of people.
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Illustration 6: Movement along Demand curve
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Studying Equilibrium
Equilibrium is the situation in which forces of supply and demand in the economy are
balanced and align with each other in such way that market in overall remains stable. This
happens when market forces plays freely in the absence of external influences. At time of food
crisis of 2020, equilibrium in market of UK was seen disturbed because external factors beyond
market forces played their role. Trade barriers were imposed on supply of goods from countries
on which UK was dependant for essential supplies as caseload of COVID-19 were constantly
rising in UK (Blundell and et.al., 2020). The situation worsened when new strain of SARS-COV
2 was detected from UK only. However, barriers imposed by other countries over movement of
cargoes to UK were necessary so that they could prevent spread of virus in their territories. But
effects of this on UK's economy were devastating.
According to Krugman and Wells, however if external influences are absent, market is
seen at equilibrium always.
Equilibrium Price– Price which prevails at time when market is at equilibrium is called
Equilibrium price. Price at this point in favourable for economy. It disturbs when equilibrium is
disturbed due to external influences, and Demand and Supply curves shifts.
Equilibrium quantity- Equilibrium is quantity is quantity prevailing at time when market is
equilibrium. Krugman and Wells theory mentions quantity demanded and supplied are same in
equilibrium. Quantity also disturbs due to external influences and shift happens in Demand and
Supply curve.
At time of UK food crisis external influences beyond market forces were seen in
International policies. Other countries over whom UK was dependant for essential food supplies,
restricted movement of food products to UK fearing rising caseloads of COVID-19 in UK.
Hence, demand and supply curve made shifts rightwards and leftwards respectively. Market
equilibrium got disturbed and so does prices and quantity.
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Explaining Shortages and Surplus
Explained by economic theories of Krugman and Wells, Shortages means at a given point
of time, supply of products are insufficient to meet demand of products. This is a situation of
Excess demand in economy.
When Supply of products are higher then what is demanded, at a time in economy, then
occurs surplus of goods.. This means there is excess supply in economy.
Looking at the crisis of UK in 2020, situation of scarcity of food products and higher
demand of same, indicates situation of Shortages or Excess demand. Problem created due to
restricted movement of cargoes from other countries and hurdled economic activities together led
to shortages of supply and equilibrium disturbed in market.
According to Krugman and Wells, problem of Shortages and surplus arises only when
market is not in equilibrium.
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TASK 2
Economic Principles of Market Failure
Market failure is a situation when equilibrium in market is disturbed due to those
responses and decisions which are taken in order to control market such as addressing scarcity of
resources or property rights and many more. But results derived from these decisions are not
favourable and due to failure of these private decisions, markets get disturbed. Inefficient
distribution of goods and services is seen, realising productivity for no one.
At time of Food crisis in UK, situation of market were clearly failing. Scarcity of food
products was one problem but situation worsened when available products were not even
addressing problem clearly, also policies of government were not yielding desired results. Stock
piling of suppliers triggered inflation, demand went shooting up and ineffectiveness of domestic
supplies added more (Easterbrook-Smith, 2020). Also, progressing Brexit at such time was
another reason, when food supplies form EU countries in UK accounts nearly 1/3rd of total. All
such problems altogether led to failures of market in UK.
Intervention by Government
Whenever such situation of crisis arises role of Government become more crucial to not
only address the problem but to ensure equity of distribution of resources. Insecurity of food was
worst in 2020, even basic food supplies weren't available and public was distressed. At such time
vulnerable groups in society are at more risk, needing government to come as saviour.
Some important intervention by government of UK at this time are discussed as follows:
Quotas- For a making a better reservation of food resources especially for vulnerable section,
UK government introduced voucher schemes. For example, Supermarket voucher scheme
offered worth 15 pounds per children per week. Scheme was administered by schools which can
either offer voucher to children or provide them packaged lunch (Ahmed and et.al., 2020).
Government transfers- UK government made an emergency funding of 2.35 million pounds to
Waste Resource Action Programme, designed to address food distribution problem at time and
assure supplies to food banks and other charitable organisations.
Emergency Aid- Government made emergency aid arrangements for elderly population, who
were advised to self isolate themselves for 4 months at least. These people were at higher risks
due to age and co-morbidities.
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Legislation- UK government came up with Coronavirus Emergency Bill to legalise and
formalise steps needed in direction for solving problems holistically. On food the Bill required
Industries in this sector to provide information regarding availability and distribution of food
products in market (Tacoli, 2020).
However, problems were seen to be well addressed and clearly worsened situation for
public. Under voucher schemes limitation of geographical location of supermarkets caused
disruption, also industries haven't been cooperative. Also, food packages supplied by
government weren't rich in nutrients and already suffering poor population became more ill-
healthy (Garratt, 2020). Emergency food aid for elderly was insufficient in meeting demand.
Funding to Waste Resource Action programme got handy for big corporates rather than for
general public good.
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CONCLUSION
From above discussion in report it can be concluded that, sudden eruption of virus caused
many big problems in economy and society as whole. People became more insecure, markets
failed, vulnerable groups got more exposed to problems severing their health and social stature
and economic divide widened in UK. When virus created health problems, its effects led to
socio-economic problems. Food being most essential part of life is matter of addressing at
priority. Role of government at such time becomes imperative but in UK welfare policy of
government was seemed failing. However, besides role of government, responsibility of private
individuals is more important as they have direct connection with public. Stock piling by
suppliers raised prices of food more deriving benefits solely to them as well as corporates using
government funding are condemnable.
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REFERENCES
Books and Journals
Lin, H., Lloyd, T. and McCorriston, S., 2020. An Odd Crisis: Covid‐19 and UK Food Prices.
EuroChoices. 19(3). pp.42-48.
Galanakis, C. M., 2020. The food systems in the era of the coronavirus (COVID-19) pandemic
crisis. Foods. 9(4). p.523.
Lang, T., 2020. Feeding Britain: our food problems and how to fix them. Penguin UK.
van der Werf, P., Seabrook, J. A. and Gilliland, J. A., 2020. Food for thought: Comparing self-
reported versus curbside measurements of household food wasting behavior and the
predictive capacity of behavioral determinants. Waste Management. 101. pp.18-27.
Souza-Monteiro, D. and Hooker, N., 2017. Comparing UK food retailers corporate social
responsibility strategies. British Food Journal.
Blundell, R. and et.al., 2020. COVID‐19 and Inequalities. Fiscal Studies. 41(2). pp.291-319.
Easterbrook-Smith, G., 2020. By bread alone: baking as leisure, performance, sustenance, during
the COVID-19 crisis. Leisure Sciences. pp.1-7.
Ahmed, F. and et.al., 2020. Why inequality could spread COVID-19. The Lancet Public Health.
5(5). p.e240.
Tacoli, C., 2020. Food (in) security in rapidly urbanizing, low-income contexts. In Handbook on
Urban Food Security in the Global South. Edward Elgar Publishing.
Garratt, E., 2020. Food insecurity in Europe: Who is at risk, and how successful are social
benefits in protecting against food insecurity?. Journal of Social Policy. 49(4). pp.785-
809.
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