Analyzing the UK Food Crisis of 2020: An Economic Perspective

This report provides an in-depth analysis of the UK food crisis of 2020, examining the economic factors that contributed to the shortages and disruptions. The report begins by establishing a foundational understanding of supply and demand principles, as explained by Krugman and Wells, and applies these concepts to the specific context of the UK crisis. It explores how lockdown measures impacted supply chains, leading to imbalances and market failures. The analysis includes an examination of market equilibrium, shortages, and surpluses, as well as an assessment of government interventions and their effectiveness. The report also delves into the principles of market failure, providing a comprehensive overview of the economic challenges faced during this period. The report offers insights into the causes and consequences of the crisis, drawing on economic theory and real-world observations to provide a comprehensive understanding of the events and their implications.

UK Food Crisis
2020

EXECURIVE SUMMARY
COVID-19 is one the biggest crisis witnessed not only this decade but in this century.
The pandemic exposed many health risks before the world, but its boundaries were not only
limited to health factors but it also interrupted economic, travel, administrative, social or
altruistic, educational and all other activities as well . Therefore, it was not only a health crisis
but a crisis of holistic nature. It proved detrimental to financial health of people as well. As the
virus was seen spreading through touch and respiration. Governments thought most appropriate
tool as Lockdown. Lockdown is a tool meaning temporary shutdown or suspension of economic
activities and curbing free movement of people. Also under Lockdown borders went closed at for
restricting entry of infectious person from outside and exit to stop exposure of insiders to
infectious areas. Lockdown was also set by UK government, to contain spread of virus in
country. The UK government intended a required cause. But effects that were seen were different
from positive results in the country. The virus spread could not be get controlled but financial
crisis together with food crisis were triggered and caught people badly making them fall under a
very vicious circumstances, not only their health was affected but deteriorated their lifestyle for
longer period.

Table of Contents
EXECURIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
Understanding Supply............................................................................................................5
Understanding Demand..........................................................................................................9
Understanding Equilibrium..................................................................................................12
Understanding Shortages and Surplus..................................................................................12
TASK 2..........................................................................................................................................13
Economic Principles of Market Failure................................................................................13
Interventions of Government................................................................................................13
Disagreeing with Government interventions........................................................................14
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17
Books and Journals...............................................................................................................17

INTRODUCTION
Lock-down was adopted as a preventive measure for containing spread COVID-19. It
was adopted in United Kingdom and many other countries, resulted in making society more
vulnerable and these effects were very badly visible in UK. Restricted economic activities and
curbs in free movements of goods and human capital, in combined led to arise of these problems
of supplies. Also restrictions from foreign market deteriorated these crisis further. Social and
economic divide in UK increased more (Souza-Monteiro and Hooker, 2017).
In this report, an analysis of food crisis occurred in UK as result of virus upsurge and
lockdown measures, is made. This begins from understanding basic principles of demand and
supply in relation to crisis of UK. Followed by, understanding market equilibrium and its
disturbances, effects relating to crisis. And, issues of shortages and surpluses to that of UK crisis
are discussed. Also principles of market failure and government interventions are helpful in
getting knowledge of issue holistically.
TASK 1
The situations of food products crisis that was surged in the United Kingdom was result
of multiple wrong decisions and mishandling by government. At first instance crisis was bought
by measure of Lockdown, whose objective was different. It had restricted every economic
activities. Also agriculture was disrupted and as a result enough production of production of food
grains was not possible to meet domestic requirements. It pressurised existing stock of food
products. Secondly, supply of food and meat products from countries which were having trade
exchanges was not possible as borders were closed, thus these disruptions worsened situation
more. However, these problems were caused in earlier phases of crisis. Extension of lockdown to
many months was main reason to cause hurt. Thirdly, in next phase, Suppliers became reluctant
in releasing stock of food products with them in market, because they were apprehensive of
supply of food products in future. These all factors, together resulted in scarcity of food products.
Also, it is worth mentioning that, when new strain of virus was detected from UK, many
countries became more restrictive in making any trade with country.
For studying and understanding the food crisis in UK economy of year 2020 is better
conducted in report considering from core. The report made study of this issue by usage of

economic concepts and principles of supply and demand supported as approached by Krugman
and Wells.
Understanding Supply
Supply is the quantity of products or commodities that suppliers or producers in market
are willing to supply on a given price and at a given point of time. This was explained by
principles of Krugman and Wells. The curve that is reflective of supply in market at given price
over different time scales is called Supply curve. Krugman and wells mentioned that any change
in supply is directly relatable with prices of commodities. Whereas, relation that is seen between
supply and price is positively or directly proportional, meaning supply increases when prices of
products increase resulting in increase of revenues for suppliers. However, increase and decrease
in supply because of prices is seen only when market forces plays role and all other factors are
constant. Whereas, in abnormal circumstances supply could be affected by external factors as
well.
In crisis of 2020 in United Kingdom, suppliers were already supplying food products at
the existing prices driven by market forces. But when economic activities were disrupted and no
additional supplies of food products could be sought, neither from domestic producers nor from
market of abroad, they started hoarding products with them and scarcity rose more (Lang, 2020).
Then market forces were not working but suppliers were seen controlling market at all. This led
to abnormal circumstances in market. To understand core of this disruption it is important to
understand nature of supply and supply curve and its concepts.
Movement over the Supply curve
Movement along supply curve is economic phenomenon in which changes bought in
quantum of supply of products are driven by change in prices. It is reflected by movement of
increase and decrease of supply along the curve only. This phenomenon does not relate with
Food crisis of UK in 2020, because here changes in supply is driven by price only, whereas in
UK crisis disruption in supply of food products was driven by external factors of market.
Movement along the supply curve is phenomenon of normal circumstances in market (Bosco and
et.al., 2020). This can be well comprehended with help of a diagram.

The diagram above reflects movement of supply or change in supply along the supply
curve only. This driven by changes in price. When prices of product increased from P1 to P2,
supply eventually increased from Q1 to Q2. As a result supply point moved further from A to B,
over the same curve.
Shift of Supply curve
Krugman and Wells explained that, shift in supply curve is that increase or decease in
supply of products where factors that affects supply are the one present in external environment.
This is basically the change not bought or driven by prices of products. These factors that act
from external business environment like consumer preferences, income levels, taxation policy
and several others. Since they exist out of business therefore, business and operations themselves
have to be adaptable to them. Therefore, supply curve is seen shifting from one point to another,
because change is bought whereas prices are constant. This economic phenomenon is the one in
direct relations with food crisis in United Kingdom. There are two different situations in shift of
supply curve and report have studied each one separately.
Leftward
Illustration 1: Movement along Supply curve

Leftward shift is reflective of decrease in supply as market comes under influence of
external factors. When supply of products are decreased not because of price but any other
factor, this change leads to shifty in supply curve to the left at prevailing price only. However, it
is not that prices remains unchanged, changes in prices are reflected afterwards.
This had been the exact case in economy of UK in year 2020, when it suffered food
crisis. The supply of products in the market was disrupted due to external factors of restriction in
movement of goods and halt in carrying agricultural activities. Also, when suppliers started
hoarding of products fearing restricted supplies in future. However at this time prices of food
products were unchanged but supply got decreased (Wise, 2020). Therefore supply curve shifted
to left. This can be better understood with help of a diagram.
In the above digram true nature of Crisis of 2020 is reflected. Before the scarcity of food
products emerged in market of UK, supply was standing at Q where prices were at P. After
external factors played their role of halted agricultural activities played and then hoarding was
made by suppliers, supply was decreased to Q1. Hence, supply curve can be seen shifting from
S to S1, at prevailing prices of P. However, change in price is not spared and an effect over it is
visible afterwards as a result of excess demand. Price thus increased from P to P1.
Illustration 2: Leftward shift of Supply curve

Rightward
Rightward shift in supply curve is reflective of increase in supply of commodities offered by
supplier at a given price and on a given point of time. But this increase is not driven by price,
rather driven by external factors, existing beyond forces in market. External factors can be
referred to other factors like change in technology, decrease in tax, change in consumer
preferences etc. This economic concept of rightward shift in supply curve is not in alignment
with the food crisis of 2020 in UK, but it forms an important part of economics and thus its
understanding is necessary for understanding nature of supply in market. In its study in report it
is helped through diagram as well.
In the above diagram, supply curve can be seen shifting from S to S1, towards right.
Whereas, prices are standing same at P. When external factor came in role, for example change
in technology, supply can be seen increasing from Q to Q1, at price P. resultantly, supply curve
shifted to S1 from S.
Illustration 3: Rightward shift of Supply curve

Understanding Demand
According to concepts of Krugman and Wells, Demand can be explained as quantity
demanded of products by consumers in market on a given price and at a given point of time.
Demand is the willingness of consumers to avail a product combined with their will to pay for it
as well. If there is no willingness to pay, a demand is a desire. When there are normal
circumstances in market demand changes because of change in prices of products. Relations seen
between the price and demand is inversely proportional to each other, which means when price
increase demand decease and vice-versa. The curve that reflect this relation over the graph is
called demand curve. Demand curve is indicative of quantity demanded at a given price in
different intervals of time and presentation on graph. In context of UK food crisis of 2020,
demand for food products were high and got more triggered because other factors as well. It was
nearly stabilised before lock down was enforced but after it demand went very high at same
prices. Supply was insufficient to meet demand, gap between two kept increasing all the time
and demand was seen exorbitantly higher. But this was not appearing because of prices of food
products in market were decreasing. But because of disturbed supply products could not be
accessed by consumers (Loopstra, 2018).
To get a greater understanding of demand, the report have made attempt to study each
concept differently, as described by principles of Krugman and Wells.
Movement along Demand Curve
According to Krugman and Wells, movement along demand curve is change in demand
of commodity driven by change in prices. As there is inverse relation between demand and price,
therefore, when price increase demand is seen decreasing and when prices decrease demand will
be increasing, but this happens in normal circumstances when only price factors are active and
other factors are constant in market. This relation between two and change in demand is totally
seen over change in demand over same curve. This phenomenon is not related with food crisis in
UK, but as essential one to understand. This can be explained with help of a diagram.
Shift in Demand curve
Change in demand of commodity led by prices are conditions of normal circumstances in
market. But, when external factors plays role, like seen in case of UK food crisis of 2020, that
leads to shift in demand curve. External factors of disrupted supply and scarcity of food products

were active and demand of consumers was not getting fulfilled. As a result, when people were
horrified by rising scarcity of food, they started demanding more. This led to increase in demand
at the prevailing prices in market. On the graph this is reflected as shift of demand curve on right.
Similarly, when demand is decreased by external factors, for example reduced income of people
or changed preferences, the demand curve can be seen shifting to right. However this
phenomenon is not related with food crisis of UK, but it is an essential part of understanding
concept of demand. In UK food crisis, demand of products was increased and prices were
unchanged, but afterwards of course prices were seen rising as an effect of surplus demand
(Merendino and Sarens, 2020).
Both of these concepts of demand can be better understand with help of diagrams.
Illustration 5: Rightward shift of Demand curve

In the above diagram it is reflected that, over the same price of P0, earlier quantity
demanded was Q0. This is the situation of market in UK before the crisis had erupted. After the
crisis, people got aware that food products were not available and this will continue in future.
Therefore they started demanding more and demand increased to Q1 from Q0, at existing price
P0. Therefore demand curve shifted to Right from D to D1.
In the above diagram, it is clear that earlier when prices were standing at P1, quantity
demanded was Q1 and this was reflected by by curve D1. Similar to rightward shift here also
change in demand is bought by external factors but for negative, where demand is seen
decreasing to Q2. But since prices are constant at P1, entire curve have shifted to D2.
Illustration 6: Leftward shift of Demand curve

Understanding Equilibrium
Equilibrium is that position in market where factors and respective market forces are
completely stabilised. As per description of Krugman and Wells, equilibrium can be described as
perfect situation. In Equilibrium quantity which is supplied by suppliers is sufficiently enough
for meeting quantity demanded. At this very point, the quantity which is demanded and that is
equally supplied as well is called Equilibrium quantity and the price on which this stable
occurs is called Equilibrium Price. Krugman and Wells noted that, situation of Equilibrium is
present in market when market forces acts free and there is no disruption from external factors.
Equilibrium is win-win situations for buyers and suppliers. At the time of UK food crisis,
external factors were active and Equilibrium was disturbed (Clayton, ed., 2020).
Understanding Shortages and Surplus
Shortage- This term refers to excess demand in market. When quantity demanded is more than
what suppliers are willing to supply, shortages arises. At this case prices are seen rising. This
was exactly the case in UK food crisis.
Surplus- This term indicates excess supply in market. This means when demand of products are
insufficient to meet supply. Here, suppliers are seen incurring huge losses, as prices of products
decrease.
Krugman and Wells noted that, Shortages and Surplus, both situations are disturbance to
Equilibrium.

TASK 2
Economic Principles of Market Failure
Market failure is that circumstances in market which arises when decisions taken in
regards of finding solutions for disturbances and problems in market proves worsening market
conditions and bring some difficult negative results. These private decisions merely leads to any
favourable results. Most of times the market failures, are bought by those people who are
administratively responsible to stabilise markets but they fail in doing so and such outcomes are
seen that are irrecoverable in long run. All other problems get together arises with them such as
inefficient distribution of resources.
In UK crisis of food insecurity of 2020, markets were apparently failing. Food products
were in scarcity and situation got worsened when there was hoarding of food products by
suppliers and also there were restriction over securing supplies from overseas market.
Resultantly, inflation captured market, because of excess demand. Brexit was also the reason as
1/3rd of supply of food products in UK are from countries which are members in European
Union. All these conditions together were result of rising of crisis (Hall, 2020).
Interventions of Government
Crisis that arose were something that were never seen before in United kingdom,
Government interventions were needed from all sorts of dimensions.
Some of the most curative steps taken by government of United Kingdom, in this order
are discussed in report:
Quotas- Quotas were attempted to secure and reserve some reasonable amount of food from total
available stock of food for vulnerable sections of population. Here, in this step UK government
attracted Voucher schemes. In this scheme Supermarkets were made to offer vouchers for
children standing 15 pounds per week. This scheme was managed by schools also which were
allowed to either offer voucher to children or provide them packaged lunch (Feeding the food
insecure in Britain, 2020).
Government transfers- This was an emergency funding worth 2.35 million pounds and meant to
solve and regulate distribution problem of food resources. It was provided to Waste Resource
Action Programme. This programme was responsible to ensure effective supplies of food banks
and charitable organisations.

Emergency Aid- Emergency aid programs was for elderly population solely. It became an
imperative step indeed as elderly population are at most risk in any health crisis, secondly they
are suffering from co-morbidities and third they were also self-isolating themselves as required
by government orders leading their reduced access to market. Risk was higher to this population
due to age and co-morbidities.
Legislation- Coronavirus Emergency Bill, a legislation step taken by UK government to address
the issue strictly. It legalised interventions of government and required a strict adherence by
every associated and concerned person involved in addressing the crisis, like corporates and
supermarkets. Under this, food resources Industries were required to offer al sort of information
related to food products, its supply and their distribution as well.
Disagreeing with Government interventions
The issue of food crisis could not be considered as addressed sufficiently and managed by
government. The crisis of insufficient production and supply and distribution of food products,
emerged as various factors played their respective roles. Food products were not being produced
any more, production activities and transportation were restricted and supplies from overseas
market was not available. Government was needed to intervene immediately but those
interventions were not addressing crisis in desirable manner. In fact, it was more likely seeming
that they deteriorated the situation. This can be evident as follows:
Voucher schemes- The government was unable to understand geographical limitations of
supermarket. Supermarkets are grocery stores operates on larger basis, their sales are huge, and
therefore they are not operational in areas which do not fulfil their business scale, especially in
the outskirts, slums and countryside areas (UK food and nutrition security in a global COVID-19
context, 2020). Therefore, vouchers provided by supermarkets were not available these areas.
This created huge problem for underprivileged and weaker sections of society.
Lack of Nutrients- Food packages made available by government directly to people were lacking
in nutrients and health ingredients in them. It was important that those packages must have
contained proper nutrients so providing sufficient energy to people for helping fight the crisis, as
regular and stable diet was not available. But this was left undone. However, moreover, these
packages proved detrimental to health of weaker and vulnerable sections such as Lactating
women, elderly populations, labour class and poor people. Health of these people is already in
weak stage, and government better have considered that fact.

Clearly there could not be enough reasons find out that can make one believe that
government interventions were appropriately solving problems of food crisis.

CONCLUSION
Hence, from the above discussion it can be concluded that pandemic or other unforeseen
calamities and disasters have enough potential to create huge problems before society. People
and especially those who have weaker positions in society and more limitations than any other
person, became more vulnerable and victims of these disasters, affects are made to their poor
health and economic divide. As pandemic had exposed health problems to people and exposed
limitations of health infrastructure, socio-economic evils were also got in mainstream. Food is
most essential part of life. It was required that government should come and solve these crisis
and problems while focusing more on welfare of all but approach of UK government was not
visible right.

REFERENCES
Books and Journals
Souza-Monteiro, D. and Hooker, N., 2017. Comparing UK food retailers corporate social
responsibility strategies. British Food Journal.
Lang, T., 2020. Feeding Britain: our food problems and how to fix them. Penguin UK.
Bosco, A. and et.al., 2020. Narrative inquiry on case studies of crisis in dementia. Quality in
Ageing and Older Adults.
Wise, J., 2020. Government must “stop dithering” and tackle childhood obesity crisis, says
Labour.
Loopstra, R., 2018. Rising food bank use in the UK: Sign of a new public health emergency?.
Merendino, A. and Sarens, G., 2020. Crisis? What crisis? Exploring the cognitive constraints on
boards of directors in times of uncertainty. Journal of Business Research, 118, pp.415-
430.
Clayton, S. ed., 2020. The New Internationalists: Activist Volunteers in the European Refugee
Crisis. Goldsmiths Press.
Hall, S. M., 2020. The personal is political: Feminist geographies of/in austerity. Geoforum, 110,
pp.242-251.
Online
Feeding the food insecure in Britain. 2020. [Online]. Available through: <
https://link.springer.com/article/10.1007/s12571-020-01080-5 >
UK food and nutrition security in a global COVID-19 context. 2020. [Online]. Available
through: < https://resourcetrade.earth/publications/covid-19-uk-food-nutrition-security
>