John Bovay has become a fixture at The New York Produce Show and Conference presenting many thoughtful pieces, a few of which we have profiled here:
This year, his topic seemed perfect for The Global Trade Symposium, as, indeed, it turned out to be. We asked Pundit Investigator and Special Projects Editor, Mira Slott, to discuss the presentation with the Good Professor:
John Bovay
Assistant Professor
Agricultural and Applied Economics
Virginia Tech
Blacksbug, Virginia
Q: John, we were honored to have you back at the New York Produce Show and Conference where you presented your latest research and prescient insights. You started with us, initially, during your time at UConn and, have continued, more recently, at Virginia Tech. The topic you’ve tackled this year was an ideal fit for the Global Trade Symposium: Impacts of COVID-19 on U.S. trade in food and agricultural products.
A: I appreciated the generous invitation. The talk included the following:
- Evolving effects of the pandemic on food demand and supply (a synthesis of academic research)
- Patterns of U.S. trade in food and agriculture products over 2019-20
- A general overview of how economists use applied statistics to answer questions about markets and policy
- Preliminary results from my ongoing research paper with coauthors Charlotte Emlinger and Shamar Stewart, which shows that shocks related to COVID have had minimal impacts on U.S. imports and exports of food and agriculture products. However, there is much to disentangle within this realm that will be relevant to the produce industry…
Q: You were generous in giving attendees a first look at your exclusive research prior to publication. The research you’ve presented at previous Shows subsequently gets published in peer-reviewed journals.
A: Here are the articles I presented at previous editions of the New York Produce Show:
(2019 Show) McFadden, B., J. Bovay, and C. Mullally. 2021. “What are the overall implications of rising demand for organic fruits and vegetables? Evidence from theory and simulations”. Q Open 1(1), https://doi.org/10.1093/qopen/qoab008.
(2018 Show) Bovay, J., and W. Zhang. 2020. “A Century of Profligacy? The Measurement and Evolution of Food Waste.” Agricultural and Resource Economics Review 49(3): 375–409. https://www.cambridge.org/core/journals/agricultural-and-resource-economics-review/article/century-of-profligacy-the-measurement-and-evolution-of-food-waste/2D4CECD6A2D234E6D5F665EA2D06B7FC
(2017 Show) Bovay, J., and J.M. Alston. 2018. “GMO Food Labels in the United States: Economic Implications of the New Law.” Food Policy 78:14–25.
(2016 Show) Bovay, J. 2017. “Demand for collective food-safety standards.” Agricultural Economics 48(6):793–803. (attached) and Bovay, J., and D.A. Sumner. 2018. “Economic Effects of the U.S. Food Safety Modernization Act.” Applied Economic Perspectives and Policy, 40(3):402–420.
Q: Your current research sounds broad in scope, covering all food and ag products. Do you isolate impacts for fresh produce, and different commodities? Do you look at the fluctuations at different timeframes during the pandemic, the waves in COVID infection rates/deaths here and globally…and what changes occurred because of this…
A: The data collection/analysis is complex and ongoing. We also will be extending the analysis to 2021 before completing the research paper for publication. The methodology and approach to our analysis is purposeful in this regard for several reasons, and we discussed this in great depth at the Global Trade Symposium.
During the presentation, I made the point that patterns of trade (by port, by trade partner, by commodity or product group) did not change much from 2019-20; the research paper explores whether the small changes seen were caused by COVID, and the preliminary findings show that COVID had very limited impacts on the value of U.S. trade in food and agricultural products in 2020.
Q: You certainly presented some fascinating revelations…That conclusion does seem to take the steam out of the sensational headlines…
A: So, that’s the punchline, and I didn’t want to wait till the end of the presentation to say it, because I didn’t want people to just be sitting there on the edge of their chairs for a climactic conclusion. But I also want to provide them with the necessary information to appreciate the intricacy of the analysis.
Q: You may get some pushback from the foodservice side of the produce industry, which got decimated during the pandemic, and was forced to reinvent itself…
A: I addressed this. I want to speak at first about general disruptions to food and agriculture from the pandemic. It’s just an illustration that people who aren’t active in food and agriculture don’t understand the complexity of the supply chain, and to point out how disruptions in any individual stage may have rippling effects throughout the global system.
At least from my perspective, studying the data I’ve been able to access, many of the initial disruptions we heard of, this is almost ancient history, but in March, April, May 2020 were caused by changes in consumption patterns rather than supply shocks. And that relates partly to changes in demand for the way that food is packaged and the distribution channels. For example, dairy producers were talking to journals a lot about pouring out milk, and not having buyers for their milk. But that wasn’t necessarily because people were drinking less milk, I think they were, but particularly there was less demand for milk used in packages for institutional buyers and the same for vegetables more frequently used in restaurants than home kitchens. So, one of those initial disruptions was caused by changes in consumption, and changes in demand for certain products. Maybe some vegetables are more expensive and seen as luxury goods, things like Brussel sprouts and asparagus. I’m still flushing out that data. But it certainly seems that some vegetables are more essential, necessity goods, and some are more like luxury.
Q: I think you’re on the right track there…
A: When people lose their jobs or lose wages, that’s going to change what they eat. And we’ve continued to see a lot of disruptions in the way that people are earning and spending money basically.
Later on and some in the beginning too, but recently we’ve seen disruptions that are caused by bottlenecks in the supply chain. And particularly just in the last few months, we’ve seen a lot of stories about backups at ports, ships waiting not being able to dock, and trucks not being available to take things once they get off the ships. So those are some examples of other things, not necessarily directly COVID-driven. You could still make the argument that they are because people are demanding a lot of consumer products, they’re not spending as much money on travel. They’re spending more money on electronics or whatever things that are shipped to the US from overseas. And that’s causing some bottlenecks too.
I also spoke a great deal about commodity markets, in which of course, the data are not focused on fruits and vegetables, and do not necessarily include some fruits and vegetables, but there was a huge drop in commodity prices at the beginning of the pandemic, but really, things have improved over time. Also, there’s evidence that the gap between farm prices and retail prices for things like beef and poultry were high at the very beginning of the pandemic based on the graphical evidence I have. There doesn’t seem to be a very strong correlation between COVID illnesses and these prices for beef and poultry even chicken ever since the first wave of the pandemic…we’re getting into a fifth wave now, there’s not a strong, obvious correlation between the prices that consumers are paying and the severity of the pandemic.
Q: I just wanted to clarify that you’re really focusing on beef and poultry here?
A: Yes, that’s right. In future research, I’ll be looking more at prices for fruits and vegetables based on this analysis of international trade that I’ve been working on. But we don’t have that all put together yet, so I wasn’t able to talk specifically on that pricing analysis during the presentation.
Q: That’s fine, I understand this is an ongoing project with many elements.
A: I shared with your audience some of the most important academic research that’s been done by other folks on how the pandemic has affected food markets and commodity markets. Focusing on fruits and vegetables and consumer goods. I wouldn’t try to tell folks about academic research on cattle futures, or corn and soybean futures. This is not particularly relevant. But I did spend a little time talking about some of the most important findings that I thought would be interesting to your audience. There is a handful of academic journals some core papers, and some valuable information we discussed
Q: Could you give us a few bullet points on some of those findings?
A: One of the most interesting veins of academic research to me is how food security has been affected over the course of the pandemic with people losing income sources and jobs and things of that nature. Let me give you a couple of examples. This was a while ago, but back in March and April 2020, based on a very large-scale survey, where folks were answering questions multiple times within just the first couple of months of the pandemic. Pricing attrition seemed to be a less important aspects while packaged food became slightly more important. So, people would have been demanding more canned, and frozen fruits and vegetables, and been a little bit less sensitive to price. Just in the early stages of the pandemic. One of the things that I am looking into is whether those effects have persisted.
Q: Yes, I think that would certainly be interesting…
A: Another paper analyzing food insecurity by national experts in 2020 projected that 17 million additional Americans were going to be food insecure in 2020 compared with 2018. That was a really drastic change in food security and is something that matters in terms of produce marketers’ ability to sell food. If people are having trouble scraping together money to buy the basic calories that you need to eat, they’re certainly going to have trouble buying those more premium, traditionally luxury vegetables. Those are a couple of examples of literature that I highlighted. But there was also various examples focused on food demand and changes in the way that people have been consuming food.
Q: New York Produce Show and Conference attendees were able to share their experiences with you as well…
A: It’s was great to have the opportunity to present my research to the produce industry at a global trade forum of this stature. My research has been so diverse over the years, I wanted to frame what I’m doing and tie together relevant information that could be useful to executives in advancing their businesses and the industry.
I just went into doing academic research since college and value the real-world business interaction. I’ve been to the New York Produce Show four times previous to this edition and presented a range of research papers, which have all been published now. I hope that what I shared as part of the Global Trade Symposium inspired meaningful feedback that will help us to improve our research in the future.
So, this is a USDA funded research project to study this question of how COVID has affected trading food and agricultural products. And we were asked to cover commodity groups, meat and livestock, dairy, grains and oil seeds, and fruit and vegetables. That was sort of the mandate from USDA with the funding.
My co-authors and I developed a lot of the methodology and the details on our own. We wanted to explore the question of how COVID affected trade directly, and then COVID mitigation measures, and how people’s individual responses to the COVID situation may have affected trade.
We started this project a year ago. So, we didn’t even have data for all of 2020 yet. At the beginning of February, we were able to get monthly data on trade flows between US ports and all foreign trade partners at the commodity level. So, port level data, with each individual country that we trade with, for each individual commodity.
Commodities are pretty disaggregate. Cauliflower and broccoli, for example is one commodity. So, it’s separated out on some broccoli, but it’s not just vegetables in general. So, it’s a really big data set, and we’re trying to explore how variation in COVID illnesses and deaths affected imports and exports from the U.S.
Then separately, looking at how state-level restrictions on commercial activity on mask mandates and this sort of thing, which probably affects demand somewhat, and maybe very, very slightly affects supply, how these have affected the flow of goods around the world.
We use state-level data on restrictions for the U.S. And then we use data for each country that we trade with. And then we have mobility analysis, basically people’s cell phone mobility data on health, there may be correlations between people going into work, or into grocery stores and pharmacies and demand for all these various commodities.
Q: It sounds complicated, there are so many variables, and then also the evolving restrictions and the changes were so diverse with different countries, and within different states in the U.S.
A: It is very complicated. Right. So, that’s actually what the empirical economic analysis relies on is the variations over time. New York State has had varying restrictions at various points in the last two months. so how has New York’s restrictions related to imports and exports of goods from New York, and when you have data on hundreds of ports, hundreds of commodities, dozens of trade partners, and then they all have these different incidence rates of COVID, all the different levels in terms of government restrictions… There’s a lot to explore in the connections between what we’re considering shocks of COVID on imports and exports.
Because it’s so complicated, I felt I really needed to spend more time explaining the way that economists research and how we analyze data, basically. I spent a few minutes after introducing my research question, just talking in general, how does this analysis work…I think that it was useful to everybody in the audience to understand sort of the nuts and bolts of it, not just give the answer that feels like it comes out of a black box without explanation of what’s going on.
I think people walked away with a better appreciation of how economic research at universities is working, and also my results were not merely correlations and not just what we call summary statistics. You know, the raw data tells one story, and that is that trade flows were very, very much the same in 2020, and 2019.
What we wanted to do was explore how variation in these various COVID mitigation measures across the 50 states may have related to the tiny changes between 2019 and 2020. But the punchline is that we see that the mitigation measures on people’s individual mobility are associated with pretty much economically meaningless changes in trade flows.
Q: Did you find any significant or meaningful differences when you looked at the different types of commodities, for example meat seemed to have a lot more issues and problems than fruits and vegetables…
A: Yes. There are some differences. But I think even when we broke it out by these four big commodity groups that I described, meat and livestock, dairy, grains and oil seeds, and fruits and vegetables, looking at the hundreds of commodities within each of those four categories in aggregate. We still didn’t find very much impact on prices. But I think if we were to go down to each commodity, perhaps we would see differences. If you were to dive down, there are 700 commodities, right?
Surely, we’re going to see that COVID is associated with impacts for maybe 25 or 45, or some number of those 700 commodities, you’re just going to see some impacts for sure. We want to be careful in not overstating the impacts of COVID by looking at each individual commodity and asking this question for each individual commodity because that may sort of mislead readers or listeners into thinking well, it was important. We want to keep it as high level as possible and talk about the average impact for the most part.
Now it may be useful to understand well, this one particular commodity group they were highly impacted. And I think that is definitely important information to know maybe down the road, but we want to be careful in the way we approach that because we don’t want to overemphasize these to imply economically significant results if it’s only one small industry.
Q: I understand your point.
A: For sure, if we dig down… I’ve done some analysis. I’ve seen that for a couple of fruits and vegetables. there do seem to be impacts from COVID and from mitigation measures. I’m a little reluctant though at this point to focus on those results because this research is still in a pretty preliminary stage. I wanted to talk about our next steps. I think that in a few months, we will have dotted all the i’s and crossed all the t’s, in terms of setting up the research, the research question, and the data analysis, etc. And we’ll be a little bit more confident in sharing results for smaller commodity groups at that point.
Q: Okay. So, you’d just pull out different vegetables. For instance, what happened with onions?
A: It’s funny you say that. I’ve looked at onions in particular, onions, garlic, etc. In my charts, you would see that category is really, really flat. But in fact, the trends month to month in 2019 and 2020 for imports of vegetables are really similar across the two years.
Q: As an aside, Miguel Gómez presented a broader talk on the reach of global trade at the Foundational Excellence Program, and he participated in the Global Trade Symposium. He made some interesting points related to impacts of COVID on global produce trade that seem to complement your preliminary research.
In a pre-show interview, he said that global produce trade during the pandemic was minimally impacted, in large part because of the industry’s vast diversification….
A: I haven’t made that point in this paper, but I fully agree.
I want to emphasize that in my presentation, you saw all these graphs on global trade, and for the most part they showed very little change from 2019 to 2020. When we started to do such projects, we were expecting we’d find some of the differences between imports and exports in 2019 and 2020 were related to COVID. I think at this point, our preliminary results say, well, maybe there is some very tiny relationship between COVID and imports and exports, but it is economically meaningless.
The situation may change or may have changed in 2021. We haven’t done the analysis including the 2021 data yet. We’re still going through this. We still might have a long way to go before we’re to the other side of the pandemic. I think some of the bottlenecks in the supply chain have been a lot more important in 2021 than they were last year. So, I’m still open-minded about what we’re going to find when we extend the analysis to 2021.
Q: Are there other areas going forward you’ll be exploring that could be of interest to the produce industry?
A: We’re also talking about bringing in data that allows us to compare agriculture with non-agricultural industries. I don’t know exactly how far we can go. We probably wouldn’t look at electronics or anything like that. But we may look at textile products, clothing, or other things that are not absolutely essential to surviving.
That’s one extension that we’ve been talking about. We’ve been talking about looking to how COVID may have ed demand for those highly differentiated branded products, as opposed to potatoes, which are not very strongly branded, looking at whether there’s been a change in the difference between bulk and branded goods.
Q: Do you think inflationary problems will influence your results for 2021 data?
A: We also want to look at price impacts. All of what we’ve done so far is looking at the value of trade, in terms of billions of dollars. With the inflation in 2021, maybe there have been changes in the quantity shifts that don’t show up when just looking at the value of the shipments. That’s another thing that I think is really important to look at. But we just haven’t gotten there yet, in this paper.
Consumer prices in general have risen a lot in 2021. As a setup, we haven’t been analyzing data for 2021. But the data that we are analyzing is just about value. So, for example, the value of bananas imported to Newark, N.J. in January 2020, that’s one observation in our data set. But it’s actually bananas from each individual country to Newark. So that’s the kind of thing that we’re looking at.
So, if the price of bananas has risen in the last three years, and I don’t know whether it has, what our data that we’ve been analyzing to this point, may be masking some changes in prices. If it’s showing no impact on the cost of bananas, right now, that may be just because we’re looking at the total value of the banana shipments as opposed to the quantity of the banana shipment. It’s interesting to explore whether there were important impacts in terms of quantity of these different commodities being imported and exported.
Q: When things started locking down in the produce industry, the food service side with restaurants was completely decimated and then the retail side ended up having all these fluctuations with demand and everything else. With the food service and retail sides separated supply chains in many ways, companies were reinventing themselves, and figuring out ways to work together…
A: Right. Early in the pandemic there were farmers who had to plow under their just planted vegetable fields because those vegetables were used in restaurants and the buyers didn’t think they were going to be able to sell them. I just wanted to make the point — and I think it was obvious to most people who were attending the Global Trade Symposium — that it wasn’t really about a lack of demand for food in general. It was just about changing demand patterns and people changing the way they’re spending their time. And if they’re not going to restaurants, their patterns of fruit and vegetable consumption probably change.
I think that the takeaway is that our research shows that global trade in food and agricultural products has been very resilient to the various pressures caused by the pandemic. That’s really the headline. We’ve even talked about whether that should be the title of the article. There have been challenges, obviously. There have been times when consumers felt frustrated that they weren’t able to buy everything that they wanted. But all in all, trade patterns were very similar across 2019 to 2020.
In some ways I do feel the conclusion is anticlimactic. It was important for me to let people know we don’t find strong impacts from COVID in this analysis, but, also, to take people through the full details of our analysis and carefully considered answers.
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John Bovay’s presentation had two great values. First, it showed how even highly disruptive events, such as COVID-19, tend more to move things around than to change quantities when you are dealing with food. People have to eat; they may eat more at home than at restaurants; they may prefer more of a particular product than another, but it is a big economy, and in the end the volume of food consumed doesn’t seem to have changed too much. Second, Professor Bovay provided a really nice insight into the kinds of tools academics use to ascertain what is going on in the world and to explain the value of this type of insight.
In the years to come, as research continues it will be interesting to see if we can discern more minute impacts of the pandemic on the industry — particular products, etc.
So to make sure you are there, request information on attending the next Global Trade Symposium and New York Produce Show here.
If you are interested in exhibiting or sponsoring in New York, let us know here.
A raft of great preparations are coming up for The London Produce Show and Conference, so request attendee information here.
And, if exhibiting or sponsoring the London event is of interest, please request more info here.
Many thanks to John Bovay for making us all professors… even if just for a day.
