The impact of COVID-19 on agricultural market integration in Eastern Canada

Abstract

Since the outbreak of the coronavirus pandemic in early 2020 and the resulting economic fallout, reports and official statistics have pointed to an unequivocal effect of the disease on almost all global economic activities, including the agricultural and agri-food sectors. The aim of this article is to use a price transmission approach in order to study the price relationships of agricultural commodities, including potatoes, corn, hogs, eggs, and chicken between regional Canadian markets and to verify their economic integration. The method of panel cointegration is applied to investigate the potential impact of the pandemic on the spatial integration of the provincial agricultural markets in Eastern Canada. It is found that these markets were fully integrated and efficient prior to COVID-19 restrictions. However, the statistical results show that travel restrictions and labor shortages represented trade barriers between the provinces, and they are likely the factors that impacted the price transmission mechanism, and consequently the markets became much less integrated. It is suggested that government policies should include actions that would manage future shocks to the agricultural commodity prices by accelerating the necessary transformations in the agri-food sector to make it more resilient and less vulnerable to future pandemics and other potential natural challenges.