46 – Professor Bennett goes to Asia

13 July, 2020

Key Message: The impacts of COVID-19 are affecting patterns of eating in Asian households, dampening demand for feed grains whilst maintaining demand for most food grains.

This is the last blog in a short series that features Bennett’s law which indicates that as people’s incomes rise, their diets transition away from grains and other staple products towards meat, dairy, fish, fresh produce and other non-staple food items. The law has been used to help explain changes in people’s consumption patterns as the COVID-19 pandemic strips people and economies of some of their income and wealth.

Much of Australia’s grain is exported to Asia. What is happening to grain consumption and food habits in Asia due to COVID-19?

Firstly, most people are increasingly eating at home, either preparing their home meals or having meals delivered to their homes (Figures 1 & 2).

Figure 1: Impact of COVID-19 on eating at home habits in Asian countries
Source: Based on data from Nielsen

Secondly, people are altering what foods they eat, returning to easy-to-prepare, low cost meals. So, demand for milling wheat used for making instant noodles and biscuits remains strong, despite the impacts of COVID-19. However, milling wheat demand for cakes, pastries and artisan breads is decreasing as many consumers have less income to spend on these non-essential foods. More concerning is the decline in demand for feed grains used to produce meat and milk products. When household incomes fall these products are demanded less, consistent with behaviour expected under Bennett’s law.

Figure 2: Impact of COVID-19 on home deliveries of food in Asian countries
Source: Based on data from Nielsen

Although feed grain imports into Asian countries have grown strongly over recent years, this is not the case so far in 2020. Among South East Asian countries, according to Rabobank, demand for major grains is expected to decrease the most in the Philippines, which will see a drop of 3.2% in 2020. Indonesia is forecast to perform the best with flat total demand this year. Wheat imports into South East Asia, used for feed and food, are forecast to grow by 1.4% in 2020, following growth of 3.7% in 2019.

So, Australian grain producers, by mostly producing human consumption grains like wheat are better insulated from the economic downturn generated by the COVID-19 pandemic than other farmers solely reliant on sales of feed grains.

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