Will the COVID-19 Pandemic Outbreak Intensify the Resource Misallocation in China’s Food Production?

Abstract

Resource misallocation is one of the important manifestations of agricultural supply-side distortion and an important causal factor that hinders food production increase and affects food security. Did the COVID-19 pandemic intensify China’s food production misallocation? The extent and consequences require quantitative assessment and scenario analysis. In this paper, we use a combination of input-output model and computable general equilibrium (CGE) model, and further incorporate the most important input factor in agriculture—intermediate inputs—into the model. At the same time, simulation of the pandemic impact from the demand and supply sides, respectively, and scenario analysis of the impact of the COVID-19 pandemic on China’s food production. The results of the study show that: first, compared with the baseline level before the epidemic, the overall TFP growth of China’s food industry chain decreased, and the TFP growth rate of the food distribution sector decreased most significantly. Second, there are significant factor misallocation distortions of capital, labor, and intermediate inputs. Third, in the short term, the period of the COVID-19 pandemic led to a decline in the vitality of the national labor market, but the return of non-farm employed labor in rural areas instead reduced the degree of labor misallocation in the food sector. Fourth, the demand side has a greater impact on China’s food production, among which the consumer demand has a particularly strong impact on the resource allocation of food production, and the short-term shock will mainly have a more obvious impact on the allocation of labor factors and the allocation of intermediate input factors in the food industry chain. Accordingly, this paper proposes that in order to guarantee China’s food security and adapt to the short-term characteristics of the era when the COVID-19 pandemic is rampant, China should make efforts in four areas: rational allocation of food production resources and factors, solid construction of the whole food industry chain, stable guarantee of the food market system and transfer to enhance social expectations.