A report on the effects of the present economic crisis on agriculture was just produced by the USDA-ERS. The findings are summarized below (view as pdf).
The global economic crisis of 2008-2009 had a significant impact on agriculture in the United States. In comparison to 2007-2008, falling earnings around the world as a result of the global recession, along with a short-term strengthening of the dollar, result in huge drops in U.S. agricultural exports and sharply reduced agricultural prices, farm revenue, and employment.
Agricultural households are also seeing a drop in income from off-farm work, as the U.S. economic downturn affects rural-based firms and tax revenue declines, putting pressure on rural government employment and social services. Because the farm sector in the United States entered the crisis with record-high exports, prices, and farm income, the decreases, while significant, will return agriculture to trend outcomes. While the full extent of the U.S. and global recessions is unknown, the repercussions of the crisis are projected to be less severe for agriculture in the United States than for many other sectors of the economy.
Net farm income in the United States reached $87 billion and $89 billion in 2007 and 2008, respectively, setting new nominal records. These figures indicate the highest net farm revenues since the early 1970s, even when adjusted for inflation. According to this research, U.S. net farm income in 2009 might drop by 26% to $66 billion, equal to the average of $65 billion generated over the preceding ten years, and in the worst-case scenario to $60 billion, depending on assumptions about the severity of the economic crisis (a drop of 33 percent ).
The forecast drop in farm revenue in 2009 is unlikely to have a significant impact on national agricultural land values. Land value patterns that developed in 2008 may persist in states with the steepest decreases in rural home values, while they may subside in states with double-digit rises in land prices due to high crop receipts. In the medium term, the economic crisis may diminish agricultural export-related employment in the United States, with anticipated job losses of 13% in 2009. (a loss of 45,000 jobs).
Agriculture in the United States will be impacted by the crisis primarily through indirect foreign repercussions rather than changes in the US economy. The slowing expansion of foreign economies will diminish agricultural commodity import demand, resulting in lower agricultural exports and prices in the United States. Although the crisis began in the United States, it has since expanded throughout the world, particularly to significant emerging economies such as China, South Korea, and Mexico.
As money floods into the United States as a safe haven as a result of the crisis, the dollar is rising versus most other foreign currencies. The net inflow of capital to the United States in 2008 was around $650 billion. Because the currency is stronger, agricultural exports from the United States are more expensive in overseas markets than those from competitors. According to this research, U.S. agriculture exports could fall from $117 billion in 2008 to $96 billion in 2009 as a result of the global economy faltering and the dollar strengthening.
Another characteristic of the crisis is that falling global economic activity has resulted in a sharp drop in global energy prices. This will not have a uniform impact on agricultural farmers in the United States. Falling energy costs have cut the price and profitability of biofuels, lowering feedstock crop prices, particularly corn. Reduced energy and fuel prices, on the other hand, will benefit all producers by lowering input costs. According to this estimate, fuel and energy-related input prices for U.S. farmers might drop by 30% in 2009, bringing them back to 2006 levels.
The drop in energy prices will benefit livestock farmers because reduced crop prices will slash their feed expenses. Macroeconomic analysts such as Global Insight and the EIU expect that the US and global economies will stabilize in 2010 before resuming growth in 2011 at levels similar to those seen in the early 2000s. The rebound of U.S. agricultural exports will be aided by a return to expanding global gross domestic product and consumer income, particularly in emerging countries. As a result, according to the reference study in this research, U.S. net farm income might climb to $83 billion by 2013, despite agricultural exports being only $93 billion, roughly unchanged from the anticipated 2009 value of $96 billion due to the stronger currency.
Energy demand will rise as the economy recovers. As a result of this transition, global energy and gasoline costs may rise once more. Economic growth would aid growers of corn and other biofuel feedstock crops by partially reversing the impacts of the crisis. Economic growth will have a favorable impact on the cattle industry, but rising feed and energy costs will have a negative impact.
The greatest source of long-term uncertainty is the value of the US dollar in relation to the currencies of other key trade countries. One possibility is that the dollar will continue to gain ground, particularly versus the Chinese yuan and other key emerging market currencies. Another possibility is that the dollar may weaken, as it did for most of the 2000s before to the 2008 financial crisis.
In the first scenario, American farmers will face a stronger currency, lowering the price competitiveness of agricultural exports from the United States. In the case of an appreciating dollar, net farm revenue will fall by about 7% to $83 billion, while agricultural exports will fall by 27% to $85 billion by 2013.
In the second scenario, a weaker dollar compared to the reference case will boost U.S. farmers’ global competitiveness. With a weaker currency, net farm income is expected to rise 19 percent to $106 billion in 2013 and $118 billion in 2017, while agricultural exports are expected to increase 19 percent to $120 billion in 2013 and $134 billion in 2017. The weakened currency, along with the restoration of global economy, will result in strong overseas demand for American agricultural goods, allowing farm income to remain high.
What happens to manufacturing during a downturn?
In economics, a recession is a negative tendency in the business cycle marked by a drop in production and employment, which leads household incomes and spending to drop. Even if not all people and businesses face actual income drops, their future expectations become less assured during a recession, causing them to postpone significant purchases or investments.
What impact does the economy have on agriculture?
Agriculture, food, and associated industries contributed $1.055 trillion to the US GDP in 2020, accounting for 5.0 percent of total GDP. Farm output in the United States provided $134.7 billion to this total, or about 0.6 percent of GDP. Agriculture’s overall contribution to GDP is greater than 0.6 percent because agriculture-related industries rely on agricultural inputs to bring value to the economy. Food and beverage manufacturing, food and beverage retailers, food service and eating and drinking establishments, textiles, clothes, and leather items, and forestry and fisheries are all tied to agriculture.
How is the food business affected by the recession?
The worldwide economy was severely impacted by the Great Recession of 2008. In many countries, GDP has declined and unemployment has soared, affecting industries, communities, and individuals. The recession had a global influence, albeit the severity and timing of the effects varied, with European countries being hit first and with larger consequences, while Asian countries were hit later and with smaller affects. The Great Recession has a wide range of health effects, including decreased self-esteem and an increase in cardiovascular and respiratory ailments. In several nations, there were also increases in infant and child mortality, as well as in perceived health and health-related quality of life, according to an analysis of the effects of the Great Recession on children. People in lower socioeconomic positions (SEP) may have been hit worse by the recession, expanding inequality.
The Great Recession may have impacted the food environment in a variety of ways. Food costs rose during the recession as a result of inflation and food corporations adjusting their marketing techniques to raise prices per unit of food and package content. During the recession, price reductions on products particularly processed foods also increased. These changes occurred in tandem with a decrease in household resources. This may have resulted in lower food expenditures and the affordability of nutritious food items, particularly among those with low socioeconomic status. For example, a research in Chicago contrasted low-income regions to more affluent ones and discovered that low-income communities had inferior access to healthful food. Although there is conflicting evidence regarding the effects on overweight and obesity, existing data points to a possible rise, particularly among those with low socioeconomic status.
Economic shocks may have various effects on nutritional intake, according to evidence from prior recessions. Although studies are conflicting, the 1997 Asian economic crisis appears to have had an impact on nutritional intake, with decreased calorie intake and changes in food consumption. The Mexican crisis of 1994 appears to have had a detrimental impact on nutritional intake, however there were differences in food consumption between rural and urban areas. In comparison to earlier recessions, the Great Recession is notable for its length and global reach, as well as its devastating effects on unemployment, GDP, and government budgets. It was also marked by a delayed recovery and, in Europe, a sovereign debt crisis that forced many governments to implement austerity measures. This occurred against a backdrop of increased ubiquity of ultra-processed food, which suggests that, due to the reduced cost of these items, the impact on nutritional intake may have been greater than in prior recessions. As a result, we hypothesize that the Great Recession had a significant impact on dietary intake, which justifies a thorough investigation. We wanted to look at the research on the effects of the Great Recession on children’s and adults’ food intakes, and see if the effects were more pronounced in low-SEP groups. We examined both as potential effects of the Great Recession, based on earlier evidence that supports both good and negative effects on diets and health. Because the Great Recession was one of the most severe economic shocks previous to the onset of COVID-19, our research can help policymakers safeguard public health during the current pandemic.
What happens to real estate values during a downturn?
Investing is fraught with economic uncertainties. While the general public may be surprised, investors and skilled financiers understand that markets will not remain calm indefinitely. In fact, if they did, it would be disastrous.
To reduce the risk of financial instability and collapse, investors diversify their portfolios and seek out stable markets. If you’re skilled at what you do, a financial crisis won’t have a big impact on your wallet.
Depending on your age, you’ve lived through a few economic downturns, whether it was the 1987 Black Monday Market Crash or the 2008 Global Recession. Regrettably, we’ve found ourselves in the same situation once more. Markets have been thrown into disarray as a result of COVID-19. Joblessness is on the rise, small firms are failing, and organizations that were once reliable investment vehicles are now suffocating.
Investors that are astute do everything they can to prepare for situations like these. We can’t, however, anticipate the future. Many investors, however, seek out “recession-proof” companies that will not lose value in the event of a downturn. Some even come across funds that increase in value while others decrease.
Farmland is that type of investment, as many people are discovering. For the uninitiated, we’ll explain why you should invest in times of crises, and why farmland is the best option.
Why you should invest during a recession
During a recession or economic slump, many people (including some investors) prefer to sit tight. Their 401(k)s are depleting, and their assets are shrinking, yet altering course might result in even more losses. At least, that’s how I’m thinking.
In reality, staying engaged and dynamic throughout a recession might help you emerge with more money and a more stable portfolio.
It’s far from certain that any stock will ever recover its value. Take airlines, for example: everyone needs to fly, which is why investing in Boeing or Delta always appears to be a safe bet. However, based on what we’ve learned from Blackrock’s annual letter and the purchasing habits of millennials and Gen Zs, airlines in their current form may decline in value over time.
In short, investing during a downturn is beneficial. However, consider the future when formulating your approach. Although the stock price is currently at an all-time low, no one knows what the future holds.
Part of the reason why farmland is such a wonderful investment during a downturn is because of this.
Why invest in farmland during a recession?
1. Land is less expensive.
Real estate and property values usually take a knock during a recession. When markets begin to settle, the value of properties lowers, which normally indicates a significant windfall for the real estate market.
A similar issue occurs in the case of farming. Following the financial crisis of 2008, according to a USDA study, “Based on regional dynamics, farmland prices and cash rental rates indicated a wide range of changes, ranging from no change to an 11 percent drop.”
However, you may argue that we were advised not to buy stocks merely because they were cheap. What distinguishes farming from other types of land? The answer is a combination of beneficial diversity and stability.
2. Affirmative diversity
In our book, we go over this topic in further detail “5 Reasons to Invest in Farmland” article. In a nutshell:
Other asset types are inversely correlated with farmland, while real estate is only mildly correlated with it. This means that, while other assets (stocks, bonds, etc.) lose value, land values rise, as do agricultural project yields.
In other words, farmland values tend to rise as the value of other stocks falls. But this may appear to contradict the premise that land is cheaper during a crisis, the value of the land as a real estate property declines, while the value of the farmland production grows. According to the same USDA report, “Across the country, the combined value of cropland and improvements climbed by 8.1 percent.”
Furthermore, farmland yields are frequently the source of inflation. As economies recover and purchasing power rises, governments will raise inflation to level the playing field. Because crop yields are directly linked to inflation, farmland investors benefit from this rise in the long run.
This is one of the reasons why farmland is seen as such a reliable investment.
3. Consistency
People need to eat whether it’s raining or shining, whether it’s a recession or a golden age. Crop yields are increasing year after year as the middle class expands and the population grows.
Many investors consider banks and high-tech assets to be very safe. Banks have been operating for hundreds of years and may be relied upon to provide stability to your financial portfolio. However, as a result of the 2008 financial crisis, many consumers were turned off by such technique. Furthermore, cryptocurrencies and fintech firms are igniting debates about nontraditional, digital, and decentralized banking, which has the potential to upend the entire business.
Farmland investors do not need to be concerned about this. Many investments have a return on investment “We, as a society, decide what we’re willing to pay for those services or products, which is known as “perceived value.” They don’t have any “We don’t base our concept of value on them because they have inherent value.
Historically, gold has been used to determine the worth of goods and currencies all throughout the world. However, as famously stated by Robert Frost, “Nothing made of gold can last.”
Farmland and crop yields have supplanted it as the most important inflation-hedging investments of our day. This means that while inflation rises, farmland and crop yields climb in tandem, maintaining the purchasing power of the land as it was originally purchased.
Is farmland recession proof?
Nothing is, unfortunately. Farmland is, well, land, as we saw in the USA report. When people have less money to spend on products, demand falls, and the value of those things falls as well. Farmland is no exception.
Farmland, on the other hand, is a rather stable investment during a downturn. It gives investors and individuals the assurance that they will recover once the crisis is passed. Many investments, including banks, are not in this category.
Farmland is a robust investment, according to many experts, and they aren’t creating any more of it. As climate change threatens the world and our ability to produce crops, legislators are pressing farmers and landowners to do more with less. This means that even if everything appears to be falling apart, the value of your investment may only rise.
The ultimate line is that, more than gold, high-tech, or banking, farmland is a sound investment to make during a downturn. One that will keep your portfolio afloat during the storm and increase as the weather improves.
FarmTogether is a farmland investment platform powered by technology that gives investors immediate access to the land they want, when they want it.
We only partner with farmers and land that we would personally invest in, thus our farmland is carefully selected. We’re also democratizing farmland ownership with investment commitments as low as $10,000 and returns as high as 13% with 9% cash dividends.
We want you to have a bigger say in how the land is cared for. We believe that different perspectives will lead us into the future of agriculture and farming as corporations strive to take over the country’s farms. All the while, we’re making money for our investors.
In a worldwide recession, what happens?
A global recession is a prolonged period of worldwide economic deterioration. As trade links and international financial institutions carry economic shocks and the impact of recession from one country to another, a global recession involves more or less coordinated recessions across several national economies.
What are the consequences of the recession?
Traditional fiscal stimulus analysis focuses on the short-run effects of fiscal policy on GDP and employment creation in the near term. Economists, on the other hand, have long recognized that short-term economic situations can have long-term consequences. Job loss and declining finances, for example, can cause families to postpone or forego their children’s college education. Credit markets that are frozen and consumer spending that is down can stifle the growth of otherwise thriving small enterprises. Larger corporations may postpone or cut R&D spending.
In any of these scenarios, an economic downturn can result in “scarring,” or long-term damage to people’s financial positions and the economy as a whole. The parts that follow go through some of what is known about how recessions can cause long-term harm.
Economic damage
Higher unemployment, decreased salaries and incomes, and lost opportunities are all consequences of recessions. In the current slump, education, private capital investments, and economic opportunities are all likely to suffer, and the consequences will be long-lasting. While economies often experience quick growth during recovery periods (as idle capacity is put to use), the drag from long-term harm will keep the recovery from reaching its full potential.
Education
Many scholars have pointed out that educationor the acquisition of knowledgeis important “Human capitalalso known as “human capital”plays a crucial role in promoting economic growth. Delong, Golden, and Katz (2002), for example, assert that “Human capital has been the primary driver of America’s competitive advantage in twentieth-century economic expansion.” As a result, variables that result in fewer years of educational achievement for the country’s youth will have long-term effects.
Recessions can have a variety of effects on educational success. First, there is a large body of research on the importance of early childhood education (see, for example, Heckman (2006, 2007) and the studies mentioned therein). Because parental options and money drive schooling at this stage (pre-k or even younger), issues that diminish families’ resources will have an impact on the degree and quality of education offered to their children. Dahl and Lochner (2008), for example, indicate that household income has a direct impact on math and reading test scores.
Second, a variety of factors outside of the school environment influence educational attainment. Health services, for example, can remove barriers to educational attainment, from prenatal care to dental and optometric treatment. After-school and summer educational activities have an impact on academic progress and learning in the classroom. Forced housing dislocationsand, in the worst-case scenario, homelessnesshave a negative impact on educational outcomes. Economic downturns obviously affect all of these factors on educational performance. In 2008, 46.3 million individuals were without health insurance, with over 7 million children under the age of 18 being uninsured (U.S. Census 2009). We can expect even more children to struggle with their schooling as poverty (nearly 14 million children in 2008) and foreclosures (4.3 percent of home loans in the foreclosure process1) rise.
Finally, families who are trying to make ends meet are frequently pushed to postpone or abandon aspirations for further education. According to a recent survey of young adults, 20% of those aged 18 to 29 have dropped out or postponed education (Greenberg and Keating 2009). According to a survey performed in Colorado, a quarter of parents with children attending two-year colleges expected to send their children to four-year colleges before the recession (CollegeInvest 2009).
College attendance is costly if it is postponed or reduced. Not only does attending college lead to higher earnings, lower unemployment, and other personal benefits, but it also leads to a slew of social benefits, such as improved health outcomes, lower incarceration rates, higher volunteerism rates, and so on (see, for example, Baum and Pa-yea (2005) or Acemoglu and Angrist (2000)).
Opportunity
There’s no denying that recessions and high unemployment restrict economic opportunities for individuals and families. Individuals and the greater economy suffer losses as a result of job losses, income decreases, and increases in poverty.
To give just one example of missed opportunities, recent study has indicated that college graduates who enter the workforce during a recession earn less than those who enter during non-recessionary times. Surprisingly, the findings also imply that the income loss is not only transient, but also affects lifetime wages and career paths. “Taken together, the findings show that the labor market effects of graduating from college in a terrible economy are big, negative, and enduring,” writes Kahn (2009). She finds that each 1 percentage-point increase in the unemployment rate results in an initial wage loss of 6 to 7%, and that the wage loss is still 2.5 percent after 15 years.
Non-college graduates will most likely do badly. While unemployment has grown for all demographics throughout the recent crisis, individuals with less education and lower incomes face significantly greater rates than others.
Job loss
The unemployment rate has risen from 4.9 percent in December 2007 to 9.7 percent in August of this year during the current recession. About 15 million people are unemployed right now, more than double the level at the onset of the recession, with nearly one out of every six workers unemployed or underemployed. About 5 million individuals have been out of job for more than six months, making up the greatest percentage of the total workforce since 1948.
Losing one’s employment causes obvious challenges for most people and their families. Even once a new job is taken, the income loss can last for years (often at a lower salary).
Although the research on the effects of job loss is far too large to discuss here, Farber’s evidence is worth highlighting (2005). Farber concludes that job separation is costly, based on data from the Displaced Workers Survey from 2001 to 2003. 2 “In the most recent period (2001-03), approximately 35% of job losers were unemployed at the next survey date; approximately 13% of re-employed full-time job losers are working part-time; full-time job losers who find new full-time jobs earn about 13% less on average than they did on their previous job…”
Job loss has an impact on one’s mental health in addition to their income and earnings (see Murphy and Athanasou (1999) for a review of 16 earlier studies). It’s also worth noting that how one does during a recession is determined by a multitude of things. When compared to other age groups, older employees are disproportionately represented among the long-term unemployed.
Economic mobility
As previously stated, intergenerational mobility or the lack thereof can exacerbate the effects of recessions.
Through a variety of processes, poorer families can lead to less opportunities and lower economic results for their children, whether through nutrition, school attainment, or wealth access. As a result, a recession should not be viewed as a one-time occurrence that strains individuals and families for a few years. Economic downturns, on the other hand, will affect the future chances of all family members, including children, and will have long-term effects.
Private investment
Investments and R&D are two of the most obvious areas where recessions can stifle economic progress. Economists have long acknowledged the importance of investment and technology as driving forces behind economic growth. 4
Investment spending and the adoption of innovative technology can and do decline during recessions. At least four causes have contributed to this. First, a downturn in the economy will reduce demand for enterprises’ products as customers’ incomes fall, diminishing the return on investment. Second, enterprises’ ability to invest will be hampered by a lack of credit. Third, recessions are periods of greater uncertainty, which may cause businesses to cut down on spending “They may be less willing to experiment with new items and procedures because they are “core” products and production techniques. Finally, the relationship between human and physical capital must be considered. Technology is frequently integrated in new physical equipment: as output and employment decline, fewer fresh equipment purchases are made. As a result, workers are less able to put existing abilities to use, and there is less of a need to learn new ones “current employees to be “up-skilled,” or hire new employees with new skills.5
Figure C depicts non-residential investment growth during each of the last four recessions, as well as a more specialized category of equipment and software (thus excluding structures). Annualized quarterly non-residential investment averaged 4.7 percent from 1947 to 2009, whereas investment in equipment and software averaged 5.9 percent. Investment falls sharply during recessions, as shown in the graph. It also demonstrates the severity of the present slump, with total non-residential investment down 20% from its peak in the second quarter of 2009.
The repercussions of reduced investment levels are evident. Decreased levels of economic production in the future are a result of lower capital investment today. Poorer levels of physical investment can lead to lower productivity and, as a result, lower earnings. 6 The consequences will linger long after the present recession has officially ended.
Entrepreneurial activity: Business formation and expansion
Apart from the general drop in investment activity, recessions, particularly those with a credit crunch, such as the current one, can stifle small firm formation and entrepreneurial activity.
There are various ways that recessions might stifle the establishment and expansion of new businesses. To begin with, it is self-evident that new businesses require new clients. Because a slowing economy equals less overall spending, those considering starting a new firm may prefer to wait until demand returns to typical levels. Second, new businesses necessitate the addition of new debtors and investors. Lower wages and wealth levels may make it more difficult for new businesses to recruit individual investors, and credit limits may limit private bank financing.
“The credit freeze in the short-term funding market had a disastrous effect on the economy and small enterprises,” according to a recent analysis from the US Small Business Administration (SBA 2009). The usual production of products and services had virtually stalled by late 2008.” According to a study of loan officers, conditions for small-business commercial and industrial loans have been dramatically tightened.
Not only do recessions make it more difficult to establish a new firm, but they can also derail struggling new businesses. There could be a slew of new firms (and business models) popping up.
els) that might be successful in normal times but can’t because to a lack of demand or credit. In 2008, 43,500 businesses declared bankruptcy, up from 28,300 in 2007 and more than double the 19,700 that declared bankruptcy in 2006. (SBA 2009).
The influence of the recession can also be observed in the number of initial public offerings (IPOs). Firms use the funds earned from initial public offerings (IPOs) to grow their operations. There were just 21 operating company IPOs in 2008, down from an annual average of 163 the previous four years (Ritter 2009). 8 Furthermore, the median age of IPOs in 2008 was slightly greater than in previous years, indicating that the capital flood is going to the more established companies.
It’s tempting to believe that recessions just delay the establishment of new businesses, and that delayed plans will eventually be implemented. However, many new enterprises have a limited window of opportunity to get started. Furthermore, innovative new businesses frequently build on previous technological and innovation platforms. A delay in one business may cause delays in many others, causing a cascade effect across a wider variety of businesses.
What factors influence agricultural trade?
Demand for food and agricultural products is driven by global economic conditions, laying the groundwork for U.S. agricultural commerce. As a result, changes in trade policies, global population and affluence, and economic growth affect the mix and pattern of agricultural exports and imports in the United States. Global supply and prices, currency rate fluctuations, and government assistance for agriculture are all elements that influence agricultural commerce in the United States. See U.S. Agricultural Commerce at a Glance for an overview of agricultural trade in the United States.
What factors have an impact on agriculture?
Soil, climate, monsoon, irrigation infrastructure, and the availability or use of various technologies are all elements that influence agriculture.
- Different varieties of food and non-food crops are grown in different parts of the country depending on differences in growing practices, climate, and soil.
- Jute, cotton, oil seeds, sugarcane, coffee, tea, pulses, millets, wheat, and rice are some of the primary crops farmed in India.
- India’s diversified climate may be used to develop a wide range of high-value crops.
- In subtropical and tropical climes, the tea plant thrives in fertile, well-drained soil rich in organic matter and humus.
- Sugarcane is a crop that grows in both subtropical and tropical climates. It thrives in temperatures ranging from 21C to 27C, as well as humid and hot climes.
- In the flood plains, where soils are regenerated every year, jute grows successfully on well-drained fertile soils.
- In India, the black soil region of the Deccan and the Ganga-Satluj plains in the northwest are the two most important wheat-growing zones.
In a recession, what happens to food prices?
During a recession, food prices are usually quite steady. If the recession is severe enough to cause deflation (a drop in the overall price level), food prices may drop by a similar amount.
US Deflation 1929-33
For example, during the Great Depression (1929-1933), prices fell steadily. The reason for this was a considerable drop in aggregate demand. Due to bank failures, the money supply in the United States has also decreased.
The pricing level in the United States. Between 1930 and 1933, there was deflation (negative inflation) a drop in the price level.
Deflationary pressures in recession
How a downturn in pricing could be caused by a recession. A decrease in the price level is caused by a decrease in aggregate demand (AD). Prices would tend to fall as a result of this.
Food prices more often stable than luxury goods
Food has a very low elasticity of demand in terms of income. When income declines during a recession, we cut back on high-ticket items like vehicles, but we continue to buy food (unless we are really destitute). As a result, staples like bread and rice will continue to be in high demand. As a result, corporations may feel less pressure to lower food costs than they do for other items.
In a bad recession, you may anticipate a price war to break out in high-end electronics or automobiles, but a price war in food is quite unlikely.
However, if the recession is severe enough and benefits for the unemployed are in short supply, even food will witness a drop in demand (like the Great Depression)
Restaurants: Can They Survive the Recession?
Restaurants have seen their fair share of ups and downs in the past. While many independent businesses have closed their doors with little possibility of reopening, our statistics rebounded rapidly at Wayback Burgers, and comparative systemwide sales were actually up year-over-year in the third quarter. Here are some strategies and lessons learnt that can help restaurants thrive amid economic downturns:
Prior to the Great Recession, the restaurant business was rather outdated. Few restaurants used technology in any meaningful way other than rudimentary websites. Businesses began to recognize the value of leveraging technology after the crisis, whether it was owing to digitally informed consumers’ need or eateries wanting to differentiate themselves. Brands began to develop their own apps so that customers could more quickly access menus and place orders. Self-ordering kiosks began to appear. Apps for third-party delivery have grown in popularity.