Agri Market Outlook - our assumptions around Covid-19

Friday, 1 January 2021

Forecasting what will happen in the future is always a challenge. Some variables can be difficult to predict, and the food and farming industry has to deal with issues such as the weather and market volatility which fall into this category. In this Outlook we continue to have uncertainty created by the Covid-19 pandemic, which will continue to impact on consumer demand.

Expectation of how the pandemic will develop and the impact it will have vary significantly. There is little consensus on the scale of impact or how quickly recovery will come. To deal with this uncertainty AHDB have developed a central scenario which outlines the key assumptions we have made around the nature of Government restrictions and the impact these will have on the economy and consumer behaviour.

Our central scenario broadly divides the year into two halves.


January to June


July to December

Characterised by full lockdown until mid-February, followed by only partial easing of restrictions/moving back to the tiering system.


In lockdown, whilst food takeaway and delivery operates are open there is complete closure of ‘eating-out’ in hospitality and restaurants, which is a significantly larger part of the foodservice market (89% pre-Covid)


In March, we expect around 80% of the country will be unable to eat-out at restaurants when lockdown does end due to ongoing restrictions. We assume these restrictions will gradually ease from April.


Restrictions have eased to the extent that there are no areas of the country where the eating-out market is forced to close.


Some rules, such as social distancing, remain so foodservice businesses return to a ‘new normal’ rather than a pre-Covid situation. This takes into account consumer concerns regarding returning to eating-out establishments as well as the legacy of working from home, continuing to benefit retail.


The permanent closure of many foodservice businesses will mean recovery to the full pre-Covid situation will take a number of years.


The economic impact of the virus and high employment have an impact on consumer confidence with recessionary behaviours evident for some groups.


AHDB has access to extensive data on the performance of food products in different channels such as retail, eating out, delivery and takeaway. To build our forecast for 2021 we have incorporated learning from how channels performed over the course of 2020 as restrictions were implemented and lifted.