A little over sixteen weeks since it first emerged in a densely populated manufacturing hub of central China, the novel coronavirus or the SARS-2 Covid-19 has now devastatingly spread across the globe. Identified as being highly contagious, the virus has been growing exponentially, defying all odds of it being contained anytime soon. With Italy reporting over 12,428 deaths and the United States reporting over 188,578 total infected cases as of 1st April 2020, these two nations have become the new epicentre of the virus. Seen essentially as a bio-medical problem, the Covid-19 outbreak has compelled governments and supranational agencies around the world to question their preparedness in tackling such a huge health pandemic. Moreover, the virus has also exacerbated how humans perceive and act during a global pandemic and how their lifestyle and consumption behaviour changes at such testing times.
The coronavirus pandemic is changing life as we know it. As the virus is spreading, more and more people are panic buying groceries and other essential items for their fight and survival against the virus. Grocery store shelves across the globe have remained empty as people are stocking up on their supply of canned food, pasta, medical supplies, hand sanitizers, hand washes and even at some instances toilet papers. Amongst all this, the most astonishing consumption behaviour was that of the Netherlands and the USA where civilians were found to be queuing up to buy recreational cannabis or marijuana, and guns, bullets and ammunition respectively to keep themselves prepared for whatever lies ahead. Not only our consumption pattern, but the virus has also changed the way we play, work and learn. With schools and universities closing, sports leagues and other international events being cancelled or postponed, and travel, bars and restaurants being shut, people have increasingly started conducting their daily lifestyle within the boundary of their home. This has minimized the physical contact that people might have had with their surroundings, thus keeping them safe from contracting the virus. However, the way they are dealing with these sudden and drastic changes has been startling.
As of lately, Nepal too has felt the pinch of the virus outbreak. Although the nation has been on a national lockdown since 23rd March, a high-level coordination committee which took place on 29th March had decided to extend the lockdown by one more week till the 7th April, and ban all international flights till 15th April. The move was taken in view of the rising number of new cases of Covid-19 across the nation. Along with this, many other fiscal and monetary stimuli were also discussed to protect the economy from crumbling down due to the virus outbreak.
Panic Buying in Nepal:
Amidst all these, the daily consumption behaviour of Nepalese has been overwhelming. Supply side shortage, border lockdown and market failure are not new concepts for our citizens. The government’s delay and struggle in providing our civilians with essential commodities during the 2015 earthquake and the subsequent border closure were enough to dent a trust deficit between the public and the state. Now with the new pandemic, the market price of vegetables has almost tripled over a week, medical necessities like masks and alcohol based soaps and sanitizers are being sold at exorbitant prices, and supermarkets shut. In such a scenario, civilians are left with no other choice than to hoard up in huge quantities, irrespective of the fact as to whether they need those commodities or not. Thus, despite the government’s repeated assurance to consumers about no immediate supply shortfall of daily essentials, consumers have been time and again buying goods in bulk, and leaving almost nothing to vulnerable shoppers which includes the elderly, daily wagers and other low-income buyers.
Asymmetric information regarding the extent and gravity of a pandemic plays a significant role in determining how consumers decide to buy various products and commodities. Misinformation gives rise to uncertainty and thereby causes more panic about the existing situation. As buyers start purchasing more goods, sellers see it as an opportunity to create an artificial shortage. This window of opportunity allows them to hike the retail and market price of various commodities so that they can make more money. Customers, on the other hand, have no option and end up buying these overpriced goods which shoots up market demand for the same.
To regulate such situations, the state needs to establish a proper evaluating and monitoring body which can eliminate any demand-supply asymmetries that rise in times of emergencies. This can be achieved by using sophisticated forecasting techniques for analyzing the future consumption pattern of customers and relying on this information to manufacturers so that their demands can be met. Similarly, government owned bodies including the Nepal Oil Corporation (NOC) and the Food Management and Trading Company Ltd. (FMTC) should be encouraged to maintain speculative inventories which can meet the unprecedented demands of the general public in such crisis situations. The state can also activate both the provincial and local level bodies to ensure that the local food supply chain is not disrupted by prioritizing domestically produced foods and by renewing their focus towards domestic farmers. Likewise, elderly and people who belong to marginalized groups lack access to healthy food and proper nutrition and are most vulnerable at such times. Keeping this in mind, the government could either ration and subsidize food items along with introducing food stamps and distributing them among these people so that they have access to basic utilities.
Psychology stays at the heart of panic buying, and if we are to go by the current trend, panic buying has been increasing more exponentially than the virus itself. Rumours of impending commodity shortage blinds people while identifying the differences between disaster preparation and panic buying; and this is what we are currently observing in Nepal. Hence, at such sensitive times, the government has to come up with new and effective policies which can control any panic buying and market asymmetries that may arise; or else the entire retail food market can end up in chaos.