Stockpiling- The answer we've been looking for?
Updated: Oct 18, 2020
Fear and unawareness: two emotions which drive the human race to do the more impulsive, and what may come across as 'stupid' actions.
As the novel corona virus takes the world by the storm, us human beings are left confused and slightly delusional about how to tackle the issue.
As is very evident, the outbreak has forced most countries to establish certain decisions such as national lock down and National Emergency. Such a necessary but enforced restriction on free movement has instilled a fear in the minds of humans which, by far, overpowers that of contracting the virus- the fear of shortage. Convenience stores across the globe are running out of necessities such as grain (particularly rice), pulses, canned and preserved fruits and vegetables, bottled water, toiletries and toilet paper. Various governments have adopted certain wartime measures (rationing), price controls and restrictions on the number of people permitted to stay in a particular store at a point of time. Social media is piling up with posts, comments and memes about the current situation.
Why is there a scene of sudden panic and global supply chains going haywire?
The root of the problem is the trait of a human to preserve its race, which acts as a defense mechanism, per say, and forces man to go to lengths to be satisfied with his sustainability, thus arises the situation of 'panic consumption'. Additionally, 'herd panic' is another psychological trait where a person's mind creates an atmosphere where the actions of others seems to be the most justifiable thing to do.
The demand for products and commodities with a relatively long shelf- life has skyrocketed in the span of a few weeks. The crisis must not go to such an extreme that the supply chain is hampered, due to an extreme demand hike.
For example, Kazakhstan, which is one of the world's largest shippers of wheat flour, banned its export along with other commodities like potatoes and carrots on March 24th. However, such a decision was not thought thoroughly. The country produces more grain than what is required to sustain its population, in turn, stocking it would lead to damaging its foreign affiliations and the domestic farmers. It is a proven theory that poor agriculture exacerbated by stockpiling, leads to serious shortage and price control crises. The decision to pass the export ban may cost the country in the future.
In a survey conducted by us, we asked our respondents (from all across the globe- from Canada and USA to Paris, India and UAE) whether they stocked essentials on hearing about an alleged lockdown. The answers are as follows:
Of 300 responses, 72% said that they stocked essential supplies.
26.3% choose to go to shops since they are all open (at least for a few hours) and supply essential requirements.
1.67% admit the fact that they bought everything off the shop's shelf.
The above, gives a small inkling of the current consumer behavior. A majority is under the impression that stockpiling will help them to sustain themselves longer, while a comparatively smaller fraction claims to satisfy their demands as when required like a regular consumer.
Is such rampant domestic stockpiling the answer to our problems?
Certainly for a short amount of time it gives the impression of erasing the psychological fear of shortage however, in the long run, it will lead to severe shortages in the market, which will not be able to cope with the sudden rise in demand, thus hampering the price mechanisms and future inflationary expectations.
Thus, it is important for every consumer in the economy to understand the fact that hoarding and stockpiling goods is doing nothing but, prolonging the cycle of self- sustainability. Yes, these are strange times and call for stern measures however even these measures should not permanently dismantle the economic system and foundation.
Written by Urvi Agarwal