Compound effects of drought and COVID-19 on soybean production in Brazil: Challenges and policy responses

This study investigates the cumulative and interactive impacts of drought and COVID-19 on soybean production in Brazil, focusing on cascading economic and operational disruptions. The country has faced numerous drought events in recent years (1989 to 2022), culminating with one in 2022 that, together with the occurrence of COVID-19, led to the highest decline in soybean production since 1990 (10.5 % of the total national production). Our analyses based on spatial lagged regression models revealed that the cumulative impacts of consecutive drought events significantly affect soybean production. Furthermore, the study uncovered a significant interactive association between COVID-19 and drought by using spatial lag models, emphasizing the compounded challenges posed by simultaneous shocks of climate change and rising agricultural production costs due to pandemic-induced supply chain disruptions. In addition, descriptive statistics on agricultural economics showed that COVID-19 triggered historical peaks in agricultural input prices, forcing producers to enter the 2021-2022 crop season under critical conditions. Specifically, previous losses in soybean production due to droughts during the 2020-2021 season left producers facing financial constraints while contending with historically high production costs for the next season. These results show how the impacts of a global pandemic cascade into soybean production costs (input prices), while highlight the vulnerability of Brazil's soybean production system to multiple shocks. Hence, we envision responses encompassing short-term changes in management practices and land-use decisions at the farm level; mid-term public policies providing risk assessments and emergency credit to address abnormal spikes in production costs caused by socio-health stressors, which would enable producers to secure more suitable input packages, helping to mitigate potential losses associated with co-occurring climate extreme events; and long-term further investments in developing more self-sufficient food production systems, reducing the heavy reliance on imported agricultural inputs-as seen in the Brazilian case-, and development of highly soybean tolerant-drought varieties.