0
Keri Jacobs, an associate professor of economics at Iowa State, said that the pandemic led to major disruptions in a number of agricultural industries. “These disruptions were unique because we didn’t experience a shock to the supply of agricultural products—it was largely a shock to our processing capacity through reduced labor,” she said.
Jacobs noted that the lack of labor was especially problematic in agricultural industries, as the processing capacity and the entire system was built based on the known biological processes for products, like eggs, milk, beef, and pork. Furthermore, as the pandemic first spread, restaurants, bars, and schools closed, quickly changing consumers’ food consumption habits and needs, which created further disruptions in the supply chain. “Plants couldn’t make the switch quickly enough to meet the change in demand and had inventory prepared for a market that no longer existed,” Jacobs said.
Consumers staying home en masse also drove down the need for gasoline, and therefore ethanol, which had consequences that fed back into food industries. “Carbon dioxide and distillers grains are by-products in ethanol production and are both important inputs in other supply chains,” Jacobs said. She noted that distillers grains are used to feed livestock, and carbon dioxide is a preservative and key input in packaged liquid products. “When ethanol demand tanked, so did the production of those two by-products. So, in this case, the disruptions seeped into other food processing sectors,” she said.
To help understand how and why COVID-19 disrupted the agricultural supply chain the ways it did, and to help prevent similar things from happening in the future, Jacobs will lead a newly-funded USDA study. The project, “Agricultural Supply Chain Disruptions: Costs and Mitigation Strategies to Enhance Resiliency of Ag Supply Chains” aims to enhance the resiliency of the beef, pork, dairy, and egg supply chains in the Midwest United States in the face of future disruptions and was recently awarded a two-year, $458,000 National Institute of Food and Agriculture COVID-19 Rapid Response Program grant. The grant is part of more than $14 million in USDA funding announced to help study the most critical issues facing consumers during the pandemic.
The project research team also includes five other Iowa State faculty: John Crespi, Chad Hart and Dermot Hayes, professors of economics; Bobby Martens, associate professor of supply chain management; and Lee Schulz, associate professor of economics.
“Our short-term focus is on developing data visualization tools and forensic price- and volume-based decision tools,” Jacobs said. The visualization tools will help agricultural producers and firms recognize and adapt to stressors in the supply chain system, such as future COVID-19 outbreaks. “We don’t know whether there will be another type of disruption similar to COVID-19, but the COVID-19 disruptions have the potential to flare up again this fall and winter or be compounded with flu season,” she said.
The long-term goal of the research is to explore the risk-return tradeoff in supply system changes to improve future resiliency during disruptions.
“We will, among other things, explore potential risk-mitigating strategies that firms in the beef, pork, egg, and dairy supply chains can use to reduce the impact of the current pandemic or future similar disruptions,” Jacobs said. “Fundamentally, this disruption made it very apparent where we can benefit from better information, and that is what our project aims to do—generate more informed and synthesized market information to aid supply chains.”
September 21, 2020 - Iowa State University
