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Iowa State economists study ag resilience under COVID-19
By DOUG SCHMITZ
Iowa Correspondent

AMES, Iowa – A group of Iowa State University (ISU) economists were awarded a two-year, $458,000 grant to study how COVID-19 has impacted the U.S. food supply chain, with the goal of finding short- and long-term solutions to increase resiliency against future disruptions.
“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,” said Keri Jacobs, an ISU associate professor of economics, who will lead the study. 
The project, tilted “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 in the face of future disruptions.
ISU was awarded the grant through the USDA’s National Institute of Food and Agriculture COVID-19 Rapid Response Program, which is part of more than $14 million in USDA funding announced to help study the most critical issues facing consumers during the pandemic.
Alongside Jacobs, the project research team will include five other ISU 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. 
She said 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. 
In addition, 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, she said. 
“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,” she said.
Jacobs added that consumers staying home 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,” she said. 
As a result, since distillers grains are used to feed livestock, and carbon dioxide is a preservative and key input in packaged liquid products, demand has stymied. 
“When ethanol demand tanked, so did the production of those two by-products,” she said. “So, in this case, the disruptions seeped into other food processing sectors.”
She said the visualization tools the team will use 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,” she added.
In a similar study, the USDA is also funding a $1 million research project by a team of Texas A&M University researchers to identify how COVID-19 might be transmitted in the nation’s beef supply chain.
One goal of the two-year project is to help reduce the risk of exposure for consumers and people who work in the meat industry, the USDA said.
10/22/2020