Recipient Organization
UNIVERSITY OF MISSOURI
(N/A)
COLUMBIA,MO 65211
Performing Department
Division of Applied Social Sci
Non Technical Summary
The Novel Coronavirus SARS-CoV2 (COVID-19) has created unprecedented supply and demand shocks, and many supply chains designed to function efficiently failed to respond. Rapid shifts in demand and supply, vis-à-vis the system-disrupting shock of COVID-19, resulted in market failure caused by a lack of supply chain flexibility and agility. These market failures have impacted several primary food supply chains in Iowa and the Midwest: pork, beef, poultry, and dairy. Supply chains involve complex relationships between multiple organizations, making understanding why euthanizing animals, dumping milk, and not repurposing food service products like eggs, pork and beef at times when these products are being rationed at retail stores illusive. Resilient systems are possible, but where and how resiliency should be introduced in complex multi-organizational supply chains must be better understood.Our project explores how COVID-19 disrupted our food systems and how to avoid these issues in the future.We will examine what actions and strategies helped mitigate the in-pandemic responses and can assist in future impacts, especially in the case of a COVID-19 resurgence or another similar disruption to our food systems. Specifically, this project seeks to evaluate the main bottlenecks in the eggs, dairy, beef, and pork supply chains and to use that information and the experiences of producers, processors, distributors, and retailers to develop decision tools, investment strategies, and policy options that can make these supply chains more resilient in the face of such shocks.Closures and slowdowns in packing and processing plants caused a backlog of millions of animals that were ready for harvest, while shifts in demand for pork, beef, eggs, and diary created shortages at the retail level and excess supply in other areas of the supply chain. Companies that distribute and transport meat, eggs, and dairy operated below capacity due to high absenteeism among workers. The shift in consumption and supply prompted retailers to increase prices and ration supplies to avoid stock-outs.COVID-19 disruptions implicate and put at risk occupiers of many levels of the U.S. food supply chain. The project's immediate objectives focus on developing and making available data visualization and feasibility tools to help firms at critical levels of the supply chain to better manage the challenges they experienced. Our long-term goals focus on exploring the risk-return tradeoff of changes to each system, (for example, investments in labor and technology), to improve its resilience in the face of future disruptions. Our approach combines applied research and extension outreach.Our project includes urgent, industry- and data-driven decision tools and market analyses of the beef, pork, dairy and eggs supply chains. Our short-run objectives include developing decision tools with graphical interface to provide near real-time warnings of potential problems in the supply chains, allowing producers, processors, agribusinesses and policy makers to respond quickly to avoid the devasting impacts of March and April. Our long-run objectives include identification of key bottlenecks along each of the supply chains and risk-return analyses of adjustments needed to improve the resiliency of the U.S. food system.Our project takes a highly integrated approach, bringing together research and extension economists, supply chain experts, and industry advisory members representing all levels in the food supply chains.
Animal Health Component
60%
Research Effort Categories
Basic
30%
Applied
60%
Developmental
10%
Goals / Objectives
We are proposing an integrated investigation into four of the Midwest's key agricultural supply chains--pork, beef, eggs, and dairy--to identify both short-term disruption-mitigating strategies for producers and processors in these supply chains and longer-term strategies to enhance supply chain resilience by incorporating flexibility and agility using knowledge of external supply chain integration literature and processes.Our team's over-arching goal, expanded upon in the Objectives and Methods sections of our project narrative, is to engineer--via robust case studies, data analysis, modeling, and decision aids--supply chain resilience to minimize the effects of future disruptions, like a recurrence of COVID-19 in the fall, on food supply chains. Our approach is calibrated to the experiences of each supply chain during the initial and existing COVID-19 disruptions and specifically to the parts of the supply chain that ultimately were most susceptible.Project Objectives We aim to address both the short-run, urgent needs of the supply chains for beef, pork, dairy, and eggs and to use what we learn to explore the longer-term solutions available within these supply chains that enhance their resiliency using both supply chain agility and flexibility. As such, our immediate priority is to aid processors, producers, and retailers of beef and pork and processors and retailers for dairy and eggs by:creating understanding how their supply chains are functioning now relative to pre-COVID experiences,establishing and quantifying the key drivers of these changes during the COVID-19 pandemic, particularly the shift to food-at-home (FAH) from food-away-from-home (FAFH), anddeveloping decision aids and data visualization tools to predict bottlenecks and warn of disruptions.Longer-term objectives prioritize data-driven analyses of investments and systemic changes in supply chains to create resiliency. Resilient systems are possible, but where and how resiliency should be introduced in complex multi-organizational supply chains must be better understood. Below we expand these objectives to include the separate short- and long-run objectives for each: beef and pork, and dairy and eggs.
Project Methods
MethodsThe integrated investigation into four of the Midwest's key agricultural supply chains--pork, beef, eggs, and dairy--combines data-driven analysis with interviews of participants along each product's supply chain to better understand how supply chains performed at the onset of COVID-19 disruptions and the stress-points in the supply chains. This information will be used to ultimately provide guidance and cost/benefit type analyses of supply chain improvements. Because these industry interviews are critical to providing context and robustness to the short- and long-run data-driven analyses, we presented them first, preceding our discussion of the specific commodity sectors. Importantly, the industry interviews leading to the formal case study and the eventual simulations planned in the case study are not independent; however, we list the relevant activities and timeline separately below. The interviews and data-analyses fully integrate into the long-run objectives of this project. This is clearer in our management plan.Cross-Cutting Supply Chain Coordination and Agribusiness ImpactsWe propose, in pursuit of our project's long-run objectives, and specifically those related to beef, pork, dairy and eggs, semi-structured interviews with grocery retailers, including management and buyers, to better understand the stress-points in the supply chain. Suppliers of eggs, dairy, pork, and beef to the grocery retailers will then be interviewed. These interviews will be part of a robust case-study methodology resulting in new knowledge about the responses and consequences of the COVID pandemic on pork, beef, egg, and dairy supply chains. The case study will offer insights into supply chain resilience. For example, external supply chain challenges and opportunities are difficult to identify by individual firms, but research suggests that engaging firms in collaborative discussions enables external supply chain integration. The case study methodology will engage stakeholders to better understand how both internal and external supply chain integration improved supply chain resilience.The case study results will then be used to evaluate multiple objectives in simulation models. The objectives could include cost-benefit analysis, system shock analysis where the model receives a shock similar to what was and is being experienced by the COVID pandemic, and resilience analysis to determine how quickly the system can return to pre-disruption operations. Other objectives can be included as well, based on our case study analysis. Possible examples of parameters affecting the objectives might include allowing for a flexibility between turns in hog barns, fluid egg and liquid milk production system enhancements to allow agility in packaging for retail customers, increased cold storage capacity, hiring and training excess workers at plants and distribution centers (some of which might be paid to be on call), and using Lean Production and Six Sigma process improvement concepts to cross training plant workers and pickers so that they can be assigned to tasks of those who are absent from work. The simulation model is expected to be useful well beyond this study.Beef and PorkThe beef and pork supply chain experiences to date are similar. In both, the major initial disruptions beginning in March 2020 occurred at the processing level due to labor health concerns. While those have persisted, these bottlenecks quickly devolved into producer-level challenges. Secondary challenges related to packaging, storage, and distribution for retail markets arose from changes in consumptive demand as we abruptly shifted from FAFH to FAH. Thus, our investigational approach to the two food supply chains is similar and two-fold: focusing first on the immediate short-run analysis and information that will help processors and producers make decisions, and second by analyzing the longer-term strategies available to them to adjust more quickly between food-at-home and food-away-from-home demand swings, and also put in place resiliency-enhancing measures at the processing and producer level.We propose to link existing pricing, production and processing data for beef and pork to develop pricing and margin tools to signal when adjustments in processing capacity are needed, thereby giving the supply chains valuable adjustment lead time. This is a short-run objective. Longer-term objectives focus on identifying the bottlenecks created in the short-run, proposing solutions to alleviate these, and analyzing the proposed solutions for feasibility.Eggs and DairyLike in beef and pork, critical disruptions in the egg and dairy industries occurred at the processor level, but these disruptions were not driven by labor shortages. The issues here seem to be driven by processes and technologies at the processor level and in the coordinating functions between processors and retailers. The sudden shift in consumption patterns as children were released from schools and large segments of the workforce were sent home put significant processing strain on egg and dairy processors. For example, 70% of the egg supply in Iowa is broken eggs for food service. The infrastructure for broken eggs into food service is somewhat unique from other states where table eggs are the primary production type. Other states and regions were able to and shift their production to the retail sector while Iowa's broken egg production could not be shifted to retail. Our distribution systems were unable to adapt and that is one reason our egg industry was hard hit by the COVID-19 disruptions in consumption. Similarly, dairy processors and distributors lacked the flexibility to shift quickly to the packaging and distribution processes to support the rapid spike in FAH consumption.For the dairy and egg sectors, our focus is on analyzing the demand shocks processors faced from the FAFH to FAH shift. Pricing, production, and processing data--specifically the price transmission mechanism from processing to retail and changes in retail demand--are key elements. We know from our team's engagement with industry partners that the experiences of some retailers were more positive than other retailers, and we purport that key differences in processor-to-retail supply chains created these differential experiences. Our short run objectives include an exploration of the features of the retailer-specific supply chains that led to some retailers faring better than others, and tracing this back to egg processors and dairy processors. This is a data- and engagement-driven exercise, and for this we will rely on interviews with industry, including our advisory group members from these industries, and proprietary firm-level data they contribute. A full accounting of the short- and long-run activities associated with dairy and eggs are in the timetable on page 18 in the narrative.