The Achilles Heel of the U.S. Food Industries: Exposure to Labor and Upstream Industries in the Supply Chain
New study released by AAEA Past President and member in AJAE
New research shows that the animal slaughtering industry is vulnerable to production workers. If the animal slaughtering industry had realized such vulnerability before COVID-19, and had taken necessary protective measures, the impact of the pandemic on the industry might have been less acute.
Truckers’ shortage has been a headache to many industries recently. In the new research “The Achilles Heel of the U.S. Food Industries: Exposure to Labor and Upstream Industries in the Supply Chain” released in the American Journal of Agricultural Economics, Ahmad Zia Wahdat and Jayson Lusk from Purdue University, show that food manufacturing industries are exposed to (i) transportation upstream industries, and (ii) transportation labor. Transportation services are so important for food industries that the White House has been paying it specific attention.
Wahdat says, “Our study shows that together the nine U.S. food industries are exposed to twenty-two upstream industries and two labor occupations. However, exposure to the number and combination of upstream industries can differ by each food industry. Such heterogeneity lends itself to the nature of business of a food industry. For instance, the animal processing industry does not rely on crop production industry at all, but the grain & oilseed industry does. If we are to protect a food industry from upstream input shocks (similarly, labor shock), first, we need to identify the upstream industries that matter.”
Wahdat continues, “Meanwhile, in terms of diversification of upstream inputs, there exists geographic heterogeneity within a food industry. For instance, the grain & oilseed industry in Maine mostly processes raw grains and seeds from farmers, but the same industry in Nevada mainly uses and packages processed grains and seeds from the grain industry itself. So, it is important to pay attention to the nature of business of a food industry within each state as well, i.e., blanket policy measures for a food industry may have different effects across states.”
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