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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ABOUT AAEA: Established in 1910, the Agricultural & Applied Economics Association (AAEA) is the leading professional association for agricultural and applied economists, with 2,500 members in more than 60 countries. Members of the AAEA work in academic or government institutions as well as in industry and not-for-profit organizations, and engage in a variety of research, teaching, and outreach activities in the areas of agriculture, the environment, food, health, and international development. The AAEA publishes three journals, the Journal of the Agricultural and Applied Economics Association (an open access journal), the American Journal of Agricultural Economics and Applied Economic Perspectives & Policy, as well as the online magazine Choices and the online open access publication series Applied Economics Teaching Resources. To learn more, visit www.aaea.org.
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