WEST LAFAYETTE, Ind. — A sick baker can’t bake bread, but what if something were to happen to the people who make the flour or butter that the baker needs?
It’s called the Achilles Heel.
“If a key link is weakened, it impacts the strength of the entire chain,” said Jayson Lusk, a food and agricultural economist at Purdue University. “Our research identified the most vulnerable points and it also highlights the importance of diversifying. If multiple suppliers of needed inputs are used, it is like doubling up links at critical points in the chain.”
Lusk leads Purdue’s Center for Food Demand Analysis and Sustainability, and he partnered with Ahmad Zia Wahdat to develop an interactive dashboard to share their findings on the food supply chain. For more details on their work in this dashboard, their working paper was posted on SSRN.
The dashboard provides inputs needed for different food industries, shares the total cost of upstream labor and inputs and evaluates an industry’s risk based on their diversity score, ranging from zero to one, with higher scores indicating less vulnerability.
“The meat industry had the lowest diversity score,” Wahdat said in a press release. “Around $163 billion worth of input purchases are exposed to upstream industries and labor. Of this, animal production, or farms, and labor across production and transportation are the dominant sources of vulnerability. So, events like a pandemic, natural disaster or animal illness can jeopardize the output of the meat industry, as we have seen.”
Wahdat provided an example, if 10 percent of the input supply of an industry is lost, that industry would lose an average of $203 million of its total input for each state across the nation. If 10 percent of production labor within an industry is lost, they’d lose $28 million in output for each state.
“Four major meat processing companies process 85% of cattle in the U.S.,” Lusk said. “If these processing plants are hit with a disaster, there will be shortages of beef in grocery stores.”
The dashboards provide information state by state across the nation, or it could be viewed as the entire United States.
The dashboards, part of a portfolio of public dashboards, is part of Purdue’s Next Moves in agriculture and food systems. Additional dashboards include one that shows the vulnerability of food and beverage manufacturing during the pandemic and the economic significance of those industries across the nation. Another shows the vulnerability of food and agriculture during the pandemic.
“We see this information being used by policymakers and industry executives,” Lusk said. “By seeing where there are potential vulnerabilities, they can work to protect input supplies by diversifying their input purchases across multiple suppliers or developing contingency plans. A grocery store buyer may compare the diversity scores of the states from which they buy a product, or perhaps those within a given industry would look to states with high scores and choose to adopt some of their practices.”