Preparing Today’s Agrifood Supply Chain to the Challenges of Tomorrow
Paper Session
Friday, Jan. 3, 2025 2:30 PM - 4:30 PM (PST)
- Chair: Sandy Dall'erba, University of Illinois-Urbana-Champaign
The Limited Role of USMCA in North America’s Agrifood Supply Chain
Abstract
The growing world population and climate change have put increasing pressure on the management of the global food supply chain and impacted the patterns of water use worldwide. Today, the production of food depends on inputs from many trade partners around the world; therefore, a detailed understanding of the key drivers of the global supply chain of agriculture and food is necessary to reduce costs, maintain a profitable production system, and anticipate disruptions caused by water scarcity. We complete this analysis across USMCA countries by applying the newly-developed Multi-Dynamic interregional Input-Output Shift-Share decomposition. Results indicate that the dominating factor varies by country. The US relies heavily on domestic supply chain linkages while Mexico and Canada depend more on their interaction with partners from the Rest of the World. These differences reflect varying levels of exposure to international events, protectionist trade, and water use optimization policies adapted to the productive sector of each country.Impacts of Carbon Policies and Uncertainty Shocks on Canadian Beef Supply Chain: A DSGE Model Approach
Abstract
The beef cattle industry is the largest contributor to greenhouse gas (GHG) emissions in Canadian agriculture, responsible for 39% of the total agricultural emissions (ECCC, 2024). In response to the challenge of climate change, the industry has set a target to reduce its primary GHG emission intensity by 33% by 2030 (Canadian Cattle Association, 2024). To meet the mitigation goals, the Canadian beef supply chain needs to undergo transformative changes. However, the industry also faces many uncertainty shocks, such as feed availability and quality due to extreme weather events, price volatility of input costs, high interest rates, regulatory changes, and consumer preferences for healthy and sustainably produced beef (Livestock Gentec, 2021). These uncertainty shocks can lead to changes in beef prices, production, consumption, and trade, making it increasingly challenging for the Canadian beef value chain to adapt. The Canadian federal and provincial governments have introduced – and are also in the process of developing more – carbon policies to incentivize producers to adopt new production technologies and practices to mitigate GHG emissions in the beef supply chain (ECCC, 2022). It is not clear how the interaction of carbon policy and uncertainty shocks might affect different stakeholders involved in the beef supply chain, such as cow-calf producers, feedlot operators, processors, retailers, and consumers. A well-designed carbon policy that takes into account the confounding effects of uncertainty shocks can help the Canadian beef supply chain become more resilient and better prepared for the challenges of tomorrow.Contract Farming and Food Security in Developing Economies: A Framework Model for Spillover Impact
Abstract
Empirical literature on the effect of Contract Farming (CF) on economic development of a Less Developed Economy (LDC) is divided on the basic issue of concern for the policy makers in LDCs: should CF be encouraged, and if so, under what circumstances? Broadly, there are both intermediate (yield, price etc.) and ultimate (mainly household income and food security) benefits. However, the implication of the outcomes on welfare are not unidirectional. For instance, in most cases yield per hectare and household income of farmers increased along with rise in prices of crops. This paper’s focus is totally different. Also, there is no homogeneity in the sample of crops or the country of occurrence. Since most of these contracts are private in nature with a clear objective of profit maximization, the estimates could have self-section biases, which is rarely controlled for. Additionally, these are mostly in the nature of treatment/control group studies (though not RCTs). A fundamental issue is that spillover effects bias outcomes in these methods and it should be controlled for. This implies that there is virtually no empirical literature on spillover effects. Looking at it differently, these studies conclude that in the absence of spillover effects CF appears to be conditionally beneficial to LDCs. Given this background, this paper investigates: what are the nature of these conditions? To what extent do spillover effects relax them? Constructing a three-sector-four-factors general equilibrium model: agricultural with contract farming, traditional agriculture, and manufacturing, we derive the conditions under which it is conducive for low-income farmers. The objective is to prescribe a clear set of recommendations to the governments of the LDCs that are experimenting with CF on the nature of priors that they need to ensure for significantly increasing the probability of net benefit from CF.Discussant(s)
Sandy Dall'erba
,
University of Illinois-Urbana-Champaign
Araceli Ortega Díaz
,
ECONOQUANTY
Gouranga Das
,
Hanyang University
Xiaodi Zhang
,
Shanghai Academy of Social Sciences
JEL Classifications
- Q1 - Agriculture
- R1 - General Regional Economics