A model of the U.S. food system: What are the determinants of the state vulnerabilities to production shocks and supply chain disruptions?

Abstract

AbstractWe adapt a Ricardian general equilibrium model to the setting of U.S. domestic agri‐food trade to assess states’ vulnerability to adverse production shocks and supply chain disruptions. To this end, we analyze how domestic crop supply chains depend on fundamental state‐level comparative advantages—which reflect underlying differences in states’ cost‐adjusted productivity levels—and thereby illustrate the capacity of states to adapt to and mitigate the impacts of such disruptions to the U.S. agricultural sector. Based on the theoretical framework and our estimates of the model's structural parameters obtained using data on U.S. production, consumption, and domestic trade in crops, we undertake simulations to characterize the welfare implications of counterfactual scenarios depicting disruptions to (1) states’ agricultural productive capacity, and (2) interstate supply linkages. Our results emphasize that the distributional impacts of domestic supply chain disruptions hinge on individual states’ agricultural productive capacities, and that the ability of states to mitigate the impacts of adverse production shocks through trade relies on the degree to which states are able to substitute local production shortfalls by sourcing crops from other states.