Multi-level impacts of climate change and supply disruption events on a potato supply chain: An agent-based modeling approach

Abstract

CONTEXTThe world is experiencing frequent extreme weather events like droughts, snowstorms, and shifting of seasons due to climate change. Increased frequency and severity of these extreme weather events threaten food security because agriculture depends on climate conditions. Impacts of climate change on the agricultural system not only occur at the grower's level, but also cascade to other levels along the supply chain. OBJECTIVEThis study aims to quantify a wide range of economic impacts of different extreme climate events on different stages of a food supply chain. METHODSWe chose the potato supply chain in Idaho as a case study. We developed a multi-echelon supply chain simulation model using an agent-based modeling (ABM) approach with five types of agents—farmers, shippers, processors, retailers, and logistics companies. In addition to the business-as-usual (BAU) scenario, we designed two climate-related disruption events—drought and snowstorm. We quantified the heterogeneous impacts at different stages of the supply chain for both fresh and processed potatoes using key performance indicators (KPIs) including revenues, prices, lead times, traded quantities, and food waste quantity. RESULTS AND CONCLUSIONThe impacts of the disruption events are different on different agents in the supply chain for different product categories. The price hike of fresh potatoes is far higher than processed potatoes during disruption events. This price hike makes consumers switch to processed potatoes, which require more fresh potatoes as an input that further reinforces the price hike. However, because processed potatoes have an elastic demand, once their prices go up due to higher input cost, their demand drops. Non-contracted farmers gain additional revenues from the disruption events, whereas contracted farmers incur a loss due to lock-in price and lower than usual harvest. SIGNIFICANCEThe methodology developed in this study could be applied to other food and agricultural supply chains for understanding the vulnerabilities at agent levels due to climate change disruption events. The findings would help develop mitigation strategies or policies to improve the well-being of the overall supply chain.