Online or offline: High temperature, sales channel adjustment, and agricultural profit

Abstract

Extreme weather poses significant challenges to agricultural supply chain management, especially in developing countries. In this paper, we investigate to what degree can the adjustment of sales channels mitigate the economic consequences of supply chain risks of fresh agricultural products driven by extreme weather. Exploiting a field survey of fresh agricultural products from smallholder farmers in rural China, we empirically show that the high temperatures driven-supply risks can be mitigated by sales channel adjustment from offline to online and thus increase producers' agricultural profit. One percentage point increase in online channel sales driven by high temperature raises farmers' unit profit growth by 1.12 CNY. In the absence of sales channel adjustment, farmers’ agricultural economic losses due to high temperatures could be up to 26.65% higher. These findings are significant not only because high temperature events are predicted to increase significantly in the future, but also because they shed light on how smallholder farmers with limited adaptability to extreme weather can better adapt to adverse conditions by supply chain management - thus prospering rural e-commerce and development.