Agriculture Supply Chain Risks and COVID-19: from mitigation to sustainable strategies

The impact of keeping people from being able to work, meet, and socialize has severely damaged economic activities, especially in the services and the agricultural sector. Countries have imposed travel bans, border controls, and export restrictions on food commodities. As Agriculture Supply Chain (ASC) organizations are labor-intensive for fisheries, meat products, and high-value crops, the effects of lockdown are taking a toll on the labor markets. COVID-19 has had a significant impact on global food imports and exports.

The latest reports by the World Trade Organization (2020)[i] suggest that global merchandise trade will likely fall between 13 and 32% in 2020.

The ASCs play an essential role in achieving the United Nation’s Sustainable Development Goals, i.e. SDG 2 (to end hunger through achieving food security and improved nutrition) and SDG 12 (to ensure sustainable consumption and production). Therefore, it is necessary to investigate the impact of risks and to create resilient ASC organisations.

Along with four other professors, Sachin Kamble, Professor of Supply Chain, EDHEC Business School, led research[ii] to quantify the effect of the COVID-19 and specific strategies for reducing the impact of significant risks identified due to the  pandemic on Indian Agriculture Supply Chain organisations, depending on their sizes, while promoting a more sustainable supply chain practice.

RISKS AT VARIABLE SCALE

Risks in the supply chain occur either due to lack of supply chain resources or lack of supply chain collaborations. The effect and response strategies varied across ASC organisations with significant differences. The risks are assessed in four different types of organisations, namely, micro (MI) small (S), medium (ME), and multinational enterprises (MNC) using the FLQOWA approach[iii].

Supply risks (S), Demand risks (D), Financial risks (F), Logistics and Infrastructure risks (L&I), Management and Operational (MO), Policy and Regulation (PR), and Biological and Environmental (B&E) are found to have a significant impact on the different organisations depending upon their scope and scale (see fig. 1 below).

Figure 1 : Impact of risks on ASC organizations (Micro, Small, Medium, and MNC)

TOWARDS A MORE SUSTAINABLE ASC

Various strategies are suggested for controlling the risks and their impacts for charting the path towards the new normal.

Rapid adjustments

The shortages in the supply markets, which are predominantly induced due to nation-wide lockdowns and safety measures, can be resolved by redesigning internal systems using occupational safety and health hazards precautionary measures for worker and product safety. Some of the immediate steps include separation mechanisms based on thermal imaging, usage of facemasks/ gloves during handling and processing, and reducing single skilled personnel with a multiskilled workforce with technical support (robots and cobots) to balance efficiency safety.

Adoption of industry 4.0 technologies (that can enhance agile processing and supply chain ecosystem for meeting the dynamic demand).

Organizations should exploit their technological resources and strengthen their information technology capabilities for building strategic partnerships with key stakeholders. This will help in efficient product planning with real-time information flow and enhance transparency and visibility of the ASC processes. The inaccurate demand forecasts during the pandemic times can be reduced by investing in autonomous decision-making tools such as big data analytics and artificial intelligence platforms.

Socially responsible ASC

Effective communication strategies for motivating the staff and migrant labor to return to work should be deployed. The staff should be assured of job security and release their unpaid salaries. Job offers may be made to retired employees if regular employees are not available. The primary focus should be to enhance the organization's resilience capabilities by fostering employee engagement and well-being. 

Collaboration and shared responsibility for a sustainable future.

Organizations should focus on enhanced collaboration and integration with the focal firms for effectively managing the risks (through integrated risk management practices). For eg., Agribusiness organizations should focus on building short agricultural supply chains (SASCs), useful in managing supply-demand risks in situations with restricted inter-state transport movements. This will help to avoid the food wastage at the point of origin and loss to farmers.

The findings of the study can be generalized to other emerging countries that are reeling under the impact of COVID-19. Almost all the countries are affected by international trade restrictions, internal transport movements, and compulsory lockdown of manufacturing units. Government support and guidelines are needed to strengthen and develop agricultural production in remote and isolated regions. Financial risks due to limited liquidity and lack of cash availability with the ASC operators are putting additional pressure on all the state governments to defer investments in non-critical projects and provide financial relief to ASC stakeholders. The results of this study can be used as a guideline to identify the critical ASC risk areas and plan for a sustainable future.

This article is referring to the following publication: Rohit Sharma, Anjali Shishodia, Sachin Kamble, Angappa Gunasekaran & Amine Belhadi (2020), Agriculture supply chain risks and COVID-19: mitigation strategies and implications for the practitioners, International Journal of Logistics Research and Applications, DOI: 10.1080/13675567.2020.1830049