Understanding the Agribusiness Supply Chain
The US’ agricultural industry accounts for 80% of total Colorado River withdrawals. How does water scarcity affect the complex, interdependent food supply chain?
A grain elevator and other agricultural shipping machinery in Washington State.
The agribusiness supply chain is a global, interdependent, multi-industry operation that contributed nearly $1.2 trillion to the Gross Domestic Product in 2021 [1]. Here is a simple overview: Raw resource inputs, such as water, land, and nutrients are introduced into the supply chain and used to produce agricultural commodities like crops and livestock. These agricultural products are then processed, packaged, and transported to wholesalers or grocery stores. The food is then prepared, cooked, and consumed either at home, at a restaurant, or on-the-go. The food supply chain is composed of “complex, integrated networks” that ensure reliable, ubiquitous, and year-round availability of agricultural products from across the globe. The production of agricultural commodities is typically seasonal and regionally varied, but because of the globalization of the agriculture industry, the geographic boundaries of the US’ food supply are dissolved and a massive variety of agricultural products are available to the consumer.
Water is an essential resource input- it is used in crop irrigation, animal feeding operations, and during food processing. Constraints on water availability, including record drought and increased water demand, present an existential risk to the supply chain. Water issues impacting the sector include climate change, growing competition, weak regulation, failing infrastructure, and water pollution. The [Colorado River] provides about 80% of its water to agricultural uses, such as “irrigation, pesticide and fertilizer applications, crop cooling … and frost control.”
Agricultural sprinkler in Coahoma County, Mississippi.
The US agriculture sector faces a number of compounding threats to raw resource inputs, such as degrading soil quality, loss of biodiversity, and water availability issues. As drought endangers the agricultural economy in the southwest, the agricultural sector is an obvious target for water savings, and relies on the very savings it could provide. But ultimately, what is the incentive for agribusinesses to conserve water? Broad conservation efforts within the agricultural space are typically framed as voluntary and long-term. An example is demand management, a proposed voluntary framework that incentivizes upstream water users, typically farms, to pause their water use and be paid to do so. But even this completely voluntary framework is still pending consideration by relevant agencies and stakeholders.
Policy options and agribusiness best practices that aim to promote the resilience of the supply chain are essential in mitigating ecological risk to crop supply, addressing transportation bottlenecks, and reducing trade disruption (Read more about the USDA’s recommendations on trade, labor, infrastructure, and more in their Agri-Food Supply Chain Assessment. SCRM (Supply Chain Risk Management) models are concerned with the identification, assessment, decision analysis, mitigation, and contingency planning regarding potential risks to the agribusiness supply chain. This resilience-minded, risk-management approach has proliferated because of globalization, lean management + production philosophy, and historical supply chain disruptions [7] dating back to the third wave of globalization beginning in the late 1980s.
Images courtesy of Carol M. Highsmith. Obtained through the Library of Congress, and exist in the Public Domain.
Image 1 - https://www.loc.gov/item/2018699352/ (Public Domain)
Image 2 - https://www.loc.gov/item/2017879433/ (Public Domain)
