A study by the University of Wisconsin shows farms that employ certain strategies survived the COVID pandemic while others did not.
The researchers surveyed more than 900 farmers, processors, wholesalers, retailers, and restaurant owners. The project was funded by USDA’s National Institute of Food and Agriculture.
Andrew Stevens with the University’s Department of Applied Economics studied the relationship between diversification and resilience. He told Brownfield Ag News some farms had vertical diversification (processing and some retail sales) while others had horizontal diversification (raising crops, livestock, and agritourism).
“If a farm was vertically diversified, it was almost five times as likely to have closed after the pandemic started, but when you look horizontally, that is, when you’re doing lots of different things in the same link of the supply chain, we saw that that kind of diversification increased resilience.”
Stevens said vertically diversified businesses tend to rely on a smaller number of key inputs, whereas horizontally diversified businesses can adapt using a variety of inputs.
“If those inputs get disrupted, you can’t really pivot to different directions because you’re so reliant on that whole chain working, whereas if your horizontally diversified, maybe product “A” and product “B” have supply chains that are breaking down, but you’ve still got product C.”
Stevens warned farmers against trying to do too much.
“We also found evidence for the hypothesis that trying to do too many things or cross too many links in the supply chain really stretches you thin and increases your risk of a big shock like a pandemic.”
