Open AccessCOVID-19, supply chain disruption and China’s hog market: a dynamic analysis
Author(s) -
Yubin Wang,
Jingjing Wang,
Xiaoyang Wang
Publication year - 2020
Publication title -
china agricultural economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.692
H-Index - 22
eISSN - 1756-1388
pISSN - 1756-137X
DOI - 10.1108/caer-04-2020-0053
Subject(s) - supply chain , consumption (sociology) , economic shortage , business , agriculture , agricultural economics , economics , stock (firearms) , china , marketing , biology , mechanical engineering , ecology , social science , linguistics , philosophy , government (linguistics) , sociology , engineering , political science , law
Purpose The authors explicitly evaluate the dynamic impact of five most concerned supply chain disruption scenarios, including: (1) a short-term shortage and price jump of corn supply in hog farms; (2) a shortage of market hogs to packing facilities; (3) disruption in breeding stock adjustments; (4) disruption in pork import; and (5) a combination of scenario (1)–(4). Design/methodology/approach The agricultural supply chain experienced tremendous disruptions from the COVID-19 pandemic. To evaluate the impact of disruptions, the authors employ a system dynamics model of hog market to simulate and project the impact of COVID-19 on China hog production and pork consumption. In the model the authors explicitly characterize the cyclical pattern of hog market. The hog cycle model is calibrated using market data from 2018–2019 to represent the market situation during an ongoing African swine fever. Findings The authors find that the impacts of supply chain disruption are generally short-lived. Market hog transportation disruption has immediate impact on price and consumption. But the impact is smoothed out in six months. Delay in import shipment temporarily reduces consumption and raises hog price. A temporary increase of corn price or delay in breeding stock acquisition does not produce significant impact on national hog market as a whole, despite mass media coverage on certain severely affected regions. Originality/value This is the first evaluation of short-term supply chain disruption on China hog market from COVID-19. The authors employ a system dynamics model of hog markets with an international trade component. The model allows for monthly time step analysis and projection of the COVID-19 impact over a five-year period. The results and discussion have far-reaching implications for agricultural markets around the world.