Proceedings of a Workshop
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January 2022 |
CLIMATE-RESILIENT SUPPLY CHAINS
Proceedings of a Workshop—in Brief
As the COVID-19 pandemic has demonstrated, the global supply chain is vulnerable to major disruptions from unanticipated events, yet no threat to the functioning of essential supply chains looms larger than the growing number of extreme weather events resulting from climate change. Indeed, the characteristics of today’s supply chains—their dependence on shipping and air transport, specialized inputs sourced from specific locations spread worldwide, and reduced inventories tied to just-in-time production—make them especially vulnerable to disruption from climate risks. With the goal of protecting global trade worth almost $20 trillion annually against such disruptions, supply chain executives and researchers who study global supply chains are now starting to focus on ways of increasing supply chain resilience in a world buffeted by climate change. To explore ongoing efforts to create climate-resilient supply chains, the Science and Technology for Sustainability program at the National Academies of Sciences, Engineering, and Medicine (the National Academies), held a two-day virtual workshop on September 27-28, 2021.
Planning committee chair Alice Hill, Council on Foreign Relations, noted that the March 2021 grounding of a 400 meter-long cargo ship in the Suez Canal illustrates just how vulnerable the global supply chain is to extreme weather events, in this case uncharacteristically high winds and an accompanying sand storm. The resulting blockage of this vital shipping route caused losses to global trade of over $9 billion, doubled the cost of shipping a container of goods from China to the U.S. West Coast, and led to shipping delays for customers around the world lasting several months. “Understanding how to build resilience in our supply chains in the face of worsening climate extremes is a vital step toward reducing the economic and public health shocks from catastrophic events,” said Hill, who added that this has been an understudied topic that deserves more attention than it has received given the scale of the threats and the level of vulnerability.
While nearly every aspect of modern society would stand to benefit from climate-resilient supply chains, this workshop focused on the potential effects that climate change may have on the supply chains that serve the food and agriculture sector. In four panel sessions, workshop participants discussed strategies for strengthening supply chain climate adaptation and resilience and offered their perspectives on public and private sector roles and data needs for strengthening the climate resilience of supply chains. The workshop planning committee focused on the food and agriculture sector as a tangible case to investigate climate issues for supply chains, with the intention that participants can extrapolate these discussions and considerations across other sectors, such as the fuel and technology sectors. Hill noted that while the issue of mitigating supply chains’ contributions to climate change is important, the workshop would focus on adaptation and resilience of the supply chain.
CLIMATE CHANGE, SUPPLY CHAINS, AND RESILIENCE
Hill moderated a panel session that provided an overview of the three key topics for the workshop.
Climate Change
Climate change, said Claudia Tebaldi, Pacific Northwest National Laboratory, is affecting every inhabited region across the globe, creating increases in hot extremes, heavy precipitation, and agricultural and ecological drought in many parts of the globe. According to different scenarios that the Intergovernmental Panel on Climate Change considered in
its most recent report, released in August 2021, projected changes in weather extremes will be larger in frequency and intensity with every additional increment of global warming.1 In other words, so called 50-year events will increase in frequency more than 10-year events with each additional increment of global warming. Other climate-induced changes that are likely to affect supply chains include a projected decrease in Arctic sea ice, with a navigable, ice-free Arctic likely to exist in the second half of the 21st century; a projected rise in global sea level that could affect the viability of the world’s shipping ports; and a projected decrease in ocean surface acidity that would affect the ocean food chain.
Supply Chains
A supply chain, explained Ozlem Ergun, Northeastern University, is a network in which raw materials, information, and finances flow from raw material and other types of suppliers through manufacturing, distribution, retailers, and finally to end users. Supply chains have one goal: to deliver the right product to the right customer at the right time for the right price while optimizing the performance metrics for each stakeholder involved in the supply chain. In a commercial supply chain, profitability is the most common metric.
Public health and humanitarian supply chains are different from commercial supply chains, said Ergun, in that the former mobilize only after demand occurs, meaning that they are by default late to meet demand. Public health and humanitarian supply chains also have different goals and metrics. For a public health supply chain, the goal is to meet the needs of as many beneficiaries as possible in a given timeframe and with a given budget, while for an emergency-activated supply chain the goal is to deliver emergency products to as many beneficiaries as quickly as possible.
Recently, Ergun led a 5-year effort to optimize the U.S. Agency for International Development’s (USAID) food aid delivery global supply chain (see Figure 1). She explained that each link in this supply chain serves many different commodities and shares resources and assets, such as warehouses and transportation options, which means there may be tradeoffs in terms of capacity or budget when needing to supply those different commodities to different end users. She noted, too, that lead time, supply availability, and costs are dynamic over time, with many constituents making decisions at any one time. Another complicating factor in this supply chain is that it involves international ports, warehouses, and transportation systems that can involve working with multiple governments and levels of government, which introduces many opportunities for disruptions in the supply chain to occur.
SOURCE: Ozlem Ergun, workshop presentation, September 27, 2021.
In addition to potential bureaucratic disruptions, natural disasters, conflict, and other factors can affect supply chains by disrupting both supply and demand, as well as the viability and capacity of transportation networks. Bottlenecks—the point in a supply chain that limits its flow and lead time—the time from initiation of a request for a product to its delivery—can change dynamically and affect supply chain resilience depending on how disruptions affect them and what capabilities exist for restoration and adaptation after a disruption.
Strategies for achieving global supply chain resilience, said Ergun, include strategic and tactical decisions on where and how to build and operate ports, roads, manufacturing facilities, warehouses, and how to design products
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1 IPCC Working Group I. 2021. Climate Change 2021: The Physical Science Basis—Working group I contribution to the sixth assessment report of the Intergovernmental Panel on Climate Change. https://www.ipcc.ch/report/ar6/wg1/downloads/report/IPCC_AR6_WGI_Full_Report.pdf.
that will help a system avoid and withstand disruptions. Operational decisions regarding how to allocate and distribute scarce resources, and services, such as manufacturing and transportation capacity, can increase resilience, as can advance planning for restoration activities following a disruption. The key to achieving supply chain resilience, she added, is to find the right balance among resilience strategies and foresee where bottlenecks are likely to emerge, which requires understanding the criticality and vulnerability of supply chain links and nodes. “A link or node that is both critical and vulnerable is a major source of risk, and an opportunity to build resilience by strengthening these critical and vulnerable nodes and links,” said Ergun. “However, that can only be achieved if we can map the supply chain network, predict demand, analyze risk, and engage and incentivize the stakeholders continuously.”
Food Supply Chains and Environmental Shocks
Jessica Gephart, American University, noted that food production is intimately tied to the environment and, as such, there are opportunities for climate change to disrupt the production of crops that require specific temperatures and the amount and timing of water. Livestock can experience heat stress that reduces their productivity, fish stocks are already migrating to cooler water, and aquaculture systems are vulnerable to rising sea levels and flooding. In terms of supply chain issues, small producers still dominate food production globally, and their output and links to the supply chain are likely to be particularly vulnerable to environmental variability and severe weather events. Moreover, most small producers consume a proportion of their own production, which means that any kind of disruption is going to affect both their income and their own household consumption.
Another important feature of food supply chains, said Gephart, is that many goods are perishable, so disruptions to processing, transport, and storage can result in a further loss of goods. “Many of these perishable products therefore require specialized transportation and storage infrastructure to prevent spoilage and disease, and these can become more important and more challenging under higher temperatures,” she explained. Given that food is a necessity, supply shortages or price spikes will cause consumers to shift consumption and increase demand for other products, generating another type of shock to the supply chain as well as the potential for social and political unrest that can lead to further shocks and disruptions.
The close ties between food production and the environment creates opportunities for environmental variability to affect multiple stages of the supply chain. Environmental variability can trigger algal blooms, coral bleaching, bacterial contamination, crop and animal disease, drought, extreme temperature and rainfall, flooding, pest outbreaks, wildfires, and other weather-associated disasters that are already becoming more intense and frequent. The ways in which these different disruptions translate into actual effects on the supply chain depend on the broader set of policy and economic contexts, such as the price sensitivity of producers and consumers, trade restrictions that can allow or prevent sourcing from other countries, and the degree to which the supply chain is vertically integrated.
As an example, Gephart noted that a 2004 tsunami in Sri Lanka damaged 65 percent of the local fishing fleet and 10 of the 12 major fishing harbors. It also destroyed many of the retail stalls and allowed wastewater to leak into some of the local fishing grounds, raising contamination concerns. The drop in fishery production had little effect on trade, but it was felt in the domestic supply that Sri Langa addressed by importing dried and canned fish. Similarly, extensive flooding in Pakistan in 2010 resulted in one million tons of food and 11 million livestock and poultry being lost or damaged, as well causing more than 60 percent of Pakistani households to lose grain stocks, triggering a 10-fold increase in rice imports. In addition, flooding also disrupted storage facilities and transportation networks, further disrupting the nation’s food supply chain. In the end, she said, the ultimate effect of these environmental shocks depends on the responses and adaptations that can either exacerbate or dampen any shock.
To increase food supply chain resilience, Gephart called for more research to produce strains and breeds that are less susceptible to environmental extremes and develop processing strategies that can increase shelf life. Improvements in storage and road infrastructure can help protect harvest crops and ensure market access during and after extreme weather events. She also said that providing credit, cash, and food supplementation can help mitigate some of the effects of environmental shocks on the quantity and quality of food at the consumption level.2
Discussion
Responding to a question from Hill about where to start building climate-resilient supply chains, Gephart said that creating or maintaining diversity in the system is important. Following the COVID-19 pandemic, for example, some larger commercial fishing operations are rebuilding local supply networks to create a multi-tiered system with some built-in redundancy and diversity. Ergun suggested analyzing the existing supply chains to identify existing gaps and
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2 Davis, K.F., S. Downs, and J. A. Gephart. 2021. Towards food supply chain resilience to environmental shocks. Nature Food, 2(1):54−65.
vulnerabilities, which will require policy incentives to enable data collection and analysis. Tebaldi noted the importance of modeling the effects of climate change on supply chains with an emphasis on looking at the combination of extreme events that are likely to occur in the future. Hill added that the U.S. National Intelligence Council has issued a report on compounding events, pointing out that singular events by themselves can be small, but small events occurring together can magnify their effects.3
CLIMATE RESILIENCE ACROSS THE FOOD SUPPLY CHAIN
Jarrod Goentzel, MIT Humanitarian Supply Chain Lab and planning committee member, moderated this panel’s deeper dive into the factors that affect resilience in the food supply chain and how climate change affects the operations and strategies of the stakeholders in the food supply chain.
From her perspective, Carmela Hinderaker, C&S Wholesale Grocers, believes that grocery stores are an anchor of resilience in their communities in that they provide a wide range of services beyond being the local source of food, such as banking and pharmacy services. What she worries about in that context is the confluence of multiple events that can stress the local grocery store and its community members, both in terms of keeping it supplied and their effect on their labor force.
Ruaraidh Petre, Global Roundtable for Sustainable Beef, spoke about the work his organization is doing to educate beef producers about the causes of climate change, that it is happening, and that they can contribute to alleviating climate change. Partly because of these efforts, the U.S. National Cattleman’s Beef Association has set a goal for the beef supply chain to be carbon neutral by 2040. “That is good news because it means basically we have got the whole producer base to recognize what the problem is and to acknowledge that we need to be part of the solution,” said Petre.
Joshua Merrill, Corteva, noted that rising sea levels, a consequence of climate change, might open new port opportunities, which could be a positive outcome for supply chains in that it might reduce port congestion that currently affects international shipping. On the other hand, climate change will affect what growers can produce and how much they can produce, which will directly influence the reliability of the food supply chain, particularly for those products coming out of Asia. He also pointed out that some of the policies enacted to mitigate climate change can have negative effects on food supply chains. China, for example, will now shut down manufacturing plants for an unspecified time if the nation is not on track to meet its emissions targets for a given quarter. “This is climate policy influencing our supply chain and our ability to serve our customers,” said Merrill.
Discussion
Goentzel asked each of the panelists to comment on how climate change affects the key variables that shape their organization’s strategies and planning activities, and on the uncertainties related to climate change that most worry them. Hinderaker said the main concerns from the perspective of wholesalers and grocery stores are economic, given the tiny profit margins that exist throughout the supply chain, and how price changes triggered by disruptions in the supply chain can quickly change consumer behavior. As an example, she noted how disruptions in the beef supply that occurred during the COVID-19 pandemic when processing plants had to close led consumers to eat more poultry, which further stressed that part of the supply chain beyond the disruptions caused by worker shortages, transportation issues, and other factors triggered by the pandemic. Her organization is looking at innovation as a way of buffering the economic stresses that supply chain disruptions can cause, particularly those related to the labor supply in processing plants and warehouses.
For the beef industry, a big concern is the effect that climate change will have on grasslands given that they are already marginally productive in many parts of the world, said Petre. To address that problem, the beef industry is starting to look at grazing crops such as legumes that have deeper roots and can sustain grazing during longer dry seasons. Climate variables, he noted, are already having a significant effect on prices, with both cash and futures prices becoming more volatile, making it difficult for produces to know when to take their cattle to market and leading to a reduction in herd size. That, in turn, makes the supply chain less resilient, which was apparent during the COVID-19 pandemic.
Another concern, he added, is the increase in disease vectors that are spreading as the planet grows warmer and that are already affecting beef production in Europe and China. The beef industry is also worried about Europe’s move to create a product environmental footprint—a multi-criteria measure of the environmental performance of
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3 National Intelligence Council. 2016. Implications for US National Security of Anticipated Climate Change. Washington, DC: Office of the Director of National Intelligence. https://www.dni.gov/files/documents/Newsroom/Reports%20and%20Pubs/Implications_for_US_National_Security_of_Anticipated_Climate_Change.pdf.
a good or service throughout its life cycle4—would increase prices for products perceived to contribute to climate change, one of which could be beef. Solutions are at hand—feed additives that can reduce enteric emissions by 80 percent—but the logistics and supply chains for those additives are not yet in place.
Climate change, offered Merrill, is likely to shift agricultural production to new regions globally as temperatures warm and water becomes scarce in parts of the world. The importance of drought tolerance has triggered strategic decisions regarding the research his company should fund. “We know how important it is to have offerings that help growers to be more resilient as part of our sustainability goals,” he explained. One concern going forward is the potential effect that climate change will have on the global transportation network, which is prompting his company to develop a resilient sourcing strategy that creates more geographic diversity to its supplier network. He also noted that the company is investing in technologies such as satellite imagery, drones, and remote sensors to get a better real-time picture of the environment to better inform its supply chain strategies.
One challenge Merrill noted was balancing the steps the company needs to make to meet its climate-related goals, develop products that will be better suited to altered global environmental conditions, and the inherently conservative nature of its customers. There is a realization, he said, that building resilience and flexibility into the company’s supply chain may become more important than achieving the lowest possible cost.
Petre commented that the producer community might be conservative, but it is not uninformed. In fact, producers are recognizing the effects that climate change is having on their viability. One result is that many of his organization’s members have set science-based targets that are influencing their decision-making process and investment priorities.
Responding to a question about the role of data and data sharing in resilience and continuity planning, Merrill said that venture capital has been funding agricultural startups focused on data generation and analysis. These firms, he said, are not likely to freely share their data, but will make it available for a fee. Data, he stated, are becoming more essential for predicting supply and demand, which then informs strategic decisions regarding the supply chain. Merrill said the ideal situation would be to have a common platform that all data companies would use yet structured in a way that still allows each company to profit from their data. What will be just as important, added Petre, is sharing lessons learned among the different stakeholders in the food supply chain as they gain experience building resilience into their activities.
Hinderaker said that data sharing at the retail and distributor level is poor, largely because the industry is so competitive, with profitability depending on volume and market share. The one area where data sharing does occur involves food recalls, and there is innovation in that space. Huge retailers such as Walmart are collaborating with other stakeholders in the food chain to develop block chain technology to help track food from source to consumer. However, farmers, truckers, and other small stakeholders do not have the financial resources to develop and implement data sharing systems and will not do so unless there is an economic incentive involved.
What did occur during the COVID-19 pandemic was for certain distributors to help each other deal with employee shortages to get food out to grocery stores, said Hinderaker. She noted that government could play a role here by helping make connections among the different constituents during crisis situations and making sure resources and critical infrastructure, such as fuel, water, and generators, remain available to the food supply chain given its essential nature. She pointed out that while a large distributor such as her company may have the financial resources to purchase stand-by generators for their warehouses, small grocery stores may not, yet they are essential components of the food supply chain that need to remain operational during a crisis. During the March 2021 winter storm in Texas, for example, many grocery stores could not operate their deli and meat departments because they could not get water for cleaning. “If you have fuel, water, and power up and running, the food industry will keep going,” said Hinderaker.
When asked about the role of food imports to bolster the resilience of the food supply chain, Merrill and Petre both remarked that including foreign sources in the supply chain is complicated and may not be feasible because of international trade agreements, country-specific regulations, and concerns about importing diseases along with food products. In fact, zoonotic infectious agents (e.g., bacterium, virus, parasite) are a major concern in the food industry with regard to importing food, said Petre.
All three panelists commented that the insurance and finance industries are starting to show concerns about resilience in the food supply chain. Hinderaker noted that her company’s insurers have become more concerned about the company’s crisis planning, as are the firm’s bigger customers. Customers have a personal stake in resilience because if they cannot get supplies, they can quickly lose market share to their competitors who might get their supplies from a more prepared distributor. Petre added that financial institutions are starting to incentivize producer practices that can mitigate the risk of climate-associated events, such as introducing grazing practices that can increase soil moisture
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4 Manfredi, S., K. Allacker, K. Chomkhamsri, N. Pelletier, and D. M. de Souza. 2012. Product Environmental Footprint (PEF) Guide. European Commission Joint Research Centre. https://ec.europa.eu/environment/eussd/pdf/footprint/PEF%20methodology%20final%20draft.pdf.
retention during extended dry periods.
COMMUNITIES AND FOOD SUPPLY CHAINS
The panel moderated by Klaus Tilmes, African Center for Economic Transformation and planning committee member, discussed local food system supply chains, the multifaceted interactions with climate change, inequality, globalization, and innovations occurring at the local level to strengthen the resilience of those supply chains. Tilmes noted that studying how climate change may affect local food systems and communities is a new endeavor. In fact, he said, the interactions between food systems climate change and communities are proving to be far more complex than at those at the global scale given the thousands of stakeholders who participate in local food supply chains. As an example, he pointed to a recent report that 97 percent of U.S. school meal program directors are worried about getting the supplies they need given supply chain disruptions.5 “The law of compounding disasters is clear: COVID plus extreme weather events are putting local food systems under increasing stress,” said Tilmes.
Errol Schweizer, co-founder, strategic advisor, and board member for high-growth companies in the natural and organic products industry, said that the U.S. food industry is moving in two directions. On the one hand, consumers want high-quality, more organic, non-genetically modified ingredients in their food, while on the other hand, competitive pressures on retailers and suppliers are immense. What this means is that while consumers want to buy food from ethical companies that care about mitigating climate change, the food industry is racing to the bottom in terms of price competition and focusing on supply chain efficiencies and just-in-time inventory practices regardless of their effects on the individual farmers and producers within the supply chain.
These two trends, said Schweizer, are working at cross purposes to one another, and when the COVID-19 pandemic arose, the result was a huge shock to the supply chain. Normally, a typical grocery store might run out of 2 percent of the items it stocks, but that rose to more than 20 percent during the pandemic and following the winter storm that paralyzed Texas in 2021. In Austin, TX, for example, it took retailers months to recover from those shocks.
The current U.S. food supply chain, dominated by the private sector, is not built for “anti-fragility,” let alone resilience, said Schweizer, and if the emphasis remains on optimizing productivity and profitability at every step along the supply chain, it will hamper recovery efforts following disruptions. “I think this is setting us up for many more and bigger problems as supply chain shocks continue to occur, particularly those that are weather- and climate-related,” he said. He worries, too, that these shocks will disproportionately affect those individuals who have the fewest resources and may already be food insecure.
In his view, the nation needs to completely rethink the structure of its supply chains so that they are both anti-fragile and resilient and to ensure they are fulfilling customer needs. To Schweizer, that means first looking at food as something everyone has a right to, rather than profitability and productivity being the primary concern. “What if we said everybody has the right to good food, and then we have to figure out how to make that happen,” said Schweizer. His suggestion was to consider a bigger role for the public sector in the food supply chain, getting rid of just-in-time inventory management for food products, and energizing grass roots movements to demand change.
To begin his remarks, David Visher, Community Alliance with Family Farmers, agreed with Schweizer that the nation needs an alternate system for distributing small farmers’ products to address the very problems with the food supply chain that Schweizer described. Toward that end, his organization tried to create such a system and failed, losing over $300,000 in the process. However, in the 12 years since that attempt, small farmer collectives have established what they call food hubs that are succeeding not as a separate supply chain but in collaboration with the existing food distribution system. “It is true that a big, systemic change is required, and it is nearly impossible to pull off, but there are solutions and farmers are pretty clever about finding those solutions,” said Visher.
Small farmers, he noted, still account for 80 to 90 percent of all food producers, though most of the food Americans eat does come from large farms. During the COVID-19 pandemic, some grocers were able to keep their shelves stocked because of relationships they had with small farmers, and celebrity chefs have taken to collaborating with small farmers and promoting their value. Visher’s suggestion was to start mining the knowledge of small farmers who manage to cope with disasters and survive in the face of the consolidation of agriculture in the United States. One such lesson would be to adopt software platforms that are enabling small farmers to make connections and manage their direct contacts with customers, which has the effect of shortening supply chains.
He also pointed out that the existing produce distribution system has come to realize that it needs to source products from smaller producers to meet consumer demands for organic and sustainably produced products. He noted, too, that there is more federal money flowing into efforts to help small farmers engage with one another in collective
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5 School Nutrition Association. 2021. Back to School 2021 Report. Arlington, VA: School Nutrition Association. Available at https://schoolnutrition.org/uploadedFiles/News_and_Publications/Press_Releases/Press_Releases/Back-to-School-Report-2021.pdf.
marketing and to distribute their products through food hubs. The key, said Visher, is to have established relationships before a crisis occurs and for partners to communicate when a crisis strikes.
Erin Biehl, Johns Hopkins Center for a Livable Future, agreed that relationships are important when considering the resilience of the food supply chain and the broader food system, which includes the environments in which consumers learn about and buy food, consumer behavior, the health aspects of diet, and food security.6 For her and her colleagues, a key aspect of food system resilience is helping communities, local governments, and food systems stakeholders not only bound back from a shock or stress but use that as an opportunity to adapt and transform into a system that meets more of the nation’s health goals.
To do that, her organization has been working with local governments to integrate food systems into their disaster preparedness and climate adaptation planning by focusing on four questions:
- Resilience of what, i.e., the supply chain, producers, or the complex relationships across the system?
- Resilience to what, i.e., weather shocks or structural racism that affects food security?
- Resilience for what purpose, i.e., to support supply chain stakeholders or to ensure that everyone has a right to food?
- Resilience for whom?
Biehl and her colleagues began working on this problem in 2015 in Baltimore by helping city officials understand the potential in their food system for resilience and the kind of things that could happen at a local level to support better food security outcomes in the wake of a crisis in the city. Their analysis of Baltimore’s disaster preparedness plan identified 14 different hazards that were likely to disrupt the food system. The analysis led to a framework (see Figure 2) for understanding potential food system vulnerabilities that local governments can use to break down the problem of addressing resilience into manageable pieces.7 Two of the main lessons from this project were that it is possible to focus on food system resilience in a way that improves food access in the community, and to involve stakeholders at all levels in tackling this problem.8 The Johns Hopkins team is now working with Denver, CO, Moorhead, MN, Austin, TX, and Orlando, FL, to build resilience into their food systems following the COVID-19 pandemic.
SOURCE: Erin Biehl presentation, September 28, 2021.
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6 Fanzo, J., L. Haddad, R. McLaren, Q. Marshall, C. Davis, A, Herforth, A. Jones, T. Beal, D. Tschirley, A. Bellows, L. Miachon, Y. Gu, M. Bloem, and A. Kapuria. 2020. The Food Systems Dashboard is a new tool to inform better food policy. Nature Food 1: 243–246 (2020). https://doi.org/10.1038/s43016-020-0077-y.
7 G. M. Chodur,, X. Zhao, E. Biehl, J. Mitrani-Reiser, and R. Neff. 2017. Assessing food system vulnerabilities: A fault tree modeling approach. BMC Public Health 18:817. https://bmcpublichealth.biomedcentral.com/articles/10.1186/s12889-018-5563-x.
8 E. Biehl, S. Buzogany, A. Huang, G. Chodur, and R. Neff. 2017. Baltimore, MD: Johns Hopkins Center for a Livable Future and the Baltimore Office of Sustainability. http://clf.jhsph.edu/sites/default/files/2019-01/baltimore-food-system-resilience-advisory-report.pdf.
Discussion
Responding to a request from Tilmes to comment on Biehl’s and Visher’s ideas on reforming food supply chains, Schweizer said he has found their work valuable in that they point not just to the importance of considering food access and food security but to providing local and individual control of food systems that goes beyond just-in-time distribution and a race to the bottom. One aspect of this, he said, is that half of all jobs in the U.S. food system do not allow people to make a living and be food secure themselves. Perhaps, he said, the nation should think of food systems as public utilities and common goods, which in turn could lead to more grassroots and local support and broader government support for food beyond industrial corn and soybeans. Schweizer also called for looking at the true cost of the nation’s food systems and federal subsidies that would account for the health effects of junk food and the environmental costs associated with pesticide and herbicide use. He suspects this would change the equation in terms of how food is valuable and how those who produce more valuable food can benefit more from their labors.
Visher remarked that the COVID-19 crisis triggered a boom in his part of California in community-supported agriculture, which is where consumers get their food directly from the farmers who produce it. This development has resulted in higher profits for participating farmers. He noted that small farmers can be more responsive during a crisis because they tend to be more adaptable given the more manageable scale of their operations. In addition, small farmers tend to be more diversified in the crops they grow and the channels through which they sell their products. Moreover, many smaller farmers are using sustainable organic practices that are inherently more resilient than conventional farming systems.
In response to Tilmes’s question about outcomes from her work, Biehl said that when Baltimore was working on long-term resilience planning, it also worked on short-term preparedness. This led to the city convening an emergency food working group through which different stakeholders were able to build the relationships that enabled the city to respond quickly to the COVID-19 pandemic and during major winter storms that have hit the city in recent years. She noted that the pandemic has put food security and food system resilience on the radar of local governments.
When asked about policy changes that could increase resilience of local food supply chains, Visher said that water access is an area that needs attention today given that water is essential for food production and water shortages are already affecting agriculture in parts of the United States. He also said that there needs to be increased collaboration among the organizations that are currently distributing the nation’s food—the truckers, the big distributors, the multinational food companies—and the food hub operators and people such as Schweizer.
RETHINKING SUPPLY CHAINS FOR CLIMATE RESILIENCE
In the workshop’s final panel, Cyrus Wadia, Amazon and planning committee member, moderated a panel that discussed the roles that government and other actors can play to make the nation’s food supply chain, as well as supply chains more broadly, more resilient in the face of climate change and other unexpected events, such as the COVID-19 pandemic. The panel also raised the important role that innovation will play in making supply chains more resilient.
Marty Matlock, U.S. Department of Agriculture (USDA), said that government has to play a role in the food supply chain because food is a both a national security issue and one of the most foundational issues of being human. This is not to say that free markets are not good and that the food supply chain is not efficient and effective, but the characteristics that make it efficient and effective are what make it brittle or non-resilient. The Biden administration has recognized this and issued an executive order that directs USDA to invest $4 billion in strengthening the food supply chain.9 One goal of this funding is to make agricultural markets more accessible, more fair, competitive, and resilient for farmers and ranchers, which will create more choices, opportunities, and resources for consumers and transform the food system to make it more resilient to shocks. “When we talk about making the system more resilient, we are not talking about taking apart the system, but enhancing the system by creating more regional and local opportunities for producers, processors, and consumers and creating competitive opportunities across the board,” said Matlock.
To achieve that transformation, USDA is working to identify gaps and barriers to fair competitive practices in those markets, with an initial focus on expanding meat and poultry processing capacity at the local and regional levels. By doing so, USDA hopes to create a food system that ensures producers receive a fair share of the food dollar while advancing equity and combating the climate crisis. Matlock acknowledged that this is a “big, big ask.”
Shanna McClain, National Aeronautics and Space Administration (NASA), explained that her agency’s role in making food supply chains more resilient is to support this work with quantitative research. This starts with mapping supply chains and measuring or monitoring the extent of potential vulnerabilities and threats, and includes focusing on
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9 America’s Supply Chains, Executive Order 14017, 86 FR 11849 (February 24, 2021) https://www.federalregister.gov/documents/2021/03/01/2021-04280/americas-supply-chains.
the nexus of these supply chains with human environmental systems to provide a more nuanced understanding of the drivers of climate change and how climate-related disruptions affect local communities.
Going forward, McClain expects NASA and other U.S. government agencies to play an increasing role in what she called soft infrastructure: ensuring greater interdisciplinarity in their work with the goal of ensuring greater social inclusion, engaging in more diverse public-private partnerships, and acknowledging that some of those who suffer the greatest effects of climate change on supply chain disruptions are also those that are the most vulnerable and the most marginalized. This emphasis on social factors is particularly important given that many of those individuals who are most vulnerable to supply chain disruptions are the very people who keep the supply chain functioning. “Focusing on the soft services that underpin logistics is where we really see improved performance, reliability, and resilience,” said McClain.
In his role as the national COVID-19 supply chain coordinator, Tim Manning (The White House) is responsible for ensuring that supply chains for everything from glass vials to the special syringes needed to administer COVID-19 vaccines can meet the ongoing needs for those critical materials. The COVID-19 pandemic, he noted, has highlighted the importance of having flexibility and resilience built into all critical supply chains. Even now, he said, nearly two years into the pandemic, supply chains are still fragile and disrupted, with the effects still rippling across the U.S. economy and likely to last well into 2022.
In addition, the winter storm in Texas illustrated how shifting weather patterns triggered by climate change can disrupt supply chains—in this case those that supply thermoplastic resins—and have substantial, long-lasting effects across wide swaths of the economy. The shortage of thermoplastic resins, for example, has affected the companies that make catheters, syringes, and even the containers for disposing of used vaccine syringes. One challenge to identifying climate vulnerabilities, Manning mentioned, is that the nation’s infrastructure was engineered using climate and weather data that is no longer representative of what is expected going forward.
The focus of Kevin Lyons’s work at Rutgers University has been to look at how supply chain disruptions affect local economies, which is where environmental justice and other concerns affect individuals. He noted that individual institutions have a role to play that government cannot, which is getting their own act together and developing specific plans to make their part of the supply chain more resilient as both producers and consumers. In Newark, NJ, for example, there are 32 large corporate and institutional anchors that, as of five years ago only made 3 percent of their purchases from local producers. By working with those corporate anchors, Lyons and his collaborators have helped them increase that to 17 percent, which translated into a $340 million boost to the Newark economy. “You can have climate resilience while at the same time taking care of people,” said Lyons.
One role government can play, Lyons noted, is in facilitating construction of new factories in places that will have a positive economic and social impact. New Jersey, for example, recently provided guidance that led to constructing a manufacturing facility for off-shore wind farm equipment in a rural county in the state and to issuing contracts with veteran-owned business.
Discussion
Wadia opened the discussion by asking the panelists to comment on what the nation took for granted about its supply chains that the COVID-19 pandemic has revealed to be incorrect. Manning replied that along with the dangers of ignoring supply chain globalization, the negative effect of industry concentration was not something anyone had paid much attention to regarding supply chain resilience. He noted that addressing the concentration problem, one of his assigned tasks, has been difficult given that economics drive concentration and boards of directors, therefore, have a fiduciary responsibility to maximize profits for shareholders. Coordination between the government and private industry has also proven to be more difficult than it should be, Manning added, but it will be essential if there is going to be geographic relocation and redistribution of production and logistics capacity in this country.
A shortcoming Lyons pointed out was the failure to develop a deeper engagement between purchasers and suppliers that goes beyond the purchasing transaction and includes investing in the people who make those transactions possible. He noted that the handful of organizations that did have deep relationships with their suppliers did better than those who did not during the pandemic. Deep relationships, he explained, go beyond a single transaction or contract and instead consider how long-term relationships can bolster a local economy and benefit the workers that suppliers need to fulfill contracts during challenging times. For McClain, the biggest surprise has been that nobody had considered the importance of building redundancies and fail-safes into supply chains, perhaps because of the limited network connections and the lack of deep relationships that Lyons noted.
Matlock’s response was that the nation needs to stop solving yesterday’s problems tomorrow and instead apply the lessons learned from past crises to future problems. He noted that there have been three smaller pandemics
over the previous decade, yet the nation did nothing afterward to address the gaps exposed by those smaller events. “We have to be more nimble and more capable of understanding future risk and preparing for them at the community level as well as the national level,” said Matlock, who called this a national security imperative.
Responding to Wadia’s question as to whether local supply chains are nimbler and more resilient than a more global supply chain, Matlock said that from a food production and distribution standpoint, local supply chains add adaptability and resilience to the national and global system. Manning agreed, noting that having all production located in one place is what creates fragility in the supply chain, so diversifying the supply chain by adding more local capacity reduces that fragility while also reducing the time and cost of transporting materials and goods across great distances. Local supply chains can also have climate and social benefits, too, added Lyons.
In terms of how policy interventions can support the development of local supply chains, Matlock said that local governments can use zoning regulations to promote supply chain activities. If the goal, for example, is to have small farms on the urban fringe producing food to supply the local community, cities and counties can use zoning regulations to stop developers from converting potential farmland into condominiums and shopping malls. Lyons pointed to the need to incentivize the creation of a circular economy that does not leave localities with the problem of disposing of the waste that modern society generates, particularly when it comes to packaging and shipping materials. Manning raised the idea of providing incentives that would shorten the return on investment for production that feeds into local supply chains and for workforce training of all types at the local level. Both McClain and Lyons called for including more diverse voices and experiences in the decision-making process when it comes to conducting research to identify opportunities for adding resilience to the supply chain and when building or strengthening local supply chains.
Each of the panelists remarked how important it is to get the whole of government—national and local—involved in efforts to increase the resiliency of supply chains. At the federal level, every agency needs to be involved and working together, and they need to coordinate their activities with local governments. In that regard, the panelists noted that there are examples of government agencies working together, including a new federal task force involving the Agriculture, Commerce, and Transportation departments that aims to increase the resilience of food supply chains. They also pointed out that supply chains are networks that operate across the nation, and efforts to strengthen those networks have to involve all stakeholders, not just a select few. As Wadia said as a final comment, supply chains are too complex for any one person or agency to fully comprehend, let alone help transform into a system that can better serve the nation and its population.
FINAL THOUGHTS
In summarizing key takeaways from the workshop, Steven Stichter, National Academies, mentioned the idea that the nation would benefit from rethinking how supply chains function and building on and augmenting the existing infrastructure rather than tearing them apart. He also pointed to the importance of strengthening the connections between suppliers, purchasers, local economies, and the workers who power supply chains, as well as looking for ways of reducing waste and building circular economics as avenues for creating resilient supply chains and mitigating their contributions to climate change.
Hill noted that the challenges supply chains are facing today illustrate how interconnected the world has become and how poorly understood those connections are. She also commented on the remarkable idea that food is a public utility and how important small producers are for ensuring redundancy and resilience in supply chains. In addition, she reiterated the challenge of dealing with cascading and compounding events that can lead to vulnerabilities with which the nation will need to grapple with as the climate continues to change at a rapid clip. “We need to use the ideas and understanding we gained from this workshop to jumpstart our efforts to build climate resilience supply chains,” said Hill, pointing out that the COVID-19 pandemic has served as a fire drill to reveal what is at stake going forward. “We need to take this knowledge, apply it to what we know about climate disruption and make sure that these supply chains are more resilient, that they have more redundancy and more flexibility going forward.”
DISCLAIMER: This Proceedings of a Workshop—in Brief was prepared by John Ben Soileau, Steven Stichter, and Joe Alper as a factual summary of what occurred at the workshop. The statements made are those of the rapporteurs or individual workshop participants and do not necessarily represent the views of all participants; the planning committee, or the National Academies of Sciences, Engineering, and Medicine.
REVIEWERS: To ensure that it meets institutional standards for quality and objectivity, this Proceedings of a Workshop—in Brief was reviewed by Erin Biehl, Johns Hopkins University; Alice Hill, Council on Foreign Relations; and Bryan Koon, IEM. The review comments and draft manuscript remain confidential to protect the integrity of the process.
PLANNING COMMITTEE: Alice Hill (chair), David M. Rubenstein Senior Fellow for Energy and the Environment, Council on Foreign Relations; Jarrod Goentzel, MIT Humanitarian Supply Chain Lab; Klaus Tilmes, African Center for Economic Transformation; Cyrus Wadia, Head of Sustainable Product, Amazon.
SPONSOR: This activity is supported by the PGA Science and Technology for Sustainability program and funds from the National Academies George and Cynthia Mitchell Endowment for Sustainability Science. The workshop theme and topics build upon the 2021 workshop series Fostering Sustainable and Resilient Supply Chains with Emerging Technologies
For additional information regarding this workshop, visit https://www.nationalacademies.org/event/09-27-2021/workshop-climate-resilient-supply-chains.
Suggested citation: National Academies of Sciences, Engineering, and Medicine. 2022. Climate-Resilient Supply Chains: Proceedings of a Workshop—in Brief. Washington, DC: The National Academies Press. https://doi.org/10.17226/26461.
Division on Earth and Life Studies
Copyright 2022 by the National Academy of Sciences. All rights reserved.
