Study finds local food systems respond nimbly to COVID-19 supply chain impacts

The global COVID-19 pandemic has had significant effects on supply chain systems around the world, simultaneously impacting farm labor, food processing, transportation, logistics, and demand. This resulted in stockpiling, empty grocery store shelves, and demand that far exceeded supply worldwide.

But there were also local effects closer to home. Dawn Thilmany, Ph.D., a professor in the Colorado State University Department of Agricultural and Resource Economics, examined how in some cases local and regional food systems innovated more quickly to respond to market demand and policy changes when compared to national food systems during the pandemic.

Her findings were published in a joint study in Applied Economic Perspectives and Policy, “Local Food Supply Chain Dynamics and Resilience during COVID-19.” In addition to CSU, the study involved researchers from Mississippi State University, the University of Missouri, and North Carolina State University.

“By recruiting a team of engaged scholars from across the United States that work on all aspects of food systems (marketing, rural development, food safety, business development), this article was context-rich in terms of what each of us saw playing out in our region’s food supply chains,” Thilmany said.

Drivers of local responses

The study identified several main drivers that explain why local responses to COVID‐19 vary when compared with national food supply chain disruptions.

First, local food markets often have shorter supply chains that allow them to have greater flexibility and quicker response times. Producers in local food markets can communicate directly with their customer base and adapt quickly to changing needs.

Second, many local producers moved online to build new pathways to better serve consumers during the pandemic. Using an order-and-deliver model, just like many national grocery chains, local food markets were able to streamline the purchase process. In many cases, this resulted in larger orders from local buyers purchasing from ranchers, farmers and food and meat markets.

Third, regulatory agencies relaxed policies in response to the pandemic. New flexibilities included allowing to-go alcoholic beverages from restaurants, moving SNAP (Supplemental Nutrition Assistance Program) benefits online, and allowing products that had originally been marked for wholesale (like larger boxes of beef or eggs) to be sold directly to consumers. Regulatory changes such as these further allowed local and regional food systems to react nimbly to the COVID-19 pandemic.

A woman wearing a mask sells fresh produce at a farmers market

“We continue to see local and regional farms, ranches, markets, restaurants, agritourism sites, including wineries and breweries, innovate to respond to the ‘new normal’ of COVID restrictions,” said Thilmany. “But their efforts to maintain customers and get food to local households can go much further with regulations and policies that recognize new COVID-related challenges. As COVID restrictions are being re-established this winter, we hope to see continued support to lower any potential barriers to these innovative farm and food businesses.”

Time to revisit regulations

Some characteristics of local and regional food systems, including their smaller volume of production and shorter supply chains with smaller geographic reach, have permitted local and regional food systems to be resilient and nimbly respond to the COVID pandemic. However, some of the benefits may be offset by potentially higher production costs, since many local and regional enterprises are not large, making them less efficient or giving them less negotiating power with other supply chain partners.

Given concerns about how to inform and assess tradeoffs moving forward as well as recognizing the volume of recent changes to various food supply policies, Thilmany and her fellow researchers suggested that it may be time to revisit and refine regulations that apply to local and regional food systems.

The study concludes that while local and regional food systems are nimble and connected to supply chain partners, this adaptability could be capitalized upon via an improved research and technical assistance agenda.

The researchers go on to provide a few key recommendations for how to streamline and improve local food systems including analyzing marketing channels’ response and performance under COVID-19 disruptions; conducting applied research and updating business planning to include a wider adoption of e-commerce platforms (including sharing data analytics to improve marketing strategies); and considering necessary and sensible policy changes to reduce the regulatory burdens small‐scale processors and markets face.