Market Concentration and Resilience in Agricultural Supply Chains

Problem Definition: US agricultural supply chains are arguably among the most efficient in the world, yet recent supply chain disruptions have exposed a fundamental lack of resilience. Some point to market concentration as one reason for this lack of resilience, but little empirical evidence supports this claim. In this paper, we develop a model to test the effect of market concentration in both supplier and retail markets on agricultural supply chain resilience. Methodology / Results: We measure resilience using the time it takes gross marginsthe difference between retail and wholesale prices-to return to their previous levels after a major disruptive event. We test our model using data from the US beef supply chain following the 2019 Tyson beef packing plant fire in Holcomb, KS, which temporarily removed about 6% of the beef supply from the market. Using an event-study approach, we find that supplier and retail concentration detract from resilience during the reaction phase of the disruption response, but improve recovery times by roughly 14.0% during the recovery phase.