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Study shows how farms and businesses survived COVID

A new study shows farms and businesses that used certain strategies emerged from the COVID pandemic stronger than their counterparts.

Andrew Stevens with the University of Wisconsin Department of Applied Economics studied the relationship between diversification and resilience.  He tells Brownfield some farms had vertical diversification with some processing and retail sales while others had horizontal diversification by raising crops, livestock, and perhaps offering agritourism, all within the farm’s link of the supply chain. “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 says 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 says it’s also important for the farm or business to have a flexible labor force with the skills to do different tasks if needed. 

But Stevens warns farmers and other businesses 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 to a big shock like a pandemic.”

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.