Modelling the Risk Susceptibility of Agro-Industry Circular Supply Chain During Major Disruptions: A Life Cycle Perspective

Abstract

The agro-industry is one of the main contributors to the food supply worldwide. Thus, the importance of its supply chain activities (i.e., harvest to fork) is crucial and should not be affected by any delays. However, inevitable disruptions may have an adverse impact on the supply chain activities in the agro-industry, such as natural disasters, climate change impacts, health crises, and technological lags. These risks must be appropriately mitigated considering the fragility and sensitivity of agricultural products to various factors (e.g., temperature, time). However, an assessment for agro-industry risk susceptibility remains unexplored in the literature. Thus, this study intends to assess the aversion of the agro-industry to such disruptions through conditional value-at-risk (CVaR) based risk control. A life cycle perspective will also be utilized to obtain a systematic view of the circular supply chain. The methodology used will be in two folds: (1) calculate the CVaR variable in the agro-industry supply chain and integrate it to the (2) life cycle assessment of agro-industry circular supply chain using the data collected from existing literature. The integrated methodology is utilized in the cassava starch production. The findings of the study show that the average loss at worst 10% volatile price is 15.22%, at worst 5% volatile price is 22.62%, and at worst 1% volatile price is 33.94%. Furthermore, the environmental impact assessment conducted revealed that the acidification has the highest kg-equivalent in terms of the environmental impact of the cassava starch production. Machineries and equipment utilized in the current production process of cassava starch has contributed immensely to the adverse impact on the environment, specifically in the acidification due to emissions.