On the Agricultural Commodities Supply Chain Resilience to Disruption: Insights from Financial Analysis

Abstract

The study proffers the need to strengthen supply chain resilience toward the minimization of disruptions. We investigate the financial performance of agricultural commodities' supply chain amid external uncertainty shocks in both time and frequency dimensions. The wavelet techniques are employed for the analysis. Specifically, both the Windowed Scalogram Difference (WSD) and Wavelet Multiple techniques are utilized. First, the study finds from the WSD that disruption which we proxy with global economic policy uncertainty (GEPU) hurts all the agricultural commodities in the medium and long terms. For instance, we find high comovements between agricultural raw material (ARM) and GEPU. This is similar to the comovements between rice and GEPU. Additionally, high potential comovements between 2005 and 2016 in the medium and long term for fertilizer, maize, and possibly wheat with the GEPU are found. Generally, there seem to be fewer comovements between soybeans and the GEPU which is indicative of a resistance to shocks. Second, we find from the Wavelet Multiple approaches that most of the agricultural commodities are highly integrated, except rice. Findings from the study imply minimization of diversification, hedge, or safe haven benefits with regard to market conditions among the commodities. The findings have important inferences for policymakers, supply chain actors of agricultural commodities, and investors to extensively examine the heterogeneous and adaptive dynamics of the commodity markets. We advocate that supply chains of agricultural commodities must be borne with dynamic capacities to manage vulnerabilities in an uncertain environment, necessitating resilience capabilities to thrive in the long run. Also, investors should hedge against the portfolio risk present in these agricultural commodities. This study is the first to provide insights into the supply chain of agricultural commodities from a financial perspective through time and/or frequency analysis.

Supply chain resilience and performance of manufacturing firms: role of supply chain disruption

“…However, Wong et al (2020) viewed SCR as information processing mechanism in line with the organisational information processing theory (OIPT) without directly considering the dynamic environment, especially during periods of severe economic shocks like the COVID-19 pandemic. Accordingly, as the OIPT is relevant that supply chains build the capacity to engage in proactive communication with stakeholders during uncertainties, the DCT goes beyond the management of information to cater for all other flows (finance and material flows) in the supply chain (Hamidu et al, 2022).…”

On the interplay of supply chain network complexity on the nexus between supply chain resilience and performance

“…The ability to adapt swiftly to environmental changes and actively change response methods enables a company to avoid significant supply chain concerns. Literature makes it clear that the longer it takes a company to respond to turbulence, the more damage would result (Hamidu et al, 2022;Piprani et al, 2020). The reason is that this upheaval may result in decreased business performance.…”

“…The authors define SCR to include factors relating to collaboration, flexibility and redundancy. Since SCR is known by majority of studies to enhance performance (see, Chowdhury et al, 2019;Dey, 2016;Hamidu et al, 2022;Mandal et al, 2016;Piprani et al, 2020, etc), we formulate the following hypothesis.…”

Differing impacts of the COVID-19 pandemic on farmers and intermediaries: insights into the Ecuadorian cocoa value chain

“…Previous studies have predominantly concentrated either on evaluations of farm-level resilience (Jacobi et al 2015 ; Wongnaa and Babu 2020 ) or entire supply chain evaluations (Adobor 2020 ; Hamidu et al 2022 ), but studies that give insights into and compare the implemented resilience strategies of different supply chain actors are rare. Given the distinct conceptualizations and definitions of resilience, depending on the focus on the farm level or supply chain, conflicts and trade-offs seem imminent when trying to align efforts to counter a disturbance.…”