Unscrambling COVID-19 Food Supply Chains

32 Pages Posted: 14 Aug 2020

See all articles by Trey Malone

Trey Malone

Michigan State University - Department of Agricultural, Food and Resource Economics

K. Aleks Schaefer

Oklahoma State University - Stillwater - Department of Agricultural Economics

Jayson Lusk

Purdue University

Date Written: August 10, 2020

Abstract

This article uses evidence from the egg industry to investigate how the shift from food-away-from-home and towards food-at-home affected the U.S. food supply chain. We find that the onset of the COVID-19 pandemic increased retail and farm-gate prices for table eggs by approximately 141% and 182%, respectively. In contrast, prices for breaking stock eggs-which are primarily used in foodservice and restaurants-fell by 67%. On April 3, 2020, the FDA responded by issuing temporary exemptions from certain food safety standards for breaking stock egg producers seeking to sell into the retail table egg market. We find that this regulatory change rapidly pushed retail, farm-gate, and breaking stock prices towards their long-run pre-pandemic equilibrium dynamics. The pandemic reduced premiums for credence attributes, including cage-free, vegetarian-fed, and organic eggs, by as much as 34%. These premiums did not fully recover following the return to more "normal" price dynamics, possibly signaling that willingness-to-pay for animal welfare and environmental sustainability have fallen as consumers seek to meet basic needs during the pandemic. Finally, in spite of widespread claims of price gouging, we do not find that the pandemic (or the subsequent FDA regulatory changes) had a meaningful impact on the marketing margin for table eggs sold at grocery stores.

Keywords: COVID-19, supply chain, food safety regulation, eggs, price transmission

JEL Classification: Q18, Q13, L51

Suggested Citation

Malone, Trey and Schaefer, K. Aleks and Lusk, Jayson, Unscrambling COVID-19 Food Supply Chains (August 10, 2020). Available at SSRN: https://ssrn.com/abstract=3672018 or http://dx.doi.org/10.2139/ssrn.3672018

Trey Malone (Contact Author)

Michigan State University - Department of Agricultural, Food and Resource Economics ( email )

MI
United States

K. Aleks Schaefer

Oklahoma State University - Stillwater - Department of Agricultural Economics ( email )

Stillwater, OK 74078-6026
United States

HOME PAGE: http://kaleksschaefer.weebly.com/

Jayson Lusk

Purdue University ( email )

610 Purdue Mall
West Lafayette, IN 47907
United States

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