Short answer
When assessing the economic viability of a product or system, consider how external shocks (like disease, natural disasters, or geopolitical events) can alter supply and demand, potentially creating unexpected profit margins or losses across different stakeholders.
- Field
- Commercial Production
- Source
- Journal of Animal Science (2015)
- Method
- Economic impact analysis and literature review
- Evidence
- Strong effect
Disruptions in supply due to disease can lead to price increases that, for some producers, outweigh the direct losses from reduced productivity, resulting in higher net returns. This commercial production research insight is drawn from a 2015 study published in Journal of Animal Science. Using Economic impact analysis and literature review, researchers explored how this design variable affects real-world outcomes. The key design takeaway: When assessing the economic viability of a product or system, consider how external shocks (like disease, natural disasters, or geopolitical events) can alter supply and demand, potentially creating unexpected profit margins or losses across different stakeholders.
Disease outbreaks can unexpectedly increase producer profits by disrupting supply chains
Disruptions in supply due to disease can lead to price increases that, for some producers, outweigh the direct losses from reduced productivity, resulting in higher net returns.
Journal of Animal Science · 2015
Key Findings
- 01PEDV significantly impacted pig losses, primarily in 2014.
- 02Despite losses, some producers experienced net returns above pre-outbreak expectations due to proportionally smaller price increases relative to productivity decreases.
- 03Packers, processors, distributors, retailers, and consumers likely experienced negative economic impacts due to reduced supply and increased prices.
Application
Design takeaway
When assessing the economic viability of a product or system, consider how external shocks (like disease, natural disasters, or geopolitical events) can alter supply and demand, potentially creating unexpected profit margins or losses across different stakeholders.
How to apply
When forecasting financial outcomes for a product or service, model scenarios that include potential supply chain disruptions and analyze how resulting price changes might affect profitability for different market participants.
Project actions
- 01When researching a product, consider how external factors like regulations or natural events could affect its availability and price.
- 02Think about who benefits and who loses when there's a shortage or surplus of a product.
Method & Evidence
Variables
Strengths & Limitations
Strengths
- +Provides a detailed analysis of impacts across multiple industry segments.
- +Utilizes a budget model to quantify producer-level effects.
Limitations
The economic models used might not capture all nuances of market behavior. The study is specific to the agricultural sector.
Reliability & validity
The study's findings are based on economic modeling and literature review, which provide a strong basis for understanding economic impacts. However, real-world market fluctuations can introduce variability. The validity is high for the specific context studied, but generalizability may require further research.
Think critically
To what extent can businesses strategically leverage or mitigate the effects of supply chain disruptions for economic gain, and what are the ethical considerations involved?
Design Principles
"Supply chain disruptions can create price volatility that may disproportionately benefit certain actors within the value chain."
This insight highlights that market dynamics, particularly supply and demand, can create counterintuitive economic outcomes during crises. Understanding these complex relationships is crucial for businesses to navigate unforeseen events and identify potential opportunities or risks within their operational context.
What This Means for Your Design
Sometimes, when there's less of something available (like pigs due to disease), the price goes up so much that the people who still have some can actually make more money than before, even though they lost some of their product.
How to use in your project
- 1.Use this to explain how market forces, influenced by external factors, can impact the economic feasibility of your design project.
- 2.Refer to this when discussing the potential financial risks and rewards associated with your design's production and market entry.
Add to My Project
Quick Cite
Paragraph starter
This research demonstrates that external shocks to supply chains, such as disease outbreaks, can lead to significant price increases. For instance, the PEDV outbreak in the US pork industry resulted in reduced supply, which, while detrimental to some, allowed certain producers to achieve higher net returns due to a disproportionate rise in market prices compared to their production losses. This highlights the importance of considering market dynamics and supply-side volatility when assessing the economic viability of a design project.
Source
Journal of Animal Science
Assessment of the economic impacts of porcine epidemic diarrhea virus in the United States
journal · 2015
View sourceQuestions About This Research
- What does the research say about disease outbreaks can unexpectedly increase producer profits by disrupting supply chains?
- When assessing the economic viability of a product or system, consider how external shocks (like disease, natural disasters, or geopolitical events) can alter supply and demand, potentially creating unexpected profit margins or losses across different stakeholders. Evidence: Journal of Animal Science (2015).
- Why does "Disease outbreaks can unexpectedly increase producer profits by disrupting supply chains" matter for design?
- This insight highlights that market dynamics, particularly supply and demand, can create counterintuitive economic outcomes during crises. Understanding these complex relationships is crucial for businesses to navigate unforeseen events and identify potential opportunities or risks within their operational context.
- How can designers apply this research?
- When assessing the economic viability of a product or system, consider how external shocks (like disease, natural disasters, or geopolitical events) can alter supply and demand, potentially creating unexpected profit margins or losses across different stakeholders.
- What were the main findings?
- PEDV significantly impacted pig losses, primarily in 2014.. Despite losses, some producers experienced net returns above pre-outbreak expectations due to proportionally smaller price increases relative to productivity decreases.. Packers, processors, distributors, retailers, and consumers likely experienced negative economic impacts due to reduced supply and increased prices.
- What research method was used?
- Economic impact analysis and literature review.
- How strong is the evidence?
- Evidence strength is rated Strong effect, based on a 2015 journal from Journal of Animal Science.
- What should I do differently in my next project?
- When forecasting financial outcomes for a product or service, model scenarios that include potential supply chain disruptions and analyze how resulting price changes might affect profitability for different market participants.
- What are the limitations?
- The study focuses on a specific disease and time period; impacts may vary with different diseases or market conditions. The analysis of producer returns is based on a budget model.