How Do Logistics Disruptions Affect Rural Households? Evidence from COVID-19 in China

Abstract

Using a comprehensive survey of rural households during the early stage of the COVID-19 pandemic in China, we find that logistics disruptions due to the lockdown have resulted in severe economic losses for rural households. Insufficient production inputs and perishable outputs can aggravate the impact of logistics disruptions on losses, while the purchase of agriculture insurance and higher regional GDP can mitigate this effect. We further examine the mechanisms by which logistics disruptions affect rural households, including both sales and production channels in agricultural supply chains. The former includes changes in product prices and reduced sales, while the latter includes changes in input prices and shortages of raw materials, capital, and labor. Of these channels, logistics has the most severe impact on sales. Opening up the logistics of sales channels is the primary policy choice. More storage warehouses and insurance are also important preemptive measures. Building stable and sustainable agricultural supply chains can ensure rural household viability during the pandemic.