The Quarterly: A Long Tail—Pandemic After-Effects are Just Beginning

By Tanner Ehmke , Rob Fox , Jeff Johnston , Dan Kowalski , Christina Pope and Teri Viswanath

July 8, 2021

Agri-food invests in resiliency as it benefits from the snapback recovery

The long-awaited period of pent-up, exuberant demand is here. And for all the benefits to businesses and consumers, bumps are unavoidable – labor shortages, price inflation, supply chain disruptions, and uncertainty about what a new steady-state economy will look like. They loom large, even as we celebrate a return to normalcy.

The rural economy is rebounding as well. Most of agriculture has been recovering since Q3 2020, but now the manufacturing and energy sectors are too, even as all three face labor and raw material shortages. More economic fuel could be coming in the fall if policy makers can agree to an infrastructure bill that increases investment in rural broadband, water, energy, and transportation infrastructure.

The agri-food supply chain is adapting once again. Reversing the adjustments that rerouted products from food service to grocery channels will take months, and some of the rising costs are now being passed on to consumers. Amidst these near-term complications, businesses are focusing on resiliency before the next black swan event by addressing persistent labor challenges and automation investments.

However, while many rural businesses can breathe a sigh of relief as the economy roars back, many in the western U.S. are still holding their breath. The drought is the worst in at least 40 years, and could become the worst in a century. Water and electricity providers as well as the specialty crops sector are navigating terrible and uncertain conditions, trying to bridge to better, wetter days ahead.