Impact of extreme weather events on the US domestic supply chain of food manufacturing

Extreme weather events, such as droughts, significantly impact the U.S. agrifood supply chain by reducing agricultural yields, altering domestic trade flows, and affecting food manufacturing. Our study quantifies these effects through a two-stage instrumental variable analysis, showing that, nationally, a 1% increase in drought in agricultural states leads to a 0.5% to 0.7% decline in interstate agricultural exports and a 0.04% reduction in food manufacturing output. This sector’s resilience depends on the ability to adjust import origins, trade volumes, and input substitutions. We complement our analysis with pairwise state-level dependencies. Our findings offer valuable insights for policymakers to strengthen the country’s agrifood supply chain resilience against climate-related disruptions through improved coordination, infrastructure investment, and strategic diversification of input suppliers.