• International Journal of Technology (IJTech)
  • Vol 12, No 2 (2021)

How COVID-19 Influences the Food Supply Chain: An Empirical Investigation of Developing Countries

How COVID-19 Influences the Food Supply Chain: An Empirical Investigation of Developing Countries

Title: How COVID-19 Influences the Food Supply Chain: An Empirical Investigation of Developing Countries
Jamal Ahmed Al-Doori, Naser Khdour, Eyad A. Shaban, Tamara Mahmoud al Qaruty

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Cite this article as:
Al-Doori, J.A., Khdour, N., Shaban, E.A., al Qaruty, T.M., 2021. The Impact of Economic Indicators on Food Supply Chain of Palestine. International Journal of Technology. Volume 12(2), pp. 371-377

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Jamal Ahmed Al-Doori Business Administration, Al-Ahliyya Amman University Al-Saro, Al-Salt, Amman, Jordan
Naser Khdour Business Administration, Al-Ahliyya Amman University Al-Saro, Al-Salt, Amman, Jordan
Eyad A. Shaban Business Administration, Al-Ahliyya Amman University Al-Saro, Al-Salt, Amman, Jordan
Tamara Mahmoud al Qaruty Business Administration, Al-Ahliyya Amman University Al-Saro, Al-Salt, Amman, Jordan
Email to Corresponding Author

Abstract
How COVID-19 Influences the Food Supply Chain: An Empirical Investigation of Developing Countries

A supply chain is a network of organizations that due to globalization are all deeply connected. If there is a disruption to one of those organizations, it can destroy the system, which will ultimately influence the economy and especially the population. It has been found that COVID-19 has negatively affected most nations around the globe. Developing countries have suffered the most due to a lack of resources. After an extensive literature review, it can be concluded that the greatest challenges were experienced in the food supply chain; industries were halted, but people needed enough food to survive. This study aimed to verify the impact of COVID-19 on the economy and food supply chain of Iraq. Six hypotheses were developed and data were collected from the Iraqi food supply chain. The data were cleaned and then analyzed through SmartPLS. It was found that COVID-19 has caused a high rate of inflation and decreased the human development index rate. Although several countries have lowered their interest rate, the advantages of this have failed to reach ordinary people. This study will help the government and managers in the food supply chain industry in their decision-making processes. The study will also support researchers in developing new theories in this regard.

COVID-19; Food industry; Supply chain

Introduction

The study tests the performance of aid companies in Iraq through task–technology fit, examining the impact of information system compatibility, information technology, and new technologies on performance. Research supports the idea that more procurement processes should be considered (Al-Doori, 2018). To get the best return on investment, managers should focus on devoting resources to information technology to enhance performance. How can a company improve its overall performance? The use of raw or new materials will become less important. Appropriate technologies reduce carbon emissions, helping to stabilize the environment (Hapsari et al., 2019). This new space occupied by organizations will create new investments and job opportunities as more skilled people are hired to benefit from their expertise (Shahbaz et al., 2020a). This research helps to create awareness among the supply chain of metalworking companies and motivates them to turn their traditional supply chains into functional ones. Information on reuse and supply chains has already been created, but now is the time to take action (Areiqat and Al-Doori, 2018).

Internal lean practices eliminate the waste of money and time within the supply chain system (Goransson, 2019). The term “lean” pertains to a system that uses less input to supply at a mass-production speed and at regular intervals, ultimately providing additional benefits (or value added) (Silpcharu and Thaisom, 2020). Supply chain managers have a better understanding of chain management needs and, therefore, can support the strategic decision-making process to help firms remain competitive in the market place (Al-Doori et al., 2020). Open sharing of knowledge regarding inventory levels, forecasts, marketing, and selling techniques can reduce the uncertainty between stakeholders and result in improved performance (Bai, 2011).

In this section, past research is mentioned to identify a theoretical framework and potential hypotheses for this study (Aung and Chang, 2014).

1.1. Food Supply Chain

       The sector has created job opportunities in the domestic market (World Food Programme, 2020). According to the Iraq Food Industries Union, the most important food processing industries in the West Bank are related to the agricultural products targeted for this purpose: canned vegetables and fruits (Gunasekaran et al., 2001; Shahbaz et al., 2020b). In Iraq, there are only a few industries that specialize in producing canned vegetables and fruits, and they currently employ hundreds of workers. Investment in this industry is estimated to be in the millions. These products make up around 20% of the total market capitalization and around 30% of the market (Singh, 2018), and make a major contribution to total exports (Akhtar, 2013).

1.2. Economic Conditions During COVID-19

       The food industry has been operating for centuries. It has recently grown rapidly and is now considered an essential factor of economic growth in many countries (United Nations Development Programme, 2016). It is noted that China currently leads in exports (Amuda, 2020). In Iraq, the food supply chain is highly ranked around the world in terms of foreign exchange (Shahbaz et al., 2020c). The present study focuses on those factors to assess the effect of economic indicators on commercial performance within the food industries of developing countries (European Environment Agency, 2019). Therefore, the purpose of the present study is to examine the role of economic indicators in the performance of selling goods (Al-Doori, 2020). Studies have revealed that economic indicators have a significant effect in developing countries (World Bank Group, 2017).

1.3. COVID-19 Impact on Economy

It has been found that 426,000 food organizations were badly impacted due to a sudden halt of operations during the COVID-19 outbreak (Hakimah et al., 2019). Most of these organizations indirectly impact the inflation rate and human development as they are directly linked to a basic need of humanity (Nikou and Selamat, 2013). Most registered beneficiaries (99 percent) in developing countries work with national institutions to enhance the capacity of the economy and assist the poor and vulnerable through social safety nets following the job losses linked to COVID-19-related closures (Zusmelia et al., 2020).

1.4. Research Framework and Hypotheses

After an extensive literature review, it has been found that COVID-19 has caused a high inflation rate, a high interest rate, and a decrease in the human development index (HDI) rate. This has had a drastic negative impact on the Iraqi economy and specifically on the food supply chain. Thus, the below framework has been adopted and needs to be verified empirically.

 

 


Figure 1 Research Framework1: An increasing inflation rate negatively affects the food supply chain of Iraq

 

Inflation has a significant relationship with the acquisition of products and services. The food supply chain supports the transfer of products and services; therefore, it has a significant impact on inflation. Inflation raises prices, which negatively affects purchasing power (United Nations Development Programme, 2016). A model of the underlying assets is shown in Figure 1 and is proposed by the hypotheses (Olson and Wu, 2011). A country usually has a better HDI when education indicators have higher values, which also results in a higher gross domestic product (GDP) per capita (Hakimah et al., 2019). However, political influence can interfere with money matters (Goransson, 2019). Therefore, it is to the customer's advantage to permit the installment from the supplier to expire (Singh, 2018).

The HDI is one of the integrated indicators, alongside individual income, life expectancy and education, of the four stages of human development (United Nations Development Programme, 2016). HDI is one of the key development indicators, with a robust relationship to GDP and procurement performance in various firms (World Food Programme, 2020). Therefore, the hypotheses below are proposed (Koroleva et al., 2020).

H2: An increasing interest rate negatively affects the food supply chain of Iraq

H3: An increasing HDI positively affects the food supply chain of Iraq

H4: An increasing HDI positively affects the GDP of Iraq

H5: An increasing GDP positively affects the food supply chain of Iraq

H6: GDP mediates the relationship between HDI and the supply chain of Iraq

Conclusion

    It can be concluded that although various countries have taken innovative measures to handle the COVID-19 pandemic, developing countries were not prepared for such a gigantic incident. Developed countries had enough resources to manage the unusual situation, but developing countries, with their scarce resources, were highly dependent on support from developed countries. Nonetheless, developed countries also suffered as it was found that COVID-19 negatively affected the inflation rate and human development index rate, which ultimately hamstrung economies and food supply chains. This study recommends that decision-makers involve all stakeholders in decision making. This will only be possible when there is enough information flow through the internet. Future studies can be conducted based on theory and suggest more mitigation strategies.

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