Policy analysis in agrochemical supply chain: a system dynamics approach

Abstract

Sustainable agriculture has emerged as a critical topic in the context of sustainable development goals set by the United Nations. A key aspect impacting the sustainability of the agriculture supply chain is the usage of agrochemicals. Transitioning to sustainable alternatives from agrochemicals poses challenges, as it affects farms’ productivity, income, and food supply to the market. The delicate balance between farm income and greenhouse gas emissions related to chemical fertilizer usage has not been addressed adequately using a dynamic system behavior perspective. This study employs a System Dynamics model to simulate the impact of adopting biofertilizers on the triple-bottom-line performance of the agrochemical supply chain from a policy perspective. The model aims to understand stakeholder behavior within the fertilizer supply chain and enhance its sustainability. Additionally, the study models the effects of various input subsidies using the design of experiments in an Indian agrochemical supply chain, examining trade-offs involved in the triple-bottom-line (social, environmental, and economic) parameters for each subsidy. The simulation model offers policymakers insights into determining appropriate subsidy levels to facilitate a sustainable transition of agricultural supply chains. In this context, various possible scenarios were obtained by simulating the policy parameters (agriproduct price, chemical fertilizer prices, biofertilizer fixed costs, and biofertilizer subsidies) resulting in optimal levels of environmental impact, producer profit, and social benefit. It also provides a comprehensive evaluation of the triple-bottom-line effects of policy strategies, thereby facilitating the comprehension of trade-offs in the supply chains of lower/middle-income countries. The study contributes valuable guidance for policymakers to make informed decisions for promoting sustainable agriculture and achieving the triple-bottom-line objectives in the agrochemical industry.