Connecting New England farmers to large retailers through values-based supply chains

Key Findings

Regional, values-based food supply chains (VBSCs) can improve market access for at-risk mid-sized farms.

VBSCs facilitate collaboration among supply chain partners by sharing risk and leveraging physical and informational infrastructures.

VBSCs can connect producers to larger retailers by using existing infrastructure to serve consumers in markets where they buy most of their food.

About the Co-Author

Analena Bruce, Assistant Professor, Agriculture, Nutrition and Food Systems

Contact information: Analena.Bruce@unh.edu

Mid-sized farms in the U.S. can meet increasing demand for locally and regionally produced food, but direct-to-consumer markets are unable to meet the needs of mid-sized farms or consumers. This market mismatch often leaves mid-sized farms without the market avenues necessary to sustain them. Values-based food supply chains (VBSCs) are potentially capable of meeting the needs of both mid-sized producers and consumers using strategic partnerships to “scale down” pre-existing conventional and grocery retail supply chain infrastructure where most consumers already buy their food.

Defining VBSCs and Methods

Values-based food supply chains (VBSCs) are alternative supply chain models that use collaboration and equitable partnerships to achieve beneficial values or outcomes. To facilitate access to larger retail markets, VBSC partners agree to collaboratively overcome barriers that exist for small and mid-sized producers, but these solutions can be difficult to identify and enact.

Using 22 interviews with New England-based producers, intermediaries, large-chain retailers or grocers, and key informants, the research found three areas where VBSCs can improve producer access to large retail markets, as well as more specific strategies used by interviewees.

Risk Sharing

Participation in large wholesale markets may involve a high-risk burden for producers; that is, producers are disproportionately susceptible to financial loss. VBSCs may serve to redistribute or share risk along a supply chain, using multiple mechanisms to deliver certainties of market access to producers.

Advanced volume commitments: Advanced volume commitments by buyers such as bids and contracts that are typically offered only to large producers, provide a guarantee of market access that helps redistribute risk by passing it up the value chain.

Market flexibility for seasonality and shifts in supply: Flexible delivery quotas, where shifts in volume between individual deliveries are tolerated and compensated for by a buyer, may help reduce risk for producers when they experience shifts in their supply due to seasonality, weather and disease or pests.

Market flexibility for volume: VBSCs may commit to “scaling down” their large volume requirements using strategies such as allowing producers to supply individual stores directly rather than using industrial warehouse aggregation or by creating smaller markets for specialty goods.

Physical Infrastructure

The physical infrastructure necessary for moving local and regionally produced food through conventional markets is often an obstacle that hinders producer capacity to access appropriate markets. Improvements in key physical infrastructure factors and identifying ways to increase producers’ access to existing infrastructure is important for enacting values (Fig. 1).

Cold storage: Access to proper refrigeration, like hydrocooling, as soon as possible after harvest is important for meeting retail quality standards. VBSCs facilitate shared access to costly cold storage technology for smaller producers.

Transportation: Transportation can be difficult for producers who are solely responsible for managing and absorbing the costs of frequent deliveries over extended distances. VBSCs practice direct store delivery, allowing producers to deliver to closer retail locations rather than distant warehouses, and aggregation networks between smaller farmers.

Warehousing: Proper warehouse and storage facilities are also integral for larger market access. VBSCs are specially positioned to ensure access to shared storage spaces via collaborative strategies.

Informational Infrastructure

Improved systems for the distribution of information are critical for the function of VBSCs. Retail and supermarket supply chains may be less direct and more complex, with many participants involved in a single chain. In such cases, creating pathways for information to flow between and amongst participants may be foundational for cooperation (Fig. 2).

Software systems: Software and ordering platforms are vital in the intermediary position and streamline communication, especially in complex supply chains. These might include online catalogs and other platforms designed to simplify information sharing.

Access to food safety and regulatory certifications for producers: Certifications often required by larger retailers, such as good agricultural practices (GAPs) and Harmonized GAP, can be difficult and costly to obtain. Improved educational and financial resources make certifications more accessible for producers.

Retail-level registration of values: UPCs (universal product codes) or barcode systems for differentiating local or regionally produced products, at a retail level, generally do not exist. Packaging is used as a tool to distinguish values such as local or regionally produced.

While values can be difficult to act upon in economic partnerships like VBSCs, “scaling down” existing food supply chain infrastructure to create market pathways for mid-sized farms is achievable through collaborative strategies like the ones identified here.