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Logistics: the Achilles' heel of the short food supply chain

From the ‘uberisation’ of last mile delivery to the use of smart lockers, from the offer of ready-to-eat products to the constant search for higher produce quality: how short food supply chain (SFSC) producers may face distribution costs and compete with supermarkets

Crowdsourcing the ‘last mile’ may be a solution to cut the distribution costs in short food supply chain (SFSC). The so called ‘uberisation’ (from the ride-sharing company Uber) of the delivery of local products would offer farmers a cheaper way to reach their consumers with an attractive home delivery service. It would be implemented by everyday citizens, and avoid logistics companies.

Marinko Maslarić, assistant professor at the Faculty of Technical Science, University of Novi Sad, Serbia, says: “Besides the positive financial effects, a digitised short food supply chain with crowdsourced distribution is eco- and social-friendly. It is characterised by a smaller volume of greenhouse gas emissions per delivery and people can earn extra income. If properly implemented, it could be a very suitable solution for delivering small packages over short distances.”

He co-authored a paper where a research team conducted a comparative analysis of SFSC distribution models, applying innovative logistics solutions thanks to digitised business processes. “Our study was based on a qualitative approach,” he explains, “Regarding distribution costs, we designed a case study related to a country with low income (low wages of drivers, etc.). The results showed that a crowdsourced delivery solution could cost as little as €1.10 per order, or €1.43 using specialised logistics service providers to €2.44 with transport resources owned by producers”.

However, Maslarić adds: “Disadvantages of crowdsourced distribution are related to the inability of the full flow control of the products, primarily in the context of sanitary and health conditions. Using non-professional staff could lead to problems of reliability, trust and liability. But the implementation of a SFSC member rating system could be a very effective solution to these issues.”

Another low-cost delivery method could be refrigerated parcel lockers where consumer pick up the products they have bought on line. This would help local producers survive in a market dominated by big retailers.

Remigio Berruto, assistant professor at the Department of Agriculture, University of Turin, Italy, presented this solution among others in a recent workshop in Rome organised by the EU project SKIN, which collected and shared SFSC best practices across Europe over the last three years.

He said: “Farmers can store products in lockers and consumers go and pick them up later. This lack of synchronisation allows producers to reach a higher number of customers and therefore make their business cost-effective.”

However, this solution pose a challenge. The risk is to undermine the interface, the direct relationship between farmer and consumer, which is at the basis of the short food supply chain concept.

Carlo Petrini is founder, together with some activists, of the international movement Slow Food, which more than thirty years ago challenged the dominant trend of fast foods “to defend regional traditions, good food, gastronomic pleasure and a slow pace of life”. He underlines the importance of farmer markets and the face to face approach: “Any new, useful service to the citizen is important, but meeting producers has an added value compared to having foods at home and so on.”

When the producers sell directly in person, they inform and educate citizens at the same time. Farmer markets also boost the local economy. In Italy, for example, almost 2000 exist. This means a good turnover for the areas where they are held, much more important than ten years ago. Moreover, many farmer markets are now covered, which solves several problems such as bad weather during the winter,” Petrini adds.

Logistics represents at least 10% of producers' turnover, but this can reach and sometimes exceed 50%, reports France-based CEREMA (Centre for studies and expertise on risks, environment, mobility and land planning). Farmers are not always aware of how high these costs can be. That’s why this public agency, together with the French Institute of Science and Technology for Transport, Development and Networks (IFSTTAR) and the Chamber of Agriculture of Nord-Pas-de-Calais, has developed a free online tool to calculate the costs of SFSC deliveries for the producer and also the community (in terms of greenhouse gas emissions), based on  parameters provided by the user (kind of delivery vehicle, time devoted to logistical tasks etc.). It has already been tested with producers from the Hauts-de-France, to find more efficient alternative solutions.

Berruto says: “Companies wishing to sell their produce directly need to increase volumes by associating with other agricultural enterprises, in order to provide a wider range of products and distribute at lower cost. In addition to offering fresh fruit and vegetables, they could slightly process produce to raise the price per kg. For example, while a vegetable costs €1/kg, I can sell it at €5/kg if it is ready-to-use, washed and ready-to-eat.”

Diversification seems to be a key word for sustainable short food supply chains. During the SKIN project’s workshop, we also met Aurelio Ferrazza, the owner of Casale di Martignano, a family-run farm near Rome. He told us: “My father bought it in 1956 and ran it in a traditional way with animals and extensive crops, until we took over and decided to give the business a new look. We added other activities such as agritourism with a restaurant that serves our produce, a bathing area on the lake in front of us, workshops where we process our products. However, distribution was one of the risk factors for our activity, as the high initial production cost prevented us from adding a margin that would have also covered the distribution.”

“This was one of the reasons why we decided to reduce our previous production levels and focus on more particular products, less available on the market. These include yogurt and robiola, stracchino cheeses made with sheep milk, and a more natural range of salami without any chemical treatment,” he added. 

Petrini comments: “Farmers are taking self-defence measures to survive. The more the produce is a commodity, the more they can’t compete with large retailers on price. But when true differentiation occurs as a result of a different commitment, they can do their business’’.

Many examples of SFSC original and natural products from all over the world will be shown during the 12th edition of the international festival Cheese, organised in the Piedmont region, north-west Italy, by Slow Food in September.

 

By Loredana Pianta

29 August 2019 

Cover photo: Cheese Festival; credits: Archivio Slow Food

 

SKIN
 

Short supply chain knowledge and innovation network

This project has received funding from the European Union’s Horizon 2020 Research and Innovation programme under grant agreement N.728055