Local Food Supply Chains Performance Comparison Analysis
Mimi Lee
2013 SEDA Conference: Creating
Intersections for Growth October 17, 2013
Local Food Supply Chains – Performance Comparison Analysis www.explorelocal.ca
Local Food Supply Chain
Local Food Supply Chains – Performance Comparison Analysis www.explorelocal.ca
Economics
Impacts
CSA Farmers food access food charter Food Hub food hubs Farmers’ Markets food policy Land use
framework food security Farm Retail food systems food waste health Infrastructure vibrant local food systems local food network nutrition planning Distribution procurement producers productivity Ag-tourism REGIONAL Economy Supply Chain resilience Social Capital Sustainable food system rural development urban agriculture Independent Grocery Store seasonality and availability Food Safety
Innovation
Rural Development
Local Food Supply Chains – Performance Comparison Analysis www.explorelocal.ca
USDA Research 15 food supply chain case studies in five U.S. metro areas 5 sets of comparison between “direct marketing,” “intermediated” and “mainstream” food Producer of supplyshare chain the final retail Compare the price performance in economic, social and environment Local Food Supply Chains – Performance Comparison Analysis www.explorelocal.ca
Local Food Supply Chain Comparison Direct to Consumer
Direct to Intermediated
Direct to Mainstream
Examples: 2008value 2012 Alberta In Alberta,2004 market Winery for farmers’ markets Consumer 233 380 724 Expenditure reached $724 million Farm gate Bakeries ($million)
U-pick
Farmers’ market sales
Restaurant sales
Community Supported Agriculture
Food basket program
Large supermarket chains
Restaurants serving spent local In Alberta, Sales toconsumers mainstream $374 millionover at who restaurants food earns 40% processors sell to serving local food pricelarge premium supermarket chains
Independent grocery stores Local Food Supply Chains – Performance Comparison Analysis
www.explorelocal.ca
Local Food Supply Chains in Alberta Case Studies
A product that is raised, produced or processed in region where the final product is marketed
Local Product 1. Differentiated Beef 2. Saskatoon Berry 3. Table Potatoes
Directhub to and consumer auction market Consumer
Farmers’ markets sales
U-pick and farmers’ markets
Farm gate
institution, farm stores and restaurants
Farmers’ markets farmers’ markets and auction market
4. Lamb
Consumer Hub restaurants
5. Cabbage (vegetables) www.explorelocal.ca
Farm stores
Direct to Intermediated
restaurants and Direct to independent retail Mainstream stores
Independent retail stores U-pick, farm gate
Large supermarket U-pick and farm chains gate
Winery
Mainstream processors/ Brokers/ aggregators/ wholesalers who market sell auction to large supermarket restaurants, farm chains
and farmers’ markets
farm gate and buying club
Restaurants auction market
High-end U-pick and farmers’ restaurant markets
Food basket program
gate and farmers’ markets
Local Food Supply Chains – Performance Comparison Analysis
Study Results %
General conclusion Differentiated Beef
%
Producer
Marketing
%
%
Processing
Distribution/ Aggregation
%
$
Retail
Consumer Price
Direct to consumer
63
12
25
0
0
5.85
Intermediated
51
0
15
0
34
6.11
Mainstream
51
0
13
-1
37
5.28
25
7
0
0
4.00
16
5
4
NA
NA
13
7
7
NA
NA
Table Potatoes 60 20 20 Direct to consumer All the direct marketer has a significantly higher Intermediated 8 2 marketing cost when compared to80 the mainstream Mainstream 13 11 10 but they can still be profitable when they have to be responsible for more marketing functions
0
0
0.35
0
10
3.50
16
50
0.88
Producer share of the final retail Saskatoon Berry 68 Direct to consumer price for direct and intermediated Intermediated 26 are higher than the mainstream 15 Mainstream
Lamb
Direct to consumer
44
10
21
25
0
10.81
Intermediated
19
5
7
2
67
21.33
Mainstream
16
0
NA
11
73
16.00
Mainstream
30
0
10
2
58
1.50
Direct and intermediated are able to capture a priceDirect premium over 94 Cabbage (Vegetables) 5 0 1 0 7.00 to consumer Local Food Supply Chains – Performance Comparison Analysis the price for the mainstream Intermediated 33 0 65 2 0 3.00 www.explorelocal.ca
Price Premium Price Difference over Mainstream
Differentiated Beef
Direct Marketing
11% premiums 16%
Economies of Scale
Processing Cost over Mainstream
Distribution/ Aggregation Cost over Mainstream
101% 16%
na na
133%
0% -29%
na -43%
-60% 298%
100% -80%
na na
-32% 33%
na na
127% -82%
Producers may Intermediated sacrifice price Mainstream created by a direct producer-consumer link, but this loss can be offset by Saskatoon Berry 167% Direct Marketing economies of scale. Intermediated
Study Results
Mainstream
Potato
Direct Marketing Intermediated Mainstream
lamb
Direct Marketing Intermediated Mainstream
Cabbage (Vegetables)
www.explorelocal.ca
Local Food Supply Chains – Performance Comparison Analysis
Direct Marketing Intermediated Mainstream
332% 85%
na 550%
-50% 0%
For the Next Census of Ag… Indicate all marketing channels this operation has direct sales: Direct to consumer Direct to intermediaries Direct to mainstream Future Investigation o U-pick, on site farm stores, o Local restaurants and o Conventional supermarket and on farm food services caterers chain buyer o On farm services (tours, o Wineries o Mainstream processor, mill, mazes, horseback riding, o Bakeries packer, distributor, Understand opportunities of accommodation, etc.) o Independent grocery stores wholesaler, broker or reintermediated o Roadside standmarketing and off site of o local Food foods basket programs packer who sells to large farm stores o Institutions (school, hospital, supermarket chains o Farmers’ markets etc.) o Restaurant chain buyer o Community supported o Other o Grower cooperatives Understand the impact of LFSCs on the diversity of businesses in agriculture o Auction Alberta, the increase in entrepreneurial opportunities and the orural Other o Other
social capital created in a variety of functions.
Understand one supply chain a clear advantage andrevenue the use ____% of totalno revenue in ____% provided of total revenue in farm ____% of total in farm offarm different supply chains at different stages of their operation, and to use direct sales to consumer direct sales to intermediaries direct sales to mainstream Local Food Supply Chains – Performance Comparison Analysis multiple supply chains at a time. www.explorelocal.ca
Who are we? Various staff from across the Alberta Agriculture & Rural Development working on Explore Local projects at various levels
Creating the framework required to grow the local market system Local Food Supply Chains – Performance Comparison Analysis www.explorelocal.ca
Research Publications
Local Food Supply Chains – Performance Comparison Analysis www.explorelocal.ca
Internet Resources www.explorelocal.ca Connect to the information you need! Resources and upcoming events
Local Food Supply Chains – Performance Comparison Analysis www.explorelocal.ca
Producer Extension
2011 - 2012 15 different events
6 different resources
600 producers Local Food Supply Chains – Performance Comparison Analysis www.explorelocal.ca
Producer Extension Survey Results
77% of respondents invested further in their business 86% reported positive growth in sales 73% saw up to $20,000 increase in gross sales Local Food Supply Chains – Performance Comparison Analysis www.explorelocal.ca
Policy Research & Recommendation supports a complementary market portfolio approach that recognizes local, domestic and international market opportunities. supports the formation of a market-driven and valuesbased multi-disciplinary framework to grow the local food system.
Local Food Supply Chains – Performance Comparison Analysis www.explorelocal.ca
The NEW faces of agriculture
c) Newcomers to Canada
a) Farm background, with new venture in mind b) No farm/rural background d) Second careerists Local Food Supply Chains – Performance Comparison Analysis www.explorelocal.ca
Thank you
Questions Comments
Local Food Supply Chains – Performance Comparison Analysis www.explorelocal.ca
