The effect of supply chain complementarities on local food
By: Baris Ata, Deishin Lee, Mustafa H. Tongarlak
Contributors: Lee, Deishin; Tongarlak, Mustafa H.; Harvard Business School
Series: Working paper / Harvard Business School -- 12-058; Working paper (Harvard Business School) -- 12-058
Publisher: Harvard Business School
Published: 2012
Place of publication: Boston]
Language: eng
Number of pages: 40
Work titles: Got local food?
Description: We study the operational tradeoffs of a retailer and farmers in a fresh produce supply chain to determine the equilibrium supply chain structure. These operational tradeoffs arise as a result of the geographic constraints posed by the availability of arable land and the spatial population distribution. We model the interdependent operating decisions of a retailer and farmers and show that technological advances in transportation, spatial characteristics of population distributions, and advances in farming technologies has led to a dominant economies-of-scale model of production, distribution, and retailing in fresh produce supply. When farm capacities are asymmetric, the small local farmer has a disadvantage and can be completely squeezed out of the supply chain if the large farm has enough capacity to fill demand. However, we quantify how backhauling and vertical differentiation can increase the retailer's margin for local food, thus increasing the small local farmer's competitiveness. We also show how the local farmer can leverage polyculture farming, a farming practice that increases the resilience and yield of crops, to mitigate risk of weather or pest damage, increasing his competitiveness.
Notes: "December 17, 2012."

Revision of Got local food?.

Includes bibliographical references (pages 29-32).