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Logistics and Supply Chains in Agriculture and Food

Authors:
8
Logistics and
Supply Chains in Agriculture and Food
Girma Gebresenbet and Techane Bosona
Department of Energy and Technology,
Swedish University of Agricultural Sciences, Uppsala
Sweden
1. Introduction
During the recent two decades, goods flow has been tremendously increased, even though
the amount of goods remains at the steady state. Increased variety of goods, the just-in-time
delivery system, low load rate, specialization and centralization of production systems,
globalization of marketing and seasonal variations are among the main challenges of
logistics system which may lead to the necessity of developing effective logistics in the
sector. Effective logistics and technologies are a critical success factors for both
manufacturers and retailers (Brimer, 1995; Tarantilis et al., 2004). Effective logistics requires
delivering the right product, in the right quantity, in the right condition, to the right place, at
the right time, for the right cost (Aghazadeh, 2004) and it has a positive impact on the
success of the partners in the supply chain (Brimer, 1995).
Food chain logistics is a significant component within logistics system as a whole. The food
sector plays a significant role in economy being one of the main contributors to the GNP of
many countries, particularly in developing countries. According to the European
Commission (2010), the food and drink industry is one of Europe's most important and
dynamic industrial sectors consisting of more than 300,000 companies which provide jobs
for more than 4 million people.
The current trend in food value chain is characterized by three overriding features:
a. greater concentration of farms, food industries, and wholesalers into smaller number
with large sizes;
b. the evolution of integrated supply chains linking producers and other stakeholders;
and
c. ever increasing consumers demand for food quality and safety (food that is fresh,
palatable, nutritious and safe) and animal welfare (Opara, 2003). However, to date, the
linkage between logistics systems of the stakeholders in the agriculture and food supply
chains is rather loose and fragmented. Even within individual firms, the vertical and
internal integration as related to freight and logistics is loose, and therefore they are
both economically and environmentally inefficient and not sustainable. In this regard,
effective and efficient logistics will be a critical success factor for both producers and
retailers.
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In addition to the increase in transport of agricultural and related goods in the recent
decades, empty haulage is common in agricultural sector and the load capacity utilization
level of vehicles is very low (it varies between 10 and 95%) (Gebresenbet and Ljungberg,
2001). Therefore, efficient use of vehicles could be among the methods to reduce transport
work and attenuate negative environmental impact (Gebresenbet and Ljungberg, 2001).
Within the agri-food chain, meat chain became societal interest and area of attention by
researchers because of animal welfare, meat quality, and environmental issues as transport
and handling of slaughter animals are associated with a series of stressful events for
animals, compromising their welfare and meat quality. About 365 million farm animals (45
million cattle, 95 million sheep, 225 million pigs, and 300 000 horses) are transported per
year within the 15 member countries of the European Union (EU)
The resulting transport intensification leads to environmental degradation by contributing
to air pollution, global warming, ozone depletion, resource depletion, congestion and traffic
accidents, particularly in the densely populated areas. The aforementioned constraints in the
Agri-food chain necessitate the development of innovative logistics system taking into
consideration, road and traffic conditions, climate, transport time and distance, and queuing
at delivery points to:
strength the economic competitiveness of stakeholders in the food supply chain
maintain quality or adding value of food and improve animal welfare
attenuate environmental impact
The objective of this chapter is to highlight the logistics system in the Agri-food chain and
present case studies. In most of the case studies, mapping out the material flow;
investigating the possibilities and constraints of coordinated and integrated collection of
primary production and goods distribution; and investigating the food products and means
of production that supported by information technology were carried out. Optimization of
collection/distribution and the reduction in emissions from the vehicles as a result of
optimization are presented. It is assumed that the information achieved through this
investigation will assist to develop an effective transport-logistics system, which may enable
an efficient utilization of vehicles to meet the current demand for attenuating environmental
impacts.
The main methodologies employed in the case studies that will be included in this chapter
include one or more of the following:
a. Mapping out goods flow through comprehensive field data collection using
questionnaires, interviews and measurements
b. Optimization including location analysis and route optimization
c. Coordination of distribution and demonstration
d. Clustering and integration
e. Modelling and simulation
f. Estimation of economic and environmental impact
The studies were carried out through interviews and literature studies, field measurements,
simulation and optimization. Data collection on daily distribution and collection including
geographical location of collections/distribution points and routes was done using the
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127
global positioning system (GPS) and geographical information system (GIS). Optimization
of distribution/collection centers and route optimization were done using the gathered data
and the software LogiX (DPS, 1996). Air emissions were calculated using the simulation
model developed earlier by Gebresenbet and Oostra (1997), where the following parameters
were considered: vehicle type, time (loading; unloading and idling), goods type, load
capacity utilization level, transport distance; vehicle speed, geographical position of depot
and delivery points, routes, and air emissions from vehicles.
In local food systems, the distribution infrastructure is partial, fragmented (Brewer et al.,
2001; Saltmarsh and Wakeman, 2004) and often inefficient, as in non-centralized
distribution, the share of the transportation cost per unit of the product is relatively high.
This is an area that offers great potential for improvement with potential benefits both to
suppliers and outlets. Case studies focused on local food systems, were carried and these
studies confirmed that coordination and logistics network integration in food supply chain
promote positive improvements in logistics efficiency, environmental impacts, traceability
of food quality, and the potential market for local food producers. Such improvement is
important as developing food product traceability systems has been a major challenge both
technically and economically (Wallgreen, 2006; Engelseth, 2009).
In the case of animal transport and abattoir system, the operations considered involve
loading, transporting and unloading animals and the slaughter chain from lairage box to
cooling room for cattle carcasses. Data collection was carried out through truck-driver
interviews; activity registration on routes and at delivery, and slaughter chain activity
registration. Time and distance of transport could be reduced through route optimisation.
The analysis of animal collection routes indicated potential for savings up to 20% in time, for
individual routes (Gebresenbet and Ljungberg 2001).
In this chapter, the concept and case study on clustering and network integration is
presented. In the case study, the locations of 90 producers and 20 delivery points were
displayed on maps using ArcMap of GIS software and based on geographical proximity, 14
clusters were formed. The clustering and logistics network integration approach could
provide an insight into the characteristics of fragmented supply chain and facilitate their
integration. It indicated positive improvements in logistics efficiency, environmental
impacts, traceability of food quality, and the potential market for local food producers.
2. Concept of logistics in agriculture and food supply chains
2.1 Logistics services in developed countries
The role of production and supply chain management is increasing worldwide due to the
growing consumer concerns over food safety and quality together with retailer demands for
large volumes of consistent and reliable product. In developed countries, product losses
(post harvest losses) are generally small during processing, storage and handling because of
the efficiency of the equipment, better storage facilities, and control of critical variables by a
skilled and trained staff. Recently, the concept of Agricultural and Food Logistics has been
under development as more effective and efficient management system is required for the
food production planning, physical collection of primary produce from fields and
homesteads, processing and storage at various levels, handling, packaging, and distribution
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of final product. In the food supply chain many stakeholders such as farmers,
vendors/agents, wholesalers, rural retailers and suppliers and transporters are involved. At
all levels, information flow and management of produce is essential to maintain the food
quality throughout the chain (see Figure 1). The flow of input resources from farms to
consumers needs to be described in detail and the constraints in each sub-process needs to
be identified to develop appropriate solutions for logistics related problems.
Fig. 1. Material, capital and information flow between producers (farmers) and consumers
It is important to note that lack of packaging facilities may be one of the constraints in the
logistics system of small-scale farmers during the transition from subsistence to commercial
farming. Significant post-harvest losses occur when especially vulnerable crops and fruits
are subjected to mechanical damage (Ferris et al, 1993). Therefore management of packaging
should be taken into consideration in the development of agricultural logistic systems.
2.2 Logistics service in developing countries
The development of smallholder agriculture in developing countries is very sensitive to
transport strategies. Many isolated farmers have little opportunity to escape poverty, as
their potential marketing activities are hampered by inadequate or poor transport facilities.
The rural transport planning must address the needs of people, as much as possible at the
household level. Such well planed transport system enables smallholders make the
transition from subsistence to small-scale commercial farming. This helps them to harvest
and market crops more efficiently, reduces drudgery and, by facilitating communication,
helps stimulate social integration and improve quality of life. Availability of road
infrastructure (that includes feeder roads, tracks, and paths), storage facilities and transport
services increases mobility and encourages production (Gebresenbet and Oodally, 2005).
Typical transport activities of a small-scale farmer could be represented as in Figure 2. The
arrows show people mobility and goods flow to and from a homestead. Rural transport is
usually classified into on-farm and off-farm transport.
On-farm transportation includes:
a. transportation within fields
i. collecting harvested crops to one point for processing in the fields and temporary
storage;
ii. distribution of fertilizers and seeds;
iii. transporting of firewood, timber and
iv. water,
b. transport of agricultural products from fields to homesteads,
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129
c. transport of agricultural implements from homesteads to fields and vice-versa,
d. transport of seeds and fertilizers to the fields;
e. transport of implements between different plots etc.
Off-farm transportation includes:
a. transport of agricultural products including animals to local markets,
b. transportation to grinding mills
c. transport of industrial products (commercial fertilizers, implements, seeds, etc) from
markets to homesteads,
d. transportation to health centres and schools, religion centres, and
e. transportation to towns and bigger market
Fig. 2. Transport requirements for a typical small householder (Gebresenbet, 2001)
In agricultural systems of developing countries, animal power is used to replace human
power and facilitate transport tasks. Animals are used to pull carts or sledges and as pack
animals. At least ten species have been so domesticated, and their (absolute) capabilities
depend primarily on body size. In relative terms, pack animals can carry 12 to 30 % of their
body weight and can pull horizontally 40 to 60% of their body weight. These values depend
on species, but field observations have returned higher values, probably at some cost of
animals' well being.
Road side
C
ollection
Plot 2
Homestead
Market
Water source
Products
Agric input
Equipment
Water
To and from grinding mill
Firewood
Forest
Products
Agric input
Hospital
Market
Plot 1
point
Collection
point
Nearest road
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In rural agricultural transport, in developing countries, special emphasis should be on
collection, packaging, storage and distribution of agricultural primary products. Among the
urgent tasks that formulated by the 8th plenary meeting of General Assembly of United
Nation in June 1986, regarding transport and related infrastructure in developing countries,
were improving and expanding the storage capacity, distribution and the marketing system;
and development of transport and communications. Training of farmers (producers) may
reduce loss due to harvest and temporarily storage, while other stake holders (for examples
service providers) should take the responsibility to minimize loss. Loss in processing,
storage and handling is high because of poor facilities and frequently inadequate knowledge
of methods to care for the produce. Post-harvest losses run up to 40% varying from 15 to
25% on farm and 10 to 15% in trade. The high losses in developing countries represent not
only a severe economic loss for the regions but also a major loss of nutrients to already
malnourished populations (FAO, 1989).
The basic concept described in Figure 1 is also applicable for small-scale farmers in
developing countries. However, the challenges of rural transport may be promoting the
application of the concept of rural logistics (see Figure 1); developing rural infrastructure
(storage and packaging facilities, collection points and centres); developing efficient and
effective management of product and information flow; developing strategies to promote
best transport services. Some of the main issues that require immediate attention are:
encouragement of private entrepreneurs to take the responsibility of service provider in
storage, packaging and transport services; development of collection centre systems to
promote marketing possibilities by facilitating coordinated transport services. Constraints
associated with the flow and storage of produce and services in food and agribusiness exist
in developing countries include lack of adequate storage facilities and knowledge of
handling; poor processing, management and transport services.
In the absence of coordinated product delivery system, farmers themselves transport most
of the produce, either as head loading or using pack animals, to both nearby and long
distance markets. There are many constraints of such transport conditions: Amount of
produce that can be transported by head loading or pack animals is limited; Transport time
and distance is long; Drudgery on farmers; and Spoilage of produce during transport, etc.
These constraints may result in reducing production and marketing opportunities for
farmers, and consequently shortage of food for consumers. The reduction of spoilage and
damages that could improve the marketing value of the produce may necessitate the
availability of adequate processing, packaging and storage facilities and management for
each varieties of produce (Gebresenbet and Oodally, 2005).
3. Logistics in abattoir chains: Animal supply and meat distribution
From effective logistics management point of view, an integrated approach from farm-to-
table is required for effective control of food hazards which is a shared responsibility of
producers, packers, processors, distributors, retailers, food service operators and consumers
(Sofos, 2008). This is important issue, because the increase in world population and
improvement of living standard increase the meat consumption and, especially in
developed countries, consumers prefer food with no additives or chemical residues; food
exposed to minimal processing; safe and economic food (Sofos, 2008; Nychas et al., 2008).
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131
The increasing interest in transparency of food supply chain leads food industries to
develop, implement and maintain traceability systems that improve food supply
management with positive implications for food safety and quality (Gebresenbet et al., 2011;
Smith et al., 2005). As animals stressing may damage meat quality, and lead to more
contamination with pathogens, humane treatment of animals is getting more attention
(Sofos, 2008). Tracking slaughter animals from birth to finished products and tracking food
shipments are becoming area of focus recently (Smith et al., 2005). This helps to control the
risk of animal disease, to reduce risk of tampering, to generate detail information on country
of origin and animal welfare in the global food supply systems (Smith et al., 2005).
Animal identification and traceability as well as meat processing and distribution are some
of the issues related to meat safety challenges (Sofos, 2008). In the process of establishment
of animal identification and tracking systems, countries should take the following into
consideration: Selection of appropriate technology and precision requirements, maintenance
of confidentiality, payment of costs, premises number and animal identification number,
livestock feed and meat safety (Sofos, 2008).
Underfeeding and stress of slaughter animals starts earlier than loading for transport to
abattoir and continues at different steps until the time of slaughtering. Especially, the way
non-ambulatory animals are managed at abattoirs has been reported as the ugliest aspects of
pre-slaughter handling. Gregory (2008) indicated that, in US, about 1.15% of cattle waiting
in pens at abattoirs in 1994 were downer animals and it was reduced to 0.8% in 1999. Recent
study in a developing country, Ghana, indicated that about 7% of cattle waiting at abattoirs
were downer animals (Frimpong et al., 2011).
For animal transport, besides the improvement of vehicles design and handling methods,
continuous and accurate measurement and report of stress inducing factors and stress
response parameters, and continuous observation of animals are necessary and essential to
improve animals’ welfare and the quality of meat, the final product. A complex
instrumentation system, described in Figure 3 was developed at the Engineering
department of Swedish University of Agricultural Sciences (Gebresenbet and Eriksson,
1998) to carry out the measurements of the parameters mentioned earlier simultaneously
and continuously starting from the farms to the abattoir. The on-board instrumentation and
the satellite steered position of the vehicles were controlled from the cabin of the vehicle.
The instrumentation may be classified into four groups: Video cameras for monitoring
animal behaviour, Heart rate sensor, GPS for measuring transport route, geographical
location, vibration sensors, temperature and humidity sensors, emissions, and information
transmission from vehicle to stationary database.
Although long distance transport and poor handling are stressful and compromise animals’
welfare, there is tendency to reduce the number of abattoirs due to specialisation and
centralisation. Since such long distant transport has a negative impact on animal welfare,
meat quality and environment in the form of emissions emanating from vehicles, studies are
undergoing to identify means of reducing the transport distance , transport time and animal
stress in animal supply chain and meat distribution (Bulitta et al., 2011). Especially loading
and unloading during transport for slaughter are identified as very stressful activities for
animals.
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Fig. 3. (a) Sketch of instrumented vehicle showing the positions of sensors , video camera
and GPS; (b) vibration sensors mounted on animals
Gebresenbet and Ericsson (1998) made a continuous measurement of heart rate on cows
from resting conditions at farm throughout the trip to abattoirs up to the point of stunning.
The authors reported the performance of heart rate in relation to various activities from
farm to stunning point (see Figure 3). The typical output result is presented in Figure 4, and
as it can be observed the heart rate increased from about 45 bpm (beats per minute) to about
108 bpm during loading (separation of the animal from its group and forcing the animal
to clamp the ramp into the truck). After loading, the heart rate falls and stabilized as soon
as the animal was tied and maintained its position in the pen (Figure 4). The heart rate again
raised as the vehicle started its motion. Another high heart rate peak occurred (Figure 4)
when animals met unfamiliar animals from other farms, and the final rise in heart rate was
during unloading. It is important to note that the heart rate profile reported in Figure 4,
confirmed that loading and unloading activities are the most events that compromise the
welfare of animal during transport. Bulitta et al. (2011) modelled ( using exponential
function) and analysed how cattle heart rate responds to the stressful loading process and
indicated that heifers’ heart rate rose exponentially from its mean resting value (80+6
bpm) to a peak value (136+35 beat per minute) confirming that loading is very stressful
process for animals.
Two possible strategies for improving animal welfare during transport from farm to
abattoirs are:
i. Minimising stress-inducing factors through improving animal transport logistics and
handling methods. These include improving animal handling throughout the logistics
chain, improving the loading and unloading facilities, improving the driving
performance and slaughtering activities at abattoirs.
ii. Minimising or avoiding animal transport by promoting small-scale local abattoirs or
developing mobile or semi-mobile abattoirs.
In both alternatives effective logistics is an important aspect to logistics chain of farm-
abattoir system which encompasses all activities from loading animals, transport from farm
Logistics and Supply Chains in Agriculture and Food
133
to abattoir, unloading at the abattoir, operations in the slaughter chain from lairage box to
chill room for carcasses (see Figure 5). It is important to chill meat and meat products before
transportation. The primary chilling is the process of cooling meat carcasses after slaughter
from body to refrigeration temperatures. The European Union Legislation requires a
maximum final meat temperature of 7 oC before transport or cutting. After primary chilling,
any following handling such as cutting, mincing, etc., will increase the temperature of meat,
thus the secondary chilling is required to reduce temperature below 7 oC. Such a secondary
chilling is also of great importance in the case of pre-cooked meat products, because the
temperature of meat after the cooking process should be rapidly reduced from about 60 to 5
oC, to prevent or reduce growth of pathogens that have been survived the heat process or re-
contaminate the product (Nychas et al., 2008).
Fig. 4. Typical measured cow’s heart rate profile during handling and transport. The peaks
of the measured data indicate various events: loading of the animal on the truck; the
vehicle starts moving; mixing with un-familiar animals i.e., when loading other animals
from other farm; transport on the rough road; and un-loading at the abattoir
(Gebresenbet and Eriksson, 1998)
Meat spoilage may occur during processing, transportation and storage in market. An
important aspect of fresh meat distribution and consumption is effective monitoring of
time/temperature conditions that affect both safety and overall meat quality. Appropriate
packaging, transporting and storage of meat products are important, since meat products
spoil in a relatively short time. Scientific attention on meat spoilage increased when
shipment of large amounts of meat products started (Nychas et al., 2008). The EU
0,00
20,00
40,00
60,00
80,00
100,00
120,00
0
8
16
24
32
40
48
56
64
72
80
88
96
104
112
120
128
135
143
Heart rate, bpm
Time, minute
Farm
Loading
Trucks's initial
motion
Meet un-familiar
animals
Un-loading
Drive on rough
road
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legislation requires a maximum final meat temperature of 7oC before transport and the
vehicle for meat transport must be provided with a good refrigerated system. The meat
transport from cold storage to retail outlet and then to the consumer refrigerator are
critical points for meat quality and safety (Nychas et al., 2008). Animal collection from
many farms and transporting to abattoirs requires a dynamic planning process taking into
consideration stress inducing factors such as road conditions, climate and traffic
conditions transport distance and time, queuing at the gate of abattoir for unloading
(Gebresenbet et al., 2011).
Fig. 5. Duration of activities in the cattle transport chain, from loading to slaughter;
observed mean values; for the activities following after suspension and bleeding, the values
were obtained from interviews; for loading and driving, average accumulated durations for
transport routes involving loading of cattle only (at on average 4 farms), are represented;
, full vehicle; , empty vehicle; , animal/carcass (Ljungberg et al., 2007)
A study conducted in Sweden (Gebresenbet et al., 2011a), comparing a small-scale local
abattoir (situated at the best location in the vicinity of targeted consumers outside big city)
to a large scale abattoir located in the centre of nearby big city indicated that establishment
of the small abattoir could play a significant role in increasing consumer confidence in local
meat products. In both cases (small scale abattoir and large scale abattoir) route analyses
were conducted to explore the potential savings in transport distance, time and emissions
related to animal collection from farm to abattoirs and meat distribution from abattoirs to
meat shops or consumers. Considering the animal collection from farms to small scale
abattoir, transport distance, time and emissions were reduced by 42% and 37% respectively
when compared to large scale abattoir (see Table 1). Similarly, considering meat distribution
from abattoir to consumers/retailers, the transport distance and time were reduced by 53%
and 46% respectively when small scale abattoir was used (Gebresenbet et al., 2011a). In
other case studies route optimisation experiments were conducted (i.e. measuring the real
world distribution route and re-planning the route by conducting route optimisation
experiments using RoutLogiX) on 34 routes of animal transport and 27 routes of meat
distribution and the potential improvements were obtained in terms of transport distance
and time (see Table 1).
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135
Case study No. of
routes
Distance
before
optimisation
[km]
Time before
optimisation
[h]
Improvement due
to optimization %
Source
Distance Time
Animal transport
I 19 163 2:47 3.6 4.1 Ljungberg et al., 2007
II 15 2750 46 18 22 Gebresenbet and
Ljungberg, 2001
IIIn 30 16500 126:21 42 37 Gebresenbet et al.,
2011a
Meat distribution
II 17 1638 62 17 21 Gebresenbet and
Ljungberg, 2001
IV 10 1597 - 4.7 2.7 Gebresenbet et al.,
2011b Gebresenbet et
al., 2011b
IVm 13 3054 62:45 37.7 32.4
IIIn 7 2256 27 53 46 Gebresenbet et al.,
2011a
n The case of comparison of small scale and large scale abattoir and improvement is when small scale is
compared to large scale abattoir
mThe case of coordination i.e. improvement is for route coordination (not necessarily for optimisation)
Table 1. Potential savings in distance and time by optimizing the routes of animal supply
and meat distribution
Coordination and optimisation in food distribution is a potential strategy to promote
economically effective and environmentally sustainable food distribution. A case study
conducted in Sweden pointed out that possible coordination of meat distribution in rural
area around a city could reduce transport distance and time up to 38% and 32% respectively
(see Table 1). The coordination could be formed between different companies distributing
different food items and companies distributing only meat; and between companies
distributing only meat. In a similar study, first coordinating and then optimising the food
deliveries in and around the city could reduce the number of routes by 58%, number of
vehicles by 42% and transport distance by 39% (Gebresenbet et al., 2011b). Such
coordination in food distribution system could also improve the vehicle load rate, motor
idling, emission from vehicles and congestion. Some of the major possibilities for improved
coordination and transport planning of agricultural goods transport are: possible
coordination of meat and dairy product distribution through combined loading; possible
coordination of fodder transport and grain transport through back-haulage; and partial or
total optimisation of vehicle fleet (Gebresenbet and Ljungberg, 2001).
Uncoordinated and non optimum food transport systems are not energy efficient in local
food systems, although there is considerable potential to increase the efficiency of energy
Pathways to Supply Chain Excellence
136
use by organizing the food delivery system in new ways (Beckeman and Skjöldebrand,
2007), using more energy efficient vehicles and/or introducing the production of biofuel in
the region (Wallgreen, 2006), increasing the utilization level of vehicles’ capacity (Ljungberg
and Gebresenbet, 2004) and planning optimum routes for food collection and distribution
systems (Gebresenbet and Ljungberg, 2001).
4. Logistics in milk supply and dairy product distribution
Milk is an important agricultural produce that livestock keepers use for both consumption
and market. The marketing of milk, surplus to family and farm needs, improves farm
income, creates employment in processing, marketing and distribution and contributes to
food security in rural and urban communities (Gebresenbet and Oodally, 2005).
In developing countries, demand for milk is expected to increase by 25% by 2025. In such
developing countries smallholders are the main producers of milk. Dairy imports to
developing countries have increased in value by 43% between 1998 and 2001, and over 80%
of milk consumed in developing countries, (200 billion litres annually), is handled by
informal market traders, with inadequate regulation (Gebresenbet and Oodally, 2005). From
transport services point of view, marketing of milk is difficult for producers who are living
in scattered and isolated areas. These farmers can only sell butter to the urban areas and the
remaining milk products are for home consumption. Delivery of fresh milk from long
distance to urban by small-scale farmers is difficult for two main reasons. Firstly, the daily
milk produce is relatively small to deliver to urban area and transporting perishable
commodity over long distance is difficult. Secondly, milk quality deteriorates as it is
transported over longer time without processing. The only available traditional processing
is fermentation. To promote marketing of milk for small-scale farmers, it is necessary to
develop strategies for on-farming chilling and collection of milk.
In developed nations, transport companies collect the milk from farms to collection points
and thereafter transport to dairy plants (Gebresenbet and Ljungberg, 1998). The dairy
industry provides a special milk container in which the farmers store the milk before the
transporters collect the milk. Usually tank Lorries and tank trailers are used for collecting
milk from farms and deliver to the nearest dairy. The milk supplied to dairy companies is
processed and distributed to consumers. The dairy products such as milk, powder, edible
fat and cheese are distributed by dairy product distributors. In such a process, the tank
Lorries collect milk upto their full capacity and pump to the tank trailer which is usually
placed in the best place as illustrated in Figure 6.
Optimizing the routes of milk collection enables to improve the transport distance and time.
Gebresenbet and Ljungberg (2001) measured 60 routes of milk collection which totalled to
be about 6357 km. By conducting optimization experiments on these routes, using LogiX
(DPS, 1996), the authors found that the distance could be reduced by 16%. Similar
optimization experiment on the routes of dairy product distribution reduced the distance by
22% and time by 24%.
In developed countries, it is noticed that due to structural changes in the milk production
system, the number of farms reduces while the level of production remains relatively
constant. This is shown by Figure 7 which illustrates the case of Sweden.
Logistics and Supply Chains in Agriculture and Food
137
Fig. 6. Schematic presentation of possible way of milk collection from farms and delivery to
the dairy industry (Gebresenbet and Ljungberg, 2001)
Fig. 7. Total milk production and number of milk producers in Sweden from 1960 to 1998;
, number of producers; , delivered milk (source: Gebresenbet and Ljungberg,
2001).
The European Union (EU) limits the maximum level of milk production of member
countries, for example in Sweden to 3.3 million tonnes per years (Gebresenbet and
Ljungberg, 2001; Bouamra-Mechemache et al., 2008). The domestic consumption of dairy
products in EU is as high as 90% of its milk production. And still, EU is a major player on
the world dairy market and the EU dairy sector is expected to be market oriented in the
future (Bouamra-Mechemache et al., 2008). The milk quotas enabled the EU market gain
stability for the last 25 years and the international market have also benefited due to
strategic product management on the world market. The expected challenge to future dairy
industry is world dairy market fluctuations and price volatility due to the increase in EU
milk quota by 1% annually until 2015, the year when the quota will be removed ultimately
(Geary et al., 2010). This in turn will have impact on logistics of milk and dairy products in
the future.
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138
In developing countries individual traders or small scale agencies collect milk from
producers and supply to collection centres. Milk may be carried to the collection points as
head loads, shoulder slings, on bicycles, on pack animals, animal carts or small boats
(Gebresenbet and Oodally, 2005). Advanced milk collection process found in developing
countries begins with the producer delivering milk to a collection point where the volume
is measured, or the milk weighed, recorded, and sometimes it is sampled and checked for
quality. The milk is later transported, to a larger collection centre where, if possible, it is
chilled. The collected milk is subsequently sent in bulk to a processing plant by truck. The
time-delay from milking to delivery at the processing plant often exceeds five hours and
is negatively affecting the quality of non-refrigerated milk, which is often rejected by
dairy processing plants and is also not acceptable by consumers (Gebresenbet and
Oodally, 2005).
In countries like Mauritius, the marketing of the milk is traditionally undertaken by milk
retailers who visit several cow keepers, holding special containers with capacity of 300 litres
for transporting fresh milk. The retailer fills the container after visiting 10 to 15 producers
and then proceeds to the urban areas to deliver to the consumers. The link between the
retailer and the cow keepers is very important as it enables the producers to concentrate on
production while the retailer provides a reliable market for the produce. A milk collection
system that under-estimated the role of retailers was initiated in Mauritius but failed,
because instead of developing policies and effective credit system for the producers and
converting retailers into private contractors to supply the factory with milk, the system
tried to by-pass them creating a system which was not sustainable (Gebresenbet and
Oodally, 2005).
A milk collection initiative in Brazil where a milk collection programme was developed
for farmers, most of whom were producing 100 litres per day per farm on average, was
found to be successful (Urraburu, 2001). The important element in the programme was the
common cooling tank. Within a year, bulk milk collection production grew from 28% to
70% and included 55 private cooling tanks representing some 55,000 litres per day. The
impacts of the programme on dairy farmers was the dramatic reduction of transport costs,
which in some regions fell by 80%, improvement of product quality as the time between
milking and conveying milk to the dairy was significantly reduced (Gebresenbet and
Oodally, 2005)
5. Logistics in grain supply chain
During the recent 20 years, goods flow has been tremendously increased, mainly not due
to the increase in the amount of goods, but due to other factors such as specialization and
centralization of production systems and globalization of marketing (Gebresenbet and
Ljungberg, 2001). Agricultural goods transport is a significant component within such
increasing goods transport. For example about 13% of the international sea-borne trade is
grain transport (Gebresenbet and Ljungberg, 2001). Grain transport is the main
component in agricultural transport in general and it includes grain transports from farm
to depot/terminals, between farms, between terminals, from farms and terminals to
fodder industries and mills and from terminals to ports for export. Figure 8 illustrates the
Logistics and Supply Chains in Agriculture and Food
139
material flows to, within and from agriculture and food sector (Gebresenbet and
Ljungberg, 2001).
Due to the legal limit of total weight of a lorry, the drivers have to estimate the load weight
and it is not unusual that the actual loads exceed the legal maximum loads due to
overloading (see Figure 9). The case study in Sweden (Gebresenbet and Ljungberg, 2001)
indicated that the load rate for grain transport routes is as high as 95% at the delivery point
during the harvesting season.
Fig. 8. Material flows from and to farms and other sectors in Uppsala region; *intervention is
export subsidized by the European Union (EU); the national department of agriculture
buys grain and stores it from season to season before it is exported, to reduce price
fluctuations and support the lowest price level:
Means of production~seed, fertilizer ize (commercial), plant protection, supplies
to fodder factory, etc.; Agricultural produce~grain, milk, live and slaughtered animals;
, Processed products~flour, malt, fodder, dairy products, meat;
By-products~bran, whey, natural fertilizer, by-products from malt production
(Gebresenbet and Ljungberg, 2001).
Pathways to Supply Chain Excellence
140
These authors also mentioned that during grain-related transport routes,
unnecessary/unjustified motor idling was found to be more than 30% of stoppage time.
They also estimated the emission from vehicles during grain transport before and after
optimisation of grain transport routes. Table 2 presents the motor idling and emission
reduction by optimising the transport routes of grain in relation to other agricultural
products such as milk and meat. Air emissions were calculated using the simulation model
developed earlier by Gebresenbet and Oostra (1997), where the following parameters were
considered: vehicle type, time (loading; unloading and idling); goods type; load capacity
utilization level; transport distance; vehicle speed; geographical position of depot and
delivery points; routes air emissions from vehicles.
Fig. 9. Load rate distribution at unloading point of grain: The figure illustrates that load
rates exceed 100% in many cases (source: Gebresenbet and Ljungberg, 2001).
Description No. of
routes
Distance
before
optimisation
[km]
Time before
optimisation
[h]
Motor
idling**
[ %]
Reduction
of CO2
emissions
[%]
Grain transport 45 4995 97 36 6.3
Milk transport 60 6357 185 65 6
Dairy transport 28 2234 92 3.5 22
Animal transport 15 2750 46 1.6 18
Meat transport 17 1638 62 4.6 17
*-source: Gebresenbet and Ljungberg, 2001 with some modification.
**Motor idling time in relation to total time.
Table 2. Motor idling and possible reduction of emission during transport of grain and other
agricultural products*
In grain transport systems, back-hauling can be used for the delivery of fodder to farms
(Gebresenbet and Ljungberg, 2001). Although the grain transport from farms is concentrated
during the harvesting season, there is a possibility to coordinate the delivery of fertilizers
Logistics and Supply Chains in Agriculture and Food
141
and other means of production with grain transport i.e. the farmers can dry their grain and
keep it at the farm till the time of delivery of means of production. The intensity of grain
delivery at the harvest season causes capacity problems for vehicle resources and transport
planning. Planning of production and orders at farm level, to minimize the seasonal effects,
would improve the conditions for transport planning and coordination (Gebresenbet and
Ljungberg, 2001). In developing countries, grain collectors are responsible for
commercialising the grain within the country and exporting surplus. Even though, these
grain collectors are considered as informal by the government body in some countries, they
served an important role in the grain supply chain. For commercialising grain, it can be
collected from individual farmers to a critical size that can be transported cheaply for retail
locally, and the surpluses can be exported at premium prices elsewhere (Gebresenbet and
Oodally, 2005).
6. Logistics in local food supply chain
In the agriculture sector, globalization of food production has considerably influenced the
food supply system by increasing distance the food has to be transported to reach
consumers. This situation not only has increased emissions of greenhouse gases but also has
reduced the relationship between local food producers and consumers, affecting local food
producers, their environment and culture. In terms of distance, locally produced food can be
characterized by the proximity of production place to the consumers and usually there is a
limit, e.g. 160 km in UK, and 250 km in Sweden. In addition to geographical distance, locally
produced food is also considered as food which meets a number of criteria such as animal
welfare, employment, fair trading relations, producer profitability, health, cultural and
environmental issues (Bosona et al., 2011). Currently it is observed that customers have been
motivated (to purchase the local food) by contributing positively to the ecosystem (a more
altruistic reason) and by food quality and pleasure (a more hedonistic reason) (Brown et al.
2009; Bosona and Gebresenbet, 2011).
In this section we presents the main results of two case studies in Sweden, concerning the
investigation of local food supply chain characteristics and developing a coordinated
distribution system to improve logistics efficiency, reduce environmental impact, increase
potential market for local food producers and improve traceability of food origin for
consumers. In these studies, integrated logistics networks were developed by forming
clusters of producers and determining the optimum collection centers (CC) linking food
producers, food distributors and consumers/retailers enabling coordinated distribution of
local food produces and facilitating the integration of food distribution in the local food
supply systems into large scale food distribution channels (see Figures 10 and 11). In these
case studies, after mapping the location of producers and delivery points as well as potential
collection and distribution centers using geographic information system (GIS), the best
collection points were determined using center-of-gravity and load-distance techniques
(Russell and Taylor, 2009). Then detailed collection and distribution routes were analysed
using RoutelogiX software (DPS, 2004). As summarized in Table 3, the result of the analysis
indicated that coordinating and integrating the logistics activities of local food delivery
system reduced the number of routes, the transport distance and transport time for the
delivery system of local food. Such logistics network integration could have positive
Pathways to Supply Chain Excellence
142
improvements towards potential market, logistics efficiency, environmental issue and
traceability of food quality and food origin.
Cluster boundary
Production center
CC
Distribution from
CC
Link between
CC
and producers
AB
A
existing distribution system
B
new supply network with CC
Distribution by Producers
Fig. 10. Fragmented distribution system (existing) and newly proposed coordinated
distribution system via CC (collection center) to different customers (Source: Bosona and
Gebresenbet, 2011)
Producers
CC
DC1
DC2
DC3
Retailers
Fig. 11. Network of product delivery system with coordinated collection. DC1, DC2, DC3
represent three of large scale food distribution channels. The dashed line indicates the case
of direct delivery from CC to retailers or customers.
Logistics and Supply Chains in Agriculture and Food
143
Case study No. of
routes
Distance
before
coordination
/integration
[km]
Time before
coordination
/integration
[h]
Improvement due to
optimization %
Source
Routes Distance Time
I 81 8935 226 68 50 48 Bosona and
Gebresenbet
2011
II* 23 6159 69 87 93 91 Bosona et al.,
2011
*- Although there were more scenarios, the scenario with best improvement was chosen.
Table 3. Potential savings obtained by co-ordination and integration of routes for delivering
locally produced food
Coordination and network integration in local food supply chain increases logistics efficiency,
potential market, access to information and reduces environmental impact (Bosona and
Gebresenbet, 2011; Gebresenbet and Ljungberg 2001, Ljungberg, 2006; Ljungberg et al, 2007).
In the food distribution system of local food producers, logistics is fragmented and inefficient
compromising the sustainability of localized systems and this requires improvement (see
Figure 11 and Table 3). Therefore forming the best collection and distribution centres for
locally produced food is very important. Such location decisions should be supported
technically since the location decisions have the dynamic implication over time (Sabah and
Thomas, 1995). Therefore, in the process of developing improved logistics systems in the
local food supply chain, detailed location analysis (mapping and clustering producers and
determining optimum location of collection and/or distribution centres) and route analysis
(creating optimised routes for product collection and distribution, simulating route distance
and delivery time) are very essential (Bosona and Gebresenbet, 2011) .
Potential producers of local food want to expand their sales area. However, increasing sales
of locally produced food, on small scale bases, needs to overcome the main problems such
as low size of production and more volatility of market price and high seasonality of food
products on market, inadequate packing and storage facilities, limited or no means of
transport and limited knowledge of potential market (Bosona et al., 2011). These problems
can be overcome mainly if the local food systems can be embraced by dominant food
supermarket and superstore chains and this can be facilitated by integrating the local food
system into large scale food distribution channels.
Such integration in local food systems plays a key role in sharing information and
scarce/expensive resources as it enables the stake holders get access to the right information
at the right time. Well organized information concerning local food is important to satisfy
the increasing demand of consumers to have good knowledge and information of the food
origin and how it is handled and transported. The logistics network integration is also
helpful in creating favourable situation for interested researchers. For example, well
established data management might come into existence which in turn helps to conduct
Pathways to Supply Chain Excellence
144
more detail studies on the logistics activities enabling further improvements that increase
the sustainability of local food systems (Bosona and Gebresenbet, 2011, Bosona et al., 2011).
The integration also facilitates improved traceability system which depends on information
connectivity and provides an added layer of food security which might be established more
easily within integrated systems (Bantham and Oldham, 2003; Engelseth, 2009). One
apparent advantage of such a co-ordination and logistics network integration is that each
stakeholder in the network concentrates on its specialty and improves its productivity in
both quality and quantity (Beckeman and Skjöldebrand, 2007).
Studies (Bosona et al, 2011; Bosona and Gebresenbet, 2011) indicate that in local food
systems, producers of local food run mostly their own vehicles and about half of the vehicle
capacity is unutilized. Therefore, the coordination and logistics network integration in local
food system leads towards positive environmental impact by: (i) Reducing number of
vehicles to be deployed for produce collection and distribution of local food products; (ii)
Increasing the utilization level of vehicle loading capacity; (iii) Reducing travel distance,
time and fuel by following optimized routes where possible; (iV) Reducing green house gas
emissions (as the consequence of the facts mentioned above).
7. Conclusion
From effective logistics management point of view, an integrated approach from farm-to-
table is required for effective control of food hazards which is a shared responsibility of
producers, packers, processors, distributors, retailers, food service operators and consumers.
Therefore, tracking slaughter animals from birth to finished products and tracking food
shipments are becoming area of focus recently. Studies indicated that, in the food and
agriculture supply chains, there are potential area of logistics related improvements in terms
of reducing transport routes, distance and time; reducing emission from vehicles; improving
the packaging of food products and improving transport services. This can be implemented
in collecting, storing and transporting slaughter animals, meat products, milk and dairy
products, grain and related products.
These logistics related improvements are possible in developed and developing countries. In
case of local food systems, an iintegrated logistics network that embraced producers,
customers (delivery points), collection centers and distribution centers in the local food
supply chain is very important, because the logistics services in such local systems are
fragmented and inefficient, compromising competence of local food producers. Introducing
and implementing logistics related coordination and integration in the local food systems
greatly improve the sustainability of local food systems. In general, studying and
identifying the constraints and developing and implementing more effective and efficient
concepts of logistics services in the agriculture and food supply chains is very essential for
overall economic growth of a country and for environmental benefits.
General observations for practitioners
Agriculture and food supply chain is specific and complex area with important
responsibilities. There are two main demands:
a. Maintaining food quality and safety including animal welfare along the supply chain,
and
Logistics and Supply Chains in Agriculture and Food
145
b. Reducing logistics cost.
The concept of Agricultural and Food Logistics is slowly emerging as one of the important
types of logistics to reach the requirements for maintaining quality of raw materials for food
and food products or even to perform value adding activities in the food supply chain. The
questions related to post harvest loss, which ranges up to 70% in developing countries,
animal welfare during transport, and the concern of origin of food staffs and how they are
produced and processed are societal questions.
In relation to globalization of marketing system, it is a vital for all stakeholders to reduce
logistics cost in order to increase their economic competitiveness. Therefore, development of
effective and efficient Agricultural and Food Logistics is necessary and essential.
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The technological advancement in Intelligent Transport Systems and mobile phones enable massive collaborating devices to collect, process, and share information to support the sales and transportation of agricultural goods (agro-goods) from farmer to market within the Agriculture Supply Chain. Mobile devices, especially smartphones and intelligent Point of Sale (PoS), provide multiple features such as Global Positioning System (GPS) and accelerometer to complement infrastructure requirements. Despite the opportunity, the development and deployment of the innovative platforms integrating Agro-goods transport services with e-commerce and e-payment systems are still challenging in developing countries. Some noted challenges include the high cost of infrastructure, implementation complexities, technology, and policy issues. Therefore, this paper proposes a framework for integrating ITS services in agro-goods e-commerce, taking advantage of mobile device functionalities and their massive usage in developing countries. The framework components identified and discussed are Stakeholders and roles, User Services, Mobile Operations, Computing environment with Machine Learning support, Service goals and Information view, and Enabling Factors. A Design Science Research (DSR) method is applied to produce a framework as an artifact using a six-step model. Also, a case study of potato sales and transportation from the Njombe region to Dar es Salaam city in Tanzania is presented. The framework constructs the ability to improve information quality shared among stakeholders; provide a cost-effective and efficient approach for buying, selling, payment, and transportation of Agriculture goods.
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Sustainable Development. Momentum for change led to the first ever United Nations Food Systems Summit in September 2021, which agreed on innovative solutions and strategies to transform agrifood systems and leverage those changes to deliver progress across all the SDGs. The Summit ’s call to action focused on five objectives, one of which is building resilience to vulnerabilities, shocks and stresses to ensure the continued functioning of healthy, sustainable agrifood systems. The theme of this year’s report responds to the United Nations Food Systems Summit ’s call to bring forward a series of concrete actions that people from all over the world can take to support transformation of the world’s agrifood systems. More specifically, the report provides evidence and guidance on actions that can help actors in agrifood systems manage their vulnerability to shocks and stresses, and strengthen the capacity of these systems to support livelihoods and sustainably provide continuous access to sufficient, safe and nutritious food to all in the face of disruptions. To this end, the Food and Agriculture Organization of the United Nations (FAO) has developed a suite of resilience indicators designed to measure the robustness of primary production, the extent of food availability, and the degree of people’s physical and economic access to adequate food in countries worldwide. These indicators can help assess the capacity of national agrifood systems to absorb the impact of any shock, which is a key aspect of resilience. Analysis shows that a country’s primary production sector is more resilient when it produces a diverse mix of food and non-food products and sells them to a wide range of markets, both domestic and international, a configuration mainly seen in higher-income countries or those with a large agrifood base. In terms of food availability, however, analysis of multiple sourcing pathways for crop, fish and livestock commodities shows that lower-income countries have a diversit y that is comparable to that of larger, higher-income countries. Another important aspect underscored by this report is that low-income countries face much bigger challenges in ensuring physical access to food through transport networks, key to keeping agrifood supply chains active. Analysis of data from 90 countries shows that if main transport routes were disrupted, many low-income countries in particular would have limited capacit y to decentralize food distribution or use alternative deliver y routes. For nearly half the countries analysed, the closure of critical network links would increase local transport time by 20 percent or more, thereby increasing costs and food prices for consumers. Taking an agrifood systems approach, the report also notes that risks associated with economic access to food are even more worrisome. Globally, we already know that around 3 billion people cannot afford a healthy diet to protect against malnutrition. Since low-income households spend most of their income on food, any significant loss of purchasing power – from food price hikes, crop failures or loss of income – poses a threat to their food security and nutrition. In fact, this report finds that an additional 1 billion people are at risk as they would not be able to afford a healthy diet if a shock were to reduce their incomes by one-third. The burden of this shock would fall mostly on middle-income countries, but the report also notes that, in the event of such an income shock, proportionately many more people in low-income countries would be unable to afford even an energy-sufficient diet. These risks are unacceptable in a world that produces enough food to feed its entire population. The report finds that diverse, redundant and well-connected agrifood supply chains are needed to increase resilience, as they provide multiple pathways for producing, sourcing and distributing food. However, some actors in these agrifood supply chains are more vulnerable than others. The vulnerability of small and medium agrifood enterprises (SMAEs) is critical, as well as the fact that the resilience capacity of rural households – especially those involved in small-scale agricultural production – is increasingly put to the test in the face of adverse climatic events and depletion of natural resources. Based on the evidence of this report, FAO is in a strong position to recommend that governments make resilience in agrifood systems a strategic part of national and global responses to ongoing and future challenges. A guiding principle is diversity – input sources, production mixes, output markets and supply chains – because diversity creates multiple pathways for absorbing shocks. Connectivity multiplies benefits: well-connected agrifood networks overcome disruptions faster by shifting sources of supply and channels for transport, marketing, inputs and labour. Governments should encourage better coordination and organization of SMAEs within agrifood supply chains through, for example, forming consortia, which increase their scale, visibility and inf luence. Similarly, small-scale food producers can stay competitive and resilient by integrating into supply chains through producer associations and cooperatives, and by adopting resource-conserving practices. Social protection programmes may be needed to improve rural households’ resilience in the event of shocks. Policies should also address issues beyond agrifood systems, including the need for better health and education services, gender equality and women’s participation, and must recognize agrifood’s role as a steward of the natural environment. FAO stands firmly committed to taking advantage of the opportunity offered by events such as the United Nations Food Systems Summit and others to move from commitments to action in order to transform agrifood systems to make them more efficient, more inclusive, more resilient and more sustainable for better production, better nutrition, a better environment and a better life for all, leaving no one behind. This report offers evidence and guidance to take concrete steps in this important direction.
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