Modeling Product Flow Through a Generic Post-Harvest Distribution System
A spreadsheet-based stochastic model was developed to track fruit numbers and fruit value for 1,000 individual items grown in a farmer's field, sorted at a packinghouse with and without advanced inspection technology, distributed with and without repack, and sold at a retail store. The quantities generated at each step are value per unit volume in the production field and the respective price multipliers and passing fractions at the packinghouse, distribution center, and retail store. Values of these coefficients were set to reflect experience with the onion industry. It was assumed that about 30% (with repackaging) to 40% (without repackaging) of the fruit leaving the farmer's field would reach the consumer. The initial price per unit volume and pricing multipliers were configured to give representative prices at the production field and representative price per unit fruit at steps through the system to the consumer. The pass-through percentage was decreased an extra 10% to 15% with technology and up to 20% with repack, with corresponding increases in subsequent steps to maintain the 25% to 25% total pass-through. Repacking and technology addition in the packinghouse tended to result in increased value at the retail level. Placing technology in the packinghouse did not result in increased value for the packinghouse. Vertical integration that included the packinghouse would be required to make it profitable to add sorting technology that increases quality by removing defective items. Both technology addition and repackaging reduce the total number of fruits reaching the consumer. The model suggests that the notion of early removal of fruits with latent damage to avoid increased distribution costs does not really benefit the consumer for the conditions modeled. Additional considerations such as food security are required for one to expect additional equipment adoption under current scenarios.
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- Jordan, Jeffery L. & Shewfelt, R. L. & Prussia, S. E. & Hurst, W. C., 1985. "Estimating Implicit Marginal Prices of Quality Characteristics of Tomatoes," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 17(02), pages 139-146, December.
- Kaufman, Phillip R., 1999. "Food Retailing Consolidation: Implications For Supply Chain Management Practices," Journal of Food Distribution Research, Food Distribution Research Society, vol. 30(1), March.
- Jordan, Jeffrey L. & Shewfelt, R.L. & Prussia, Stanley E. & Hurst, W.C., 1985. "Estimating Implicit Marginal Prices Of Quality Characteristics Of Tomatoes," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 17(02), December.
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