Logistics in Lagging Regions : Overcoming Local Barriers to Global Connectivity

This report is based on two case studies carried out in Brazil and India on the impact of various strategies to reduce the cost of trade for small-scale producers. Small scale producers especially those located in lagging regions in developing countries lack easy access to efficient logistics services. They are faced with long distances from both domestic and international markets. Unless the enterprises are able to consolidate traffic volumes they can be excluded from international supply chains. However, the process of consolidation is not without cost nor does it occur on its own accord. It is typically handled by outside parties in the form of intermediaries. The study was designed around the horizontal relationships between the small scale producers and their vertical connections to higher tier parties involved in the same supply chain. It analyzes the cooperative approach to linking producers, the role of itinerant traders, and a newer and innovative approach to the same problem through virtual integration of farmers using modern information communication technologies. These approaches were explored by studying two separate supply chains, sisal in Brazil and soybean in India, enabling the assessment of logistics patterns from the farm gate to onboard vessel at the export gateway. The assessment of logistics performance at the sub-national level is still evolving. The more widely used density-type indicators emphasize the infrastructure dimension of logistics but do not handle effectively the relationships and service quality attributes identified by the study. A model built around spatial and social networks is proposed to represent the horizontal and vertical attributes of logistics in lagging regions.