The development of short food supply chains offers farmers opportunities to increase their consumer base and diversify their farm business By Dr Emma Davies: IBERS, Aberystwyth University 

Introduction

Food supply chains can be described as short when there are few intermediary actors present between producers and consumers. Some of the most well-known examples of short food supply chains (SFSCs) are farmer’s markets and farm shops. In these situations, farmers sell their produce directly to customers, who may be individual households or food establishments. This reduces the presence of intermediary actors such as processors, packaging plants, distributors, wholesalers, or retailers.

SFSCs can also be described as having a short physical distance between the producer and consumer. This is in direct contrast to the global, industrial scale food supply chains that are based on long-distance trade. Today, however, a short supply chain with few intermediary actors does not necessarily prescribe to having a short physical distance between producer and consumer as direct long-distance communication between these two parties is increasingly easy and efficient. Therefore, while some SFSCs remain very localised, others may expand to meet the demands of consumers on a regional or national scale.

Therefore, three types of SFSCs are commonly recognised. These include:

1. Face to face initiatives, where consumers buy directly from the farmer.
2. Spatially proximate initiatives, where products are sold through local retailers.
3. Spatially extended initiatives, where products are sold to consumers outside of the local area.

While the distances between the consumer and producer differ according to the SFSC type, the common denominator that applies to all of these SFSCs is that the products are transmitted through a supply chain that adds valuable information concerning production, traceability, sustainability and quality.

Benefits of short-supply chains

SFSCs are becoming increasingly popular with consumers and producers alike as they have the potential to simultaneously meet expanding consumer demands and provide tangible business benefits to producers. SFSCs are also increasingly seen as sustainable alternatives to global supply chains, and as they reconnect farmers with consumers, they are often cited as methods of business diversification and rural community development. Therefore, SFSCs are seen as having benefits to the economy, the environment, and society.

Consumer demands can vary significantly, however, consumers often want products with sustainable characteristics, such as being fresh, seasonal, organic, or local. Customers are also becoming increasingly aware of the wider impacts and implications of their own decisions as consumers. Customers are increasingly conscious of animal welfare and the ethical implications of different animal production systems, such as intensive versus extensive systems. As such, many consumers also want assurances on specific management conditions, such as ensuring stress-free transport and humane slaughter methods, for example. Consumers are also increasingly mindful of the environmental implications of different production systems and management practices. Such considerations may include the impacts of grazing regimes on biodiversity, or the impact of chemical and natural fertilisers on water quality. Global discourse regarding the causes and effects of climate change also mean that consumers are becoming more conscious of food miles, the carbon footprints associated with production systems, and the overall sustainability of production systems. The desire for this information gives the producer within a SFSC a valuable opportunity to meet this need by supplying valuable provenance information. This may be in the form of a conversation that occurs in person at the point of sale, or via marketing campaigns or product packaging. The ability to provide this information is very important as when customers are assured of standards of quality, they are more likely to support products and producers.

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One of the most important features of produce sold within SFSCs is provenance. This is especially important for meat products as consumers increasingly value information regarding the processes that occur on the farm, and between the farm gate (left) and point of sale (right).

Short supply chains are able to facilitate valuable relationships between producers and consumers. This relationship is more than simply transactional, as the producer is able to provide produce characteristics valued by the consumer, and a direct relationship facilitates a dialogue that is based on shared values. The relationship is therefore indicative of product quality, shared trust, and ethical values. The direct social relationship between a consumer and producer also provides the consumer with a feeling of involvement in the SFSC enterprise, giving them a sense of loyalty, satisfaction, and personal gratification. This is important as these qualities may outweigh other important consumer criteria, which may otherwise discourage customers buying from SFSCs such as convenience and price competitiveness.

The shortening of a supply chain also increases the potential benefits for the producer. As the number of different actors in the supply chain is reduced, producers are able to retain a larger share of the economic and social benefits. For example, as produce within SFSCs often achieves premium prices, pricing can be adapted, allowing a greater share of the profits to remain within the farm business. Bypassing intermediary actors also means farmers can develop individual marketing strategies based on the strengths of their product, production system, or even whole farm environment. SFSCs are also able to help farms retain value within their local communities. This occurs as shortening supply chains often requires the expansion of local professional relationships. This can result in increased rates of employment with local businesses within local areas.  

What’s involved in developing SFSCs?

In addition to traditional farmer’s markets and farm shops, existing SFSCs also include direct on-farm sales, box schemes, direct internet sales, pick-your-own, specialist food retailers, and community networks. The creativity needed to establish sales methods such as these means that SFSCs require producers to become entrepreneurs and manage a range of different business aspects. These may include product development, production, processing, packaging and branding, marketing, and promotion. Success in these areas facilitates the development of relationships between producers, local intermediary actors, and consumers. The establishment of such relationships is important because research suggests that community supported networks are key for short food supply chains to thrive. This is because it may take years for regional producers and actors to build relationships with local consumers and create the infrastructure to effectively meet and generate increased consumer demand. However, once the establishment of such networks has been achieved, SFSCs have an increased chance of sustainability and survival.

With considerable development, demand and expansion, some short supply chains may involve a number of different producers and have the potential to become a central focal point for the region’s agricultural sector. This can lead to produce becoming products of designated origin that have protected geographical status, such as Champagne, which is both a region and a product. Other examples of products of designated origin from the UK include Cornish Clotted Cream, Yorkshire Wensleydale cheese, Cumberland Sausages, Pembrokeshire Early potatoes, Cambrian Mountains Lamb, Gower Salt Marsh Lamb, and Welsh Beef.

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Farm shops pick your own initiatives, and internet sales are common methods producers use to interact with consumers and create SFSCs. A SFSC enables producers to add value to their products via unique branding and marketing

Naturally, with any business model there are some risks. One study that evaluated the strengths and weaknesses of six case study SFSCs found that one common disadvantage was the unreliability of sales from farmer’s markets. As a result, a number of businesses chose to limit their attendance to farmer’s markets, instead opting to supply independent catering and retail establishments as these are viewed as more reliable alternatives. Another disadvantage common to a number of businesses was high distribution costs. These costs were incurred when sales outside of the local area expanded, and distances between producers and retailers increased. This risk, however, is difficult to mitigate as there may be relatively low local demand for certain products. Other risks associated with particular sectors, such as the supply of fresh meat products, were also identified by the study. These included a lack of skilled abattoir and butchery staff, or the closure of the local abattoir or smokery.

One European Innovation project, involving five farming families, aimed to develop the Cambrian Mountains Beef group. Although the group was already established with a catering butcher supplying high-end restaurants, the group wanted to manage and expand their supply chain. The project found that equipping the younger generations of the farming families with butchery skills was essential for the business to have long-term security. Involving younger members of the team also enabled the business to develop a marketing strategy for their brand involving online social media platforms and a business website.

Summary

The development of a SFSC is a creative way to expand and diversify a farm business. Producers within SFSCs have an opportunity to brand and market produce according to its individual merits and value, providing the opportunity for the achievement of premium prices. Reducing the number of intermediary actors within the supply chain also increases the share of the profits that can be returned directly to the farm business. However, establishing and sustaining a SFSC requires specialist skills, and depends on the producer understanding and meeting the needs and demands of the consumer.