University of Illinois - Chicago summer workshop on transportation teleconference

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This slideset discusses food transportation issues, especailly as they relate to regional transportation needs for local and regionally-produced food.

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  • I am representing a large team of dedicated faculty, staff and students working on transportation issues and local food over the last seven years. This project is a direct outgrowth of this larger body of work.
  • Our project centered on the Driftless production region, located on the edge of the orange “Great Lakes” mega-region. There are two primary markets in this region – the Twin Cities and the Chicago-Milwaukee urban corridor. This production / market region constitutes about 21 million people.
  • Also known as the Upper Mississippi River Valley, the region was skipped by the glaciers. As a result, there is no glacial drift or till in this production region, hence “Driftless”. The region is about 25,000 square miles, located in parts of Wisconsin, Minnesota, Iowa and Illinois. The steep topography means that the land is susceptible to erosion, especially during extreme rainfalls. There are many rivers and few natural lakes. NRCS programming emphasizes the need to replace commodity row crops with perennials, especially grass for animal grazing, and sustainable forestry practices to improve water quality, maintain wildlife habitat, and minimize erosion.
  • This is the “Sonoma” of the Midwest. It is a largely agricultural region most suitable to perennial, high value crops. Wine grapes have been cultivated here since the mid-1800s, and commercial apple orchards are part of the regional culture. 75% of Wisconsin’s raw milk cheeses are produced in this region. The region is home to Organic Valley. Wisconsin ranks second in the nation for the number of organic farms, and third for organic vegetables. The majority of these farms are in the Driftless region.
  • We wanted to engage the public and private sector in a discussion about mid-scale food production and commerce – Tier 2 – strategic partners in supply chain relationships, regional wholesale production and markets.
  • 100 private and public sector leaders in local food came together to share their stories, experience, and challenges in developing a regional food system in the Driftless region. They represented farmers, distributors, and wholesale buyers, including food banks. Various product categories were represented – fresh produce, dairy, meat, processed products. We had representatives from all four states and from the major urban centers. And there were people in attendance from different business structures – independents, family-owned, cooperatives, non-profits. We had four panels representing different perspectives on the topic of transportation and local food. Each panelist offered their perspective, and then the full group engaged in small group discussions about what they had just heard.
  • Our first discussion focused on the market for local food. We heard from Farm-to-School leader KymmMutch, distributor Don Stanwick, store produce manager Brad Smith and Brandon Scholz, from the Wisconsin Grocers Association.
  • Our next discussion was informed by the work of three businesses that are trying to work out the distribution challenges on a day-to-day basis. We heard from a milk distributor, a vegetable distributor, and a meat distributor. Kristine Jepsen, Grass Run Farms, Dorchester, IABen Perkins, Goodness Greeness, ChicagoNick Lichter, Organic Valley, LaFarge, WI
  • Our third panel was comprised of farmers grappling with distribution issues for apples, meat and vegetables. Josh Engel,Driftless OrganicsTom Ferguson, Morningside OrchardsRod Ofte, Wisconsin Meadows beef co-op
  • Six issues emerged throughout the two days. A core question that arose was, “What is local?”. What is the market draw?The other five issues are market differentiation (what is the market structure?), the role of logistics, first and last mile considerations, supply chain scale and ownership, and challenges specific to regions with high distributional capital.
  • As panelists shared their experience, participants better understood differentiation in the wholesale marketplace. How do we keep the farm story with the product? How can we retain values and also realize efficiencies?
  • Don fromChartwell’s talked about the various price points for different parts of the wholesale market. Brad from Peoples Coop said, “[Our natural food coop] is always fighting growers’ perception that we are a depository for product that can’t or didn’t sell at the farmers’ market. We make an effort to source from local growers, but the coop can’t be a dumping ground; we have to have quality standards to be profitable.” A meeting participant noted that farmers who are accustomed to direct marketing have been appalled by the terminal prices they are expected to take when selling through a nascent local food hub.
  • Much of the product value for consumers is embedded in the product story. A number of businesses are experimenting with QR codes and investing in people along the supply chain to tell their product story. Jeff Fairchild, New Seasons Market said, “Our customers aren’t really concerned about food safety –they’re more concerned about flavor. Flavor profile is really important for our customers – where it’s grown, who is growing it. The growing practices really drive people into our stores, and it seems it’s even becoming more so because of all the food media and information. People are becoming more educated and actually looking for more unusual, different things. But I’d peg my biggest change more on customer education –their desire to feel that connection with growers.”Tim Eberle, director of produce merchandising, Nash Finch Co. said, “We don’t necessarily market locally grown; we market the local grower in a specific town who is well known for growing a particular crop.”From Progressive Grocer, “Setting the table with fresh views”, January 2013.
  • Most food is purchased from groceries (about 53% of total food budget), or restaurants and institutional outlets (47%). In 2010, the top ten retailers accounted for 68% of sales. Most food is distributed through vertically-integrated chains, with few independent distributors and retails still operating. Direct-marketed food may most easily enter intermediated markets through existing independent distributors or through start-ups like Just Local Foods. David Diamond, “The Locavore Opportunity” says, “The simple reality is that chain supermarkets aren’t organized to buy from local providers. The economies of scale that drive their businesses make it virtually impossible for them ot buy locally. Store manager and even area managers aren’t trained as buyers and, more importantly, they’re not vested with the authority to buy anything for resale , or set it up in the system to be sold. This makes local products a critical growth opportunity for independents, both in the revenue they generate as well as the differentiation they give retailers.” Progressive Grocer Independent, August 2012. New trucking regulations developed for safety reasons (especially limitations on driver hours) are creating additional logistical challenges for freight, especially perishables. These are of biggest concern in metro regions where traffic congestion, parking, and other inner city issues dramatically increase time-to-market. Vertically-integrated businesses are better positioned to content with this.
  • Aggregation: Distribution efficiencies to develop – full pallets and truck loads, standardized packaging, back-hauling relationships, cold chain integrity, product standards, adequate product diversity, branding. Dis-aggregation: More thought about moving food into cities is increasingly necessary as metro regions cope with congestion, double parking, etc.. Vertically-integrated businesses already use regional and metro warehousing as a strategy to improve inner-city distribution. Independent businesses - farmers, distributors, and various markets (groceries, restaurants, etc..) are challenged by this – who will absorb the costs of inefficiencies and added distribution risk when adding an additional warehousing step? What would a green urban distribution system look like? A grocery chain in Paris is using barge to deliver to city stores. Chicago-based Providence Logistics is exploring rail to move perishable food between Northwest Indiana and Tampa. Are there emerging opportunities here?
  • In looking for system efficiencies to cut costs and optimize profit in supply chains, people in the supply chains were not willing to sacrifice quality relationships for efficiency. Relationships drive logistics. National supply chains are strengthened by annual produce marketing association meetings. Similar meetings to develop business relationships at a regional scale are critical to building supply chains. As regional logistics develop, transportation infrastructure needs will become more apparent. This formative period is also a good time to consider ways to “green” freight transportation.
  • Logistics are now built on brittle national and global supply chains. Logistics are reliant on a 12 month food supply from the West Coast and to a lessor extent on production from Mexico, South America, the Southeast, and global air freight. Gas prices for trucking are undermining established food distribution patterns. We first heard about this in 2003 as gas prices approached $4/gal.. Del Monte was looking for organic green beans from Wisconsin growers to process because it was no longer cost efficient to ship organic green beans from Mexico to canning facilities in Wisconsin. Extreme weather is impacting water available for irrigation in desert agriculture, and disrupting stable production in other growing regions. This is likely to continue. The ensuing pressure on food systems has the potential to cripple or collapse existing supply chains and further stress vulnerable populations, especially in metropolitan regions where there is a high reliance on distant food production and complex supply chains. Communities with high social and natural capital but low distributional capital tend to be more self-sufficient and resilient to short-term impacts though vulnerable to long-term impacts (drought, sea level rise, etc.). High distributional capital can also indicate accelerated depletion of natural capital (such as ground water, or arable land lost to urban development). Countries, regions, metropolitan areas or communities with dependence on imported distributed foods are vulnerable to price fluctuations and consequent destabilization of their social capital. Chicago, and other distributional hubs are highly dependent on freight transportation and those that serve as distributional hubs are perhaps the most vulnerable.Supermarkets are noticing unsteady supply chains. Steve Wright, director of produce for Tops Markets (ranks 57 in supermarkets, with 76 stores, its own distribution center and $1.7billion in sales in 2010) said: “…I’m probably not the only one that has found themselves saying in recent years, “I’ve never seen that happen before.” For example, our home state, New York, lost roughly 50% to 60% of its crop; Michigan almost lost its total crop, Ontario is just getting decimated. We’ve never seen this before, and that causes pretty severe effects for the whole dynamics of our industry.” (Progressive Grocer, January 2013)
  • What happens to this system in a volatile period? Extreme weather, political tension, changing trade agreements?This map shows primary freight transportation routes - key freight corridors, bottlenecks in major metropolitan regions, and the nation's global gateways. America 2050 calls for a Trans-American Freight Network with investments that will alleviate highway and rail bottlenecks, electrify the rails, and green the nation's seaports. These investments should foster the growth of our economy, reduce the systems impact on the natural environment, and help to offset the impact of the freight system on local communities. America 2050 thinks that to accomplish these goals the federal government needs to articulate a national freight policy. Agriculture is the largest user of freight transportation in the United States, claiming 31 percent of all ton-miles transported in the United Stated in 2007.” Trucking alone carries 70 percent of the tonnage of agricultural products. And with over 80 percent of the nation’s cities and communities served solely by trucks, highway freight infrastructure plays an important role in provisioning the US population with a stable food supply. http://www.ams.usda.gov/AMSv1.0/RuralTransportationstudy p. vhttp://www.ams.usda.gov/AMSv1.0/RuralTransportationstudy p xii.http://www.ams.usda.gov/AMSv1.0/RuralTransportationstudy p xii.
  • LA, Atlanta, Chicago, and Northern New Jersey /Eastern Pennsylvania are the epi-centers of food logistics in the US. In Canada, Toronto and Calgary are the primary centers. How will these epi-centers participate in local and regional food supply chains? Participants were encouraged to serve on state and federal transportation committees to share their insights on the new logistics. In this map, the circles represent facilities, with size indicating total square feet of distribution space. As of 2010, there were 533 food distribution facilities in the US and Canada.MWPVL is a private consulting firm working on logistics and global supply chain analysis.
  • We think that similar meetings to discern the emerging edge of regional food transportation and logistics in other production regions would yield additional insights. How are logistical relationships changing to respond to the demand for local food?It would be helpful to research food logistics, laying out the nature of regional food distribution and the organization of the retail industry (vertically integrated businesses vs. independent grocers and distribution companies) getting at scale issues that impact regional food development.Each production region is unique, with a unique set of relationships to adjacent regional markets. The Northeast is dependent on a relatively small production region in relationship to market. The eastern and southern edges of the Great Lakes region are competing for products with two other mega-regions. The West Coast has three mega-regional markets and an abundant production region, and considerable reliance on water subsidies. The Arizona Sun Corridor is completely reliant on water subsidies and food imported into the region.
  • Food sovereignty is an ever-present issue when reflecting on food distribution. What are the power relationships between rural and urban peoples? Between people with easy access to high-quality food and those without? While business development is critical, so too are social justice issues. Food bank participants at the LaCrosse meeting were interested in eliminating the need for their services by addressing fundamental issues of distributional equity.
  • University of Illinois - Chicago summer workshop on transportation teleconference

    1. 1. Sustainable agriculture and food systems research and outreach from the University of Wisconsin August 2013
    2. 2. On-going food systems projects  Production innovation  Grass-based animal husbandry  Organic production research  New crops – hazelnuts, aronia  Terroir  Driftless region food and farming  Chicago as a market for regional food – raw milk cheese, perennial fruits and veggies, wine, culinary tourism  Great Lakes Farm-to-School  Chicago school district support  Link to other school districts in the region and nationally  Harvest Medley project  Regional food transportation  Wisconsin Food Hub  Food systems planning  Supply chain logistics and transportation infrastructure
    3. 3. UW project team on transportation for local and regional food, 2008 to present  Teresa Adams, PhD, & Ben Zeitlow, National Center for Freight & Infrastructure Research & Education  Alfonso Morales, PhD, & David Nelson and Janice Soriano, Department of Urban and Regional Planning  Michelle Miller, & Lindsey Day-Farnsworth and Peter Allen, UW Center for Integrated Agricultural Systems  Past team members: Rosa Kozub, Anne Pfeiffer, Bob Gollnik, Jason Bittner, Brent McCown
    4. 4. The 4-state Driftless region
    5. 5. Networking Across the Supply Chain February 20-21, 2013 La Crosse, Wisconsin Transportation Services Division Agricultural Marketing Service U.S. Department of Agriculture This Project is supported by Cooperative Agreement No. 12-25- A-5639 between the Agricultural Marketing Service/USDA and the Center for Integrated Agriculture at the University of Wisconsin-Madison.
    6. 6. Market outlook  Kymm Mutch, Regional Learning Lab, School Food FOCUS, Milwaukee  Don Stanwick, Chartwells-Thompson Hospitality, Compass Group, Chicago  Brad Smith, People’s Coop, LaCrosse  Brandon Scholz, Wisconsin Grocers Association
    7. 7. Connecting supply and demand
    8. 8. Supply perspective 8/16/2013Footer Text 1 1 Wisconsin Meadows™ Grass-fed Beef
    9. 9. Participant feedback n=42  2/3 made more than 5 new connections  70% made new contacts useful to their businesses  88% made connections useful for local foods development  79% learned useful innovations for transportation and logistics  92% were interested in attending similar events  Comments:  Many respondents interested in more networking time  Key issues were finding existing capacity, software for regional routes, green transportation options, multi-modal opportunities
    10. 10. Definition of consumer interest  Consumers are interested in:  Local  Sustainable  Authentic  Innovative  Organic  Healthy  Safe  Proximity is a proxy for some or all of these attributes  Consumers first notice local fruits and vegetables as an indicator of store quality
    11. 11. Wholesale market differentiation  Which products and price points are appropriate for which markets?  As the supply chain lengthens, it is a challenge to keep the farm story firmly attached to the product.  There is a tension between consumer values and supply chain efficiencies.  Available software for warehousing and logistics proving inadequate for regional distribution efforts.
    12. 12. Wholesale Market Segmentation wholesale buyer type Red = institutional market Green = grocery Blue = restaurant Meal service Megabox Fast food Private cafeteria Gourmet retail White table cloth restaurants Grow your own resources
    13. 13. Maintaining product identity throughout longer supply chains  QR codes  Knowledgeable product representatives Jepsen Family, Grass Run Farms Rufus Hauke, Keewaydin Organics
    14. 14. Supply chain scale and ownership  Independently-owned supply chain businesses better positioned to develop logistical relationships with regional producers than are vertically integrated companies.  Each wholesale market segment has different scale requirements.  Impact of trucking regulations on metro markets – Hours of Service.
    15. 15. First and last mile issues  Aggregation at first mile  Product aggregation must be both at sufficient quantities and meet quality standards to survive wholesaling.  Easiest to start with products that are already regional commodities, then build capacity for other products.  Dis-aggregation at last mile  Key to improve urban congestion  Pushback from independents on establishing distribution hubs  Multi-model innovations
    16. 16. Logistics as a lynch pin for regional infrastructure development  Product movement through the supply chain is dependent on good business relations.  Can I trust you to do as you said?  Are you loyal?  Will you give me good information?  Good business relationships supersede other system efficiencies.  Regional supply chains require more complex relationships to function than do mega-chains.  Opportunities to develop regional relationships are lacking.  Logistics drive infrastructure needs.
    17. 17. Logistical challenges in regions with high distributional capital  Twin Cities have a strong distributional tie to the Driftless region, while Chicagoland does not.  Chicagoland is one of four national logistical hubs for grocery and highly reliant on existing production regions and supply chains.  As food production varies in response to extreme weather, larger distributional hubs are most vulnerable to disruption.
    18. 18. Implications
    19. 19. MWPVL International. http://www.mwpvl.com/html/grocery_distribution_network.html
    20. 20. Power dynamic  City dwellers are the market.  Rural landscapes and communities produce food.  Is the relationship equitable? Kenneth Lynch (2005) “Introduction & Chapter One: Understanding the rural-urban interface” from Rural-Urban Interaction in the Developing World Richard Blaustein (2008)

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