Team
Presentation
Report
The final report of this project will be available soon. Please contact us if you have questions.
The US market for fresh agricultural products has become an important source of revenue and growth for the food supply chain. This market accounts for nearly a quarter of all food expenditures in the US, and has an annual estimated consumption of over a $100 Billion in fruits and vegetables related products (Epperson and Estes, 1999).
The importance of this market relies not only in its share relatively to other segments, but also on its potential growth. The recent of growth of fresh agricultural products has been impressive, with an increase in consumption of nearly 25 percent from the years 1970 to 1997 (Putnam and Allshouse, 1999). The largest portion of the increased consumption has been attributed to population growth, but also to market changes, such as healthier diets and to the higher incomes among the US population (Park and McLaughlin, 1999).
Along with this growth in the volume of fresh products consumed, there has been also a shift in the required variety and a year around availability of traditional and non-domestic products, which implies the reliance on more imports and the introduction of new production technology to cope with the changing demand (Perosio et. al., 2001).
The reliance on imports and the production of exotic products has made the supply chain of fresh products even more complex for retailers and suppliers. The expected increase of consumption of fresh fruit and vegetables by the general population is expected to translate into an additional 25% (2003-2013) in expenditures of fresh fruit and vegetables (NFAPP, 2003). Such an increase puts additional pressure in the current supply chain, since the additional demand needs to be marketed, transported, and distributed.
On top of the market requirements, another important development has been the emergence of grower/shippers (Perosio et. al., 2001) who are in charge of not only producing the crops but also distributing them to the final consumer and in some cases doing also value added processes. The relevance of these producers will continue to grow as more retailers and processors continue to buy directly from producers bypassing the traditional wholesalers and intermediaries (Kaufman et. al., 2000).
For this new breed of growers, the use of integrated models might represent a large amount of savings and efficiencies by adequately modeling their uncertain environment and managing their risk. On top of these benefits, the modeling of more integrated models can be helpful in estimate the benefits of moving towards a more integrated supply chain. Then there is a great area of opportunity in fresh agricultural products, for developing models that take into account production-distribution decisions, and supply chain coordination.
We developed a planning tool for the fresh produce industry, designed for the producers of fresh agricultural products. The objectives of the proposed work is to help the farmer make decisions based on historical price information, resource availability, and those factors that are usually not considered by the farmers such as price dynamics, transportation and inventory costs. Since the fresh produce market is highly dynamic and uncertain, we decompose the overall planning problems into two phases: tactical and operational.
At the core of the planning system we integrate an analytical supply chain model that will take the relevant information to render a plan for growing (when, what and how much to produce), harvesting and distributing the products in an agricultural cycle. The planning tool considers the uncertainty of yields, prices, demand, and limited resources, such as available land and financial resources.
The particular solution is obtained through mixed integer programming and stochastic programming models applied to agricultural decisions. We expect to demonstrate the usefulness of our models and research using real data from growers of fresh produce.