The first-mile distribution dilemma: what is needed to assure quality and safety of fresh produce from the point of production?
In any supply chain, the terms “first and last-mile of production distribution” are crucial for retailers and food companies. The first-mile refers to the movement of products from the production place to a logistics service point or distributor. The last-mile refers to the final movement of products to their final consumers. Both of these processes involve many processes—including handling, storage, and transportation—that require efficient and coordinated logistics.
Many companies have focused on last mile transport and distribution, which has led to constant improvements in the quality, cost, time efficiency, and traceability of those networks. After the Amazon revolution, big changes came along in those aspects. But, what has been happing on the other side of the equation? The First-mile? This is still a big question mark in most sectors.
Cold chain logistics, especially those dealing with fresh produce, is one of the most complex components within the logistics system. Modern food supply systems increasingly require integrated supply chains that link producers, processors, and wholesalers in order to respond to grower consumer demand for food quality and safety.
To date, fresh produce handling and logistics are somehow tracked only in the last-mile, where stakeholders have higher levels of communication and coordination, especially for assuring safety and quality in high-end markets.
However, the situation for production sites at the first-mile of distribution is quite different. First-mile distribution is usually an operational blackhole, where communication and coordination between farmers, traders, and transportation companies are loose and fragmented. Considering the limited existence of a cold chain at the farm level, there is considerable uncertainty over how produce is handled and if those conditions assure quality and safety.
Within some commodities, the lack of organization on the post-harvest phase impacts heavily on the productivity. Improper storage and handling can result in losses as high as 50% every year. That means that a large percentage of fruit and vegetable production never reaches supermarket shelves, which can result in supply shortages.
The first-mile logistics and distribution schemes of fresh commodities can be analyzed from two main angles: transport and handling capabilities:
First-mile challenges around transport:
- The First-mile is the stage of transportation that links farmers to the nearest rural road or a product collection point. The infrastructure may consist of the local village, along with farms paths and tracks that are inaccessible to most conventional transport vehicles. In terms of cost per km, this is the most costly segment of the logistics process.
- The distance of the first-mile can range from 0.25km to 200km. In smallholder farming, this is further complicated by the fact the production is spread across numerous farms over a wide spatial territory.
- Typical means of transport used in this segment are human porterage, animal carts, bicycles, animal carts, and motorcycles. In some cases, tractors, and pick-up trucks are also used. This process is usually time consuming and expensive.
- First-mile transport usually involves sub-optimal handling of produce, which results in damages to crops and ultimately lost value. Produce is frequently transported in fiber sacs that lack ventilation, and often faces long exposure to sun and rain. Making matters worse, there are frequently delays in transporting from the farm-gate or consolidation points.
- Low quality and unreliable transport services, often monopolistic, represent high charges that can increase depending on the seasons, as some collection points become harder to access during wet seasons.
- Transport costs at the first-mile can make up to 20% of the total transport costs. This has a major impact on farmers who frequently participates in a 30-50% of product’s final commercial price.
First-mile challenges around aggregation capacities:
- It is often uneconomic for transporters/traders to collect produce from each individual farm, as small volumes are not efficiently consolidated. Traders then have to bring transport to each small farm in order to achieve sufficient product volumes.
- Farmers often lack infrastructure where they can assemble and consolidate their produce for collection.
- Low-cost solutions for collection points, such as roadside sheds, can function as brief produce stop-overs, but they are unable to extend shelf life. Because they cannot control temperature and ambient conditions, these solutions are unable to preserve quality.
- Limited capability to add value by the inexistence of appropriate facilities such pack-houses and warehouses that comply with food safety standards and quality, especially required by high-value markets such as export and supermarkets.
- Where present, cooling solutions at collection points are limited to containers retrofitted with expensive ‘gensets.’ Produce is stored here briefly before being taken to a pack-house or processing plant. Not always intermediate transport is refrigerated not allowing a constant cold chain management system.
- Fresh produce starts to deteriorate immediately following harvest. Extending shelf-life requires the rapid removal of field heat from freshly harvested produce, through pre-cooling. But this process is not always implemented. Produce often waits in ambient temperature at the field; and then is transported to a centralized cold room without pre-cooling facilities. Consequently, it takes a much longer time for cooling down the produce, and thus quality is lost.
The First-mile in small-scale agricultural supply chains needs to reach higher levels of efficiency. As has occurred with the last-mile, the first-mile needs to become faster, more efficient, safer, and more transparent. Companies operating in the first-mile can do this by leveraging operation’s real-time optimization and end-to-end visibility, with constant cost and quality control. Efficient operations must consider the following elements:
- Reduce transport costs by creating satellite collection points where products can be consolidated into viable volumes. Coordination with traders/transporters will help both sides achieve economies of scale. For example, load consolidation can occur at strategically located places along a road, buying posts or at bus and truck stop.
- Keep produce exposure to ambient conditions after harvest to a minimum by at least putting it under shade immediately. Also, it is important to introduce an immediate pre-cooling protocol to remove field heat and, in turn, maximize the shelf-life of produce.
- Reduce transport times and facilitate appropriate handling and packaging for mobilizing perishable produce with sufficient ventilation during the first hours after harvesting.
- Cold storage can provide temperature stabilization, humidity control, and appropriate ventilation for produce. There is also the possibility of introducing cold storage facilities with double functionality: pre-cooling and cooling components
- When possible introduce value-addition processes, such as removing soil and trimming excess material, sizing and grading, curing, bunching and weighing, packing and ripening. Food-safe on-farm facilities offer an option for performing these post-harvest activities closer to harvest, which will, in turn, reduce transport costs
- Introduce protocols for internal quality control during post-harvest processes, such as monitoring product conditions and time products are held at different temperatures. Identify critical points where efficiency and rapidness are required.