A “delicious” connection??

Our foods are distributed from the producers to us consumer via various routes. On these routes, there are many companies and individuals involved with the distribution operation, including those that we use directly such as farmer's markets, supermarkets, co-ops, and restaurants as well as wholesale markets, food manufacturer (in the case of processed food), agricultural cooperatives, and trading companies. Various problems related to food (such as false origin labeling and food poisoning) also occur on these distribution routes, many of which are caused by economic background and factors. What I mean is that if producers and consumers are connected in a “delicious” relationship, or a fair trade relationship that includes the distributors, the above problems should not occur. The subject of my research is to determine the ideal situation for the distribution of farm products and food to consumers.

 

Economic reasonability of multi-stage distribution structure

Taking fruit and vegetables as an example, a typical distribution route from producer to consumer is shown in Figure 1. There are four suppliers between the producer and the consumer. Of course there is the short route directly from the grower, and farmer's markets are becoming more widely accepted recently, but the mainstream is still the multi-stage distribution structure as shown in Figure 1. Why has this multi-stage distribution structure remained in Japan, a country with advanced logistics and information technology? The main reasons are the small scale and scattered character of production and consumption. The farmers responsible for agricultural production are still small in scale and geographically scattered. Furthermore, production is seasonal and products are not shipped continuously throughout the year. So how does the situation stand for consumers?

Fig. 1 Distribution route of fruit and vegetables Fig. 2 Auction of fruit and vegetables at wholesale market

Conversely, consumers are becoming smaller in scale. This is because of the trends towards nuclear families, more single households, and more “individual meals” (where those who live together eat different foods), are rapidly increasing. Therefore, from the producers' side, farm products supplied by farmers have to be collected and shipped together by the agricultural cooperative using large trucks. From the consumers' side, retailers such as supermarkets need to be de-centrally located near every house and sell vegetables or other food in small quantities that are not too much for one person. It is the wholesale market that connects these sides in the middle. Figure 2 shows an auction held every morning at a wholesale market. Large amounts of fruit and vegetable are brought into this market and smoothly priced with buyers in a short time.

So for what reason is direct selling from growers continued? The purpose is to revitalize interactions between producers and consumers and build up trusting relationships between them, and to ensure a stable supply of safe and reliable farm food. Even though it incurs higher distribution costs than those through wholesale markets, people deliberate select direct selling from growers.

 

Expand of farms directly managed by retail and food service companies

On the other hand, in the 2000s, retail companies and food-service chains, including supermarkets and convenience stores, began to deploy direct management farms on a nationwide scale. Figure 3 shows the distribution of directly-managed farms for one food service company and one retail company. Among these farms photograph of Kyushu farm of the retail company is shown in Figure 4. If supermarkets that sell farm products to us consumers or food-service chains that provide meals manage their own farms, the distribution route will be shortened. Is this expected to make the price of farm products drop dramatically? The answer is, of course, “No.” The circumstances farmers face (for example, the difficulty of expanding scale due to high price of farmland) are also true when companies engage in farming. Nevertheless, retail companies and food-service chains are positive about directly-managed farms, because they are aiming at regional contribution, improving the understanding of farm production, and building better partnerships with producers through this management.

Fig. 3 Directly-managed food-service and retail companies Fig. 4 Directly-managed farm of a retail company