Serving Local And Regional Markets In The Intermountain West: Identifying And Overcoming Constraints In A Vast Geography Grant uri icon

Overview

abstract

  • NON-TECHNICAL SUMMARY: This project will conduct research to develop optimized strategies for small and medium-sized producers in Idaho to access local and regional markets. Through a survey of restaurants and grocery stores, we will estimate how consumer demand for local and regional products manifests in demand at restaurants and grocery stores. This effort will also estimate the market size for vegetable and livestock products, including the market for local and regional products and factors that influence demand for such products. A second research component will conduct supply-chain analysis to identify optimized strategies for aggregation, storage, processing and distribution for small and medium-sized farmers to access local and regional markets. A third effort will develop a geo-spatial database and model to determine the optimal spatial allocation of crop and livestock production based on the market-demand structure and supply chain configuration. This research will help small and medium-sized farmers make better strategic and operational decisions in terms of market positioning, supply-chain strategy, pricing, and benefits of collaboration with other producers. Outreach components will integrate research findings into education materials and training efforts as part of the University of Idaho Extension Small Farms Program. A workshop will be delivered to those involved in community, regional and state-level food-systems economic development, including Extension faculty and educators, community and state staff and policy makers, economic development professionals, producer and communities groups and others engaged in economic and community development. A second producer-specific training day will focus on preparing for entering new markets.

    OBJECTIVES: Goals for the project include research, extension, and capacity building:To identify through research the information needed to determine the feasibility of strategies for developing vegetable and livestock-product supply chains for local and regional markets.To increase the skills, ability and success of small and medium-sized producers to optimize their operational and marketing strategies.To increase capacity at the University of Idaho (UI) and in the many local efforts around the state to engage in developing local and regional markets, processing infrastructure, cooperatives and other related economic-development activities.Specific Research ObjectivesTo determine restaurant and retail-market size and characteristics, including demand for local and regional vegetables and livestock products.To determine optimal supply-chain configurations for small and medium-sized farmers to access local and regional markets.Develop demand thresholds and ranges for understanding how large of an area is needed to provide sufficient demand to support food-systems infrastructure development.Identify best strategies, appropriate locations and scales of operation for aggregating, processing, storing and distributing vegetable and livestock products in Idaho.Describe strategies for optimal spatial allocation of agricultural production based on the market-demand structure and geographical conditions.Determine the economic impacts of alternative scenarios of vegetable and livestock production and expansion on sub-regions and on Idaho economies.Specific Extension and Outreach ObjectivesIncrease producers' skills, knowledge and success in accessing local and regional markets.Increase effectiveness of those involved with food-systems economic-development activities in determining the feasibility and prioritization of activities to develop supply-chain infrastructure to increase access to local and regional markets.Capacity-building ObjectivesIncrease collaboration between UI Extension programs around the state and UI researchers in Agricultural Economics, Business and Geography.Update and build upon previous UI Extension programs to address needs identified in past evaluation, research and other sources.

    APPROACH: Market-analysis MethodsThe market-analysis research component will use Choice Experiment Methodology and Survey Design to quantify and characterize restaurant and retail markets for local and regional vegetable and livestock products. Focus groups will aid in determining the appropriate number of attributes and wording of survey questions. Survey pretests will be conducted to aid in developing and testing the surveys. Survey design will include significant pre- and post-testing, including verbal-protocol analysis (Schkade and Payne, 1994).Survey Implementation, Format, and SamplingSurveys will be conducted by using a phone-to-web survey method in the three primary locations of interest. Among the various methods of surveying (in-person, mail, telephone and web), the choice of phone-to-web survey was determined to be most efficient and cost-effective to address the objectives of this project. Restaurant buyers are very busy people, and for this reason, they are unlikely to respond to mail surveys. The geographic distribution of the survey area makes in-person surveying cost prohibitive. The number of attributes being studied will likely result in questions too complex to present in a telephone survey. Thus, we believe that a phone-to-web survey method will increase the response rate from busy restaurant buyers and maximize efficiency and cost-effectiveness.We intend to collect at least 60 completed surveys of restaurant and retail buyers in each of the three project regions, giving us a total of 180 completed surveys for the project. Randomization procedures will be designed to ensure that surveys are implemented over a random sample of buyers at each geographic location, with the intent to oversample current buyers of locally-produced products to ensure sufficient number of observations. Survey implementation will be done by the Social Science Research Unit of the University of Idaho.Conjoint Models will be used to construct the survey design. To implement the survey design, we will use a choose-one structure for choice-experiment questions. The choose-one format has a strong justification in neoclassical economic theory - particularly with regard to unconditional willingness-to-pay estimation.Supply-chain Optimization MethodsTo address the identified project-research questions, we will use business analytics and mathematical optimization models to analyze various factors associated with distribution-strategy design. Factors such as distance, population density, infrastructure, demand range and demand threshold will all be incorporated in the model design. Mathematical optimization is the selection of a best element (with regard to some criteria) from some collection of available alternatives. Simply put, an optimization problem consists of maximizing or minimizing an objective (such as revenue, profit, or cost) by systematically choosing input values (such as distribution mix and distribution routes) from all allowed values, and computing the value of the objective. More generally, optimization includes finding "best available"" values of some objective function given defined problem settings. This methodology will afford us the opportunity to do extensive "what-if" analysis while simultaneously changing multiple factors.Spatial-allocation Analysis MethodsThe spatial-allocation analysis will use the von Thunen approach to build on the data and analyses provided through the market research and the delineation of optimized supply-chain scenarios to focus on identifying recommendations for optimal locations for vegetables and livestock production. This sub-team will construct a spatial geo-database incorporating necessary spatial information such as market location and size, farm-production locations, and the transportation structure/system to assess land rent/bid rent and agricultural-production possibilities (Fujita and Thisse, 2002). The geo-database will be constructed on a standard ArcGIS 10 platform using readily available data sources from a variety of government sources such as Inside Idaho (State of Idaho GIS), Idaho Department of Transportation (IDOT), and Idaho Department of Lands. Specific data layers will include land use (using existing classifications or derived classifications from NAIP imagery ; 1-m resolution), transportation network, location of farms and urban places, a digital-elevation model, and river/stream and bodies-of-water layers.The evaluation of regional hierarchies will be determined from the demand profiles from the market research and economic base analysis. Our supply-chain optimization research will provide inputs into the transportation and production-cost assessments. Spatial demand will provide a framework for measuring market areas and spatial competition. Market hierarchy will be evaluated through a structured analysis of the order of demand and services at different market centers using a log-linear framework (i.e., rank-size rule/Zipf's law (Berry and Parr, 1988; Christaller, 1966; Isard, 1956). Central place/market hierarchies will also be evaluated by means of time and distance analyses that directly assess market spacing (Skinner, 1965; Griffin, 1973).We will extend the spatial market analysis with explicit spatial analysis that takes local effects into account for the market hierarchy. For this purpose, we will use semi-parametric statistical models of agricultural bid rent that simulate both regional and local effects using geographically-weighted regression that can calibrate the model using kernel-weighted least squares without violating patterns of agricultural productivity non-stationarity (Fotheringham et. al., 2002; Nakaya et. al., 2009).Economic Impacts Assessment MethodsEconomic impacts will be estimated using a social-accounting matrix (SAM) input/output methodology. This project will develop an economic model for the study area using IMPLAN. The project will create an economic profile, which identifies the contributions of different state sectors and sub-regional economies. This profile will reflect the actual sales, value added, wages, jobs, unemployment, income distribution, and other measures of economic activity in each sector of the economy. Finally, a simulation will be conducted to estimate the economic impacts of optimized production and supply-chain scenarios.Extension MethodsPre and post surveys will be used to evaluate extension activities. An event evaluation will be used at each event, and a survey of all training attendees will be conducted at the end of the project to capture actual training outcomes. Evaluation activities will be use to document project success and to refine future program activities.

date/time interval

  • April 1, 2014 - March 31, 2017

geographic focus

total award amount

  • $500,000

geographic focus

  • Idaho  State Or Province

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