Locational Advantage and the Impact of Scale: Comparing Local and Conventional Fruit and Vegetable Transportation Efficiencies

Fresh produce in the United States often travels thousands of miles in diesel operated semi-trucks before arriving to market. Under a high fuel cost scenario, the current low-cost, efficient supply chain could become a high cost organizational structure for US food distribution. Rising transportation costs of food sourced from distant locations may provide competitive opportunities for small- and mid-sized local producers if transportation costs are a smaller portion of their total costs. Farmers selling fresh produce in east Tennessee farmer markets are surveyed to obtain baseline information on their transportation energy use to deliver their products to market. Local farmer energy use is compared to three conventional transportation scenarios for fruits and vegetables grown in California, Texas, and Florida. Farmers within 25 miles of the market tend to have lower transportation fuel use per unit (g/cwt.) than the three conventional scenarios. However, farmers located farther from market often have inflated g/cwt. estimates due to small truckloads and low vehicle fuel economies.

An ordinary least squares (OLS) regression of local farmer truckload weights finds that by scaling-up their production and distribution, farmers can improve their transportation efficiencies. Using location theory as a framework, the OLS results are implemented in a sensitivity analysis that illustrates how local farmers’ locational advantage in transportation varies with their production and distribution scales. Follow-up cluster analysis indicates that differences in scale quite accurately characterize the surveyed local farmers, and that the size of farmers’ production, distribution, and marketing operations increases with their travel distance to market.

Local producers transporting their products more efficiently than the conventional system are better prepared to respond to high energy prices because either their production and distribution scales are large, or they are sufficiently close to market. While farmers selling fruits and vegetables in local markets may be profitable due to the higher prices received for a differentiated product, improving in the area of transportation allows the local food network to take advantage of their proximity to consumer markets. A comparative analysis of conventional and local farmer transportation energy consumption indicates the robustness of the local food system in east Tennessee.