A strong distribution chain and product acceptance are necessary to sustain a broccoli industry in the eastern U.S. The economic component of this project seeks to 1) identify cost-efficient supply chain structures to bring broccoli from the farm gate to the retail store; and 2) assess retail and consumer acceptance and willingness to buy eastern broccoli.
Crop Budgets for eastern broccoli: In the first year of this project, Dr. Miguel Gómez and graduate student Shadi Atallah developed crop budgets for broccoli production in five eastern growing regions (Maine, New York, Virginia, North Carolina, and South Carolina) plus California. Crop budgets detail production costs and revenue streams and are used to assess farm gate price scenarios for growers in a particular region. Prior to the start of this project, crop budgets for broccoli production in the eastern U.S. were outdated or nonexistent.
Profitability analysis revealed that, despite wide variation in the costs of individual components, the overall cost to produce broccoli is very similar in the five eastern growing areas and California. Post-harvest costs are thus a key factor in determining the profitability of broccoli production in the eastern U.S.
Transshipment model for broccoli: A transshipment model has been developed to identify cost-effective distribution structures to deliver eastern broccoli from the farm gate to the retail store. The model solves for cost-minimizing seasonal flows and volumes of broccoli, given production zones, consumption centers, and production costs. Variations of the model incorporate constraints on localization (shipping mileage) and greenhouse gas emissions. Sensitivity analysis is underway to analyze the impact of changes in key parameters such as fuel prices, land availability, and post-harvest costs.
Price transmission and market power in the broccoli supply chain
A database covering a five-year period of weekly prices at shipment locations and at terminal markets has been compiled. The information will be used to conduct a spatiotemporal price analysis that will improve our understanding of pricing behaviors of supply chain participants as eastern regions increase their broccoli supply. In particular, the analysis will take into account the effects of market power to determine whether markets are well integrated or show evidence of inefficiencies.