IJOER-NOV-2016-25

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slide 1: International Journal of Engineering Research Science IJOER ISSN: 2395-6992 Vol-2 Issue-12 December- 2016 Page | 35 Small Farm Agrifood Supply Chains and Sustainable Food Security in the Developed World: A System Dynamics Methodology Christos Keramydas 1 Naoum Tsolakis 2 Dimitrios Aidonis 3 1 Department of Mechanical Engineering Aristotle University of Thessaloniki Thessaloniki Greece 2 Centre for International Manufacturing Institute for Manufacturing IFM Department of Engineering University of Cambridge Cambridge CB3 0FS United Kingdom 3 Department of Logistics Technological Educational Institute of Central Macedonia Katerini Greece Abstract — The aim of the present research is to enhance food security and sustainability in developed countries through providing a simulation tool for supporting the impact assessment of interventionary policies for the support of smallholdings’ farming. To this effect we first discuss the role of small farms towards ensuring food security and sustainability in the developed world. Following the System Dynamics methodology is employed to explore the effect of interventions on the diffusion of small farms’ cultivated commodities to the specific Greek food market. Following a simulation modelling tool is developed that specifically captures four external factors affecting the adoption rate of the refereed agrifood products namely: i consumers’ environmental awareness ii social implications iii economic incentives and iv health and nutrition consciousness. The simulation results suggest that policy interventions that could play a critical role in ensuring food security and sustainable development in developed nations should mainly focus on the increase of advertising expenditure in promoting small-scale farming and locally cultivated products on consumers’ training and education and on subsidies of investments in smallholdings. Keywords — Agrifood Supply Chains Food Security and Sustainability Simulation Small Farms System Dynamics. I. INTRODUCTION Food security and sustainable agricultural development emerge as key challenges to all nations 1 2. Projections about a global population growth to 9.1 billion by 2050 and a corresponding increase in food demand by 70 3 in tandem with climate change temperature rise and rainfall fluctuation 4 formulate a gamut of factors that position the food insecurity challenge at a prominent position in the international policy and research agenda. Nevertheless evidence in the extant literature suggest that the actual concern does not apply to the increase of food production capacity by 70 within the forthcoming 40 years but rather lies within the capability to configure efficient agrifood supply chains to increase households’ accessibility to food commodities by 70 3 and to meet the diverse dietary habits in the developed world 5. Notwithstanding the extensive research on agrifood production and distribution systems several figures justify the fact that food security concerns still predominate in public debates both in developing countries and developed nations. For example estimations indicate that nearly 870 million people around the world suffer from undernourishment or chronic hunger 6 while contemporarily around 2 billion people suffer from micronutrient insufficiency or hidden hunger 7 and approximately 500 million people suffer from obesity 8. Furthermore specific incidents appear to have a detrimental impact on the food availability and supply stability in industrialized nations 9 like the: i sudden and sharp increase in world food prices in 2007–2008 ii increased use of agricultural land for bioenergy crops iii strict trade regulations and political uncertainty and iv rapidly growing food demand in China and India. To that end small farms SFs or smallholdings are suggested as a feasible approach tackle the developed world’s food security and sustainability challenges 10. This is further accentuated by the ongoing funding schemes of the European Union to support research initiatives for the development of short food supply chains and local food systems in the Community 11. In addition the European Union recognizes the significance of SFs in food and nutrition security and has already approved funds to support the development of smallholdings and related food business landscapes 12. Europe hosts around 14 million farms with the SFs to account for 2.5 of the total used agricultural area 13. Nevertheless around 3 million farms in Europe about 20 of the total number of farms have disappeared during the last eight years mainly SFs 10. However smallholdings could stimulate local business and job creation 14 while they have been found to reduce poverty gap more intensively than other sectors 15. Additionally SFs are reported to promote welfare through slide 2: International Journal of Engineering Research Science IJOER ISSN: 2395-6992 Vol-2 Issue-12 December- 2016 Page | 36 effective nutrition intake 16 and are also documented to be more resource-efficient and productive per hectare compared to large-scale plantations 17. However the assessment of the SFs’ appeal on food markets in the developed world lacks a comprehensive system perspective. Such a quantitative model would be of great interest to policy-makers and enterprises in order to devise effective regulations and interventions towards the development of SFs while harnessing related economic environmental and social sustainability benefits. In this work the market diffusion of agricultural commodities produced in SFs is particularly addressed. The objective of this study is two-fold: i to develop a policy-making support tool at the strategic level and ii to identify and assess interventions that could support the role of SFs for ensuring food security and sustainability in developed countries. The rest of the paper is organized as follows. In Section 2 major sustainability challenges that highlight the significance of SFs towards ensuring food security are discussed. Following in Section 3 a System Dynamics SD modeling framework is developed for managing the consumers’ adoption of agricultural commodities cultivated in SFs through incorporating an extension of the Bass diffusion model. The application of the proposed framework is further illustrated on the real-world case study of Greece while interesting policy-making interventions are also analyzed. Finally in Section 4 conclusions and suggested future research avenues are discoursed. II. FOOD SECURITY AND SMALL FARMS: A DEVELOPED WORLD ’S PERSPECTIVE Research and empirical evidence emphasizing food security related solutions in developing countries along with policy interventions to foster the sustainability transition in the respective agricultural systems is rather overwhelming. On the contrary food security concerns have been insufficiently tackled for the case of developed countries with stakeholders often neglecting the economic environmental and social challenges stimulating this phenomenon. In the develop world the continuously rising food prices along with the low economic recovery rates from the recent financial recession highlight potential food insecurity implications 18. Particularly consumers in Europe spend one fifth of their income on food supplies thus further deepening social inequality in the region 19. In addition Europe is reported as being food insufficient implying that policy-makers for rural development need to promote the domestic production of protein crops at the expense of other arable crops 20. Moreover in Europe a 2 decrease in total agricultural output has been observed during the last decade 21 while in the United States a 20 decline in farm holdings is reported 22. From an environmental perspective climate change combined with loss of biodiversity water scarcity soil erosion and depletion are expected to reduce agricultural yield by at least 5-25 by 2050 23. Additionally every year 1.3 billion tons of foods are wasted globally while in the industrialized world over 40 of food wastage occurs at the retail and consumer levels of the agrifood supply chains 24. Moreover in the developed nations live about 15.7 million people who suffer from chronic hunger and undernourishment 6. Notably an alarming increase by 15.7 since 1990 on the total rate of chronic hunger and undernourishment in developed countries is reported 6. Obesity almost doubled between 1980 and 2008 globally and in Europe nearly 50 of both men and women are overweight 25. Statistical figures also highlight that in Europe around 1 in 3 of 11-year-old children are overweight 18. Furthermore the ageing population in Europe 26 is associated with the increased trend towards a diet rich in carbohydrates and animal protein 21. In view of the aforementioned challenges a radical transformation to promote sustainable agricultural intensification is required 27. To that end the need to enhance the role of smallholders’ farming towards food production and natural resource stewardship is critical. In this vein sustainability implications of SFs are closely related to food security as smallholdings promote well-being through effective nutrition intake 16. Indicatively the issue of seasonal hunger patterns is documented to have been tackled by implementing governmental projects to foster the development of smallholding cooperatives. Additionally small-scale farming in mountainous Norway contributes to the agricultural viability through promoting farm revenues and food security 28. III. SYSTEM DYNAMICS FRAMEWORK In this section a novel modeling approach for managing the diffusion of commodities produced in SFs is developed merging: i the theory of new product diffusion adapted from the field of marketing and ii the theory of SD which has a proven track record for tackling strategic decision-making problems. The main goals of the model are to a study the adoption of SFs products by consumers b predict the SFs evolution during a given time horizon and c evaluate the impact of alternative policy interventions on SFs. slide 3: International Journal of Engineering Research Science IJOER ISSN: 2395-6992 Vol-2 Issue-12 December- 2016 Page | 37 The model is based on an extension of the Bass Diffusion Equation 29: where Nt is the cumulative number of SFs products′ consumers adopters in a specific geographical region at time t dN/dt is the rate of change for the SFs products’ consumers adopters at time t m stands for the sum of potential consumers fraction of regional or national population p is the coefficient of innovation q is the coefficient of imitation and xt is an general intervention function that describes the current effect of the time-dependent external decision variables on the probability of SFs product consumption at time t. Fig. 1 presents a simplified conceptual model of the system under study. The input parameters include the innovation and imitation factors p and q that represent the corresponding trends for the first time consumers innovators of SFs products and the word-of-mouth effect i.e. consumers that purchase the product after being influenced by previous adopters imitators respectively. Moreover the utilized agricultural area UAA that refers to the land used for farming in a given region is used as a measure of the aggregate large and small farms’ size while the standard gross margin SGM that is the difference between the value of the agricultural output crops or livestock and the cost of inputs required to produce that output is used as a measure of the economic size of the agricultural holdings. The labor force employed in these farms is also an input parameter as well as the productivity factor α that express the ratio of small farms to large farms productivity. Finally the total population of a given region P and the target population i.e. the total market size/sum of potential consumers are also critical inputs for the diffusion model. The data regarding the aforementioned input parameters were obtained through Eurostat FAO and similar systems. The outcome variables of the model which stand as the system’s key performance and monitoring indicators are the total employees in small farms and the total profit of small farms across the region under study. The model was applied in the case of Greece. The preliminary results Fig. 2 indicate the positive future potential of small- scale farming in terms of employment total SFs employees and profits total SFs profits. Indicatively given that no intervention is applied to accelerate the SFs products market diffusion the total number of SFs’ employees and the total SFs’ profits are estimated to rise by 45 and 30 respectively within 20 years. This auspicious prospect could be further accelerated through appropriate interventions on the part of governments and smallholders in order to influence consumers’ behavior regarding SFs products. Potential Small Farm Products Consumers Small Farm Products Consumers Adoption as Innovators Adoption as Imitators External Interventions Environmental Awareness Social Awareness Economic Incentives Health and Nutrition B R Word-of- mouth Market Saturation Small Farm Products Production Small Farm Total Employees Small Farms Total Profit + + + + + + + + + + + + FIGURE 1. CONCEPTUAL MODEL OF THE SYSTEM UNDER STUDY. Towards this direction and motivated by the EU’s recognition of the need to enhance the role of SFs towards safeguarding sustainable development and food security across Europe the proposed model allows for the simulated implementation monitoring and evaluation of a set of real-world policy-making interventions on the SFs products’ diffusion rate through the slide 4: International Journal of Engineering Research Science IJOER ISSN: 2395-6992 Vol-2 Issue-12 December- 2016 Page | 38 general intervention function xt. The scope of these policy-making actions is to increase the rate of consumption of agricultural products cultivated in SFs and consequently increase the SFs’ market share in the developed countries. Specifically four external factors that affect the adoption rate of SFs products in the Greek food market were identified: i environmental awareness ii social awareness iii economic incentives and iv health and nutrition awareness. Indicative policy-making actions towards the direction of developing SFs products’ production and consumption include the increase of advertising expenditure in promoting the sustainability aspect of small-scale farming products and farming practices environmental awareness the market promotion of local products related training and/or educational interventions the promotion of healthy food as a critical component of wellbeing social awareness – health and nutrition and the subsidy of investments in agriculture new farmers economic incentives. FIGURE 2. TOTAL EMPLOYEES AND TOTAL PROFIT EVOLUTION SMALL FARMS. IV. CONCLUSIONS Food security has a multidisciplinary nature and it is an important issue not only for the developing world but also in the developed countries. The prevailing farming practices are unsustainable. Small Farms could play a critical role in Food Supply Chains ensuring Food Security and Sustainable development at the same time. The operation of food markets is quite complex and perhaps the mainly social and environmental merit of a small-scale agricultural production is not enough to build momentum for increase the number of small farms. Thus national and international governance with selected interventions may have a key role. To this end this paper provides a new quantitative policy-making support tool based on System Dynamics methodology which has been used for the Greek food market. This is a first time effort and there is space for improvements. Future research directions include further validation and verification of the System Dynamics model based upon data from FAO and Eurostat the examination of alternative diffusion models the development of a multi-level model incorporating all the EU-27 countries and different agricultural products on a single-product basis i.e. cereals nuts wheat etc.. REFERENCES 1 A. Q. Al-Amin and F. Ahmed “Food security challenge of climate change: An analysis for policy selection” Futures vol. 83 pp. 50- 63 October 2016. 2 United Nations World Economic and Social Survey 2013: Sustainable Development Challenges Department of Economic and Social Affairs of the United Nations Secretariat: New York 2013. 3 FAO How to Feed the World in 2050 Food and Agriculture Organization of the United Nations: Rome 2009. 4 A. Borch and U. Kjærnes “Food security and food insecurity in Europe: An analysis of the academic discourse 1975–2013” Appetite vol. 103 pp. 137-147 August 2016. 5 B.-H. Lin M. Ver Ploeg P. Kasteridis and S. T. Yen “The roles of food prices and food access in determining food purchases of low-income households” J. Policy Model. vol. 36 pp. 938-952 September–October 2014. 6 FAO The State of Food Insecurity in the World – The multiple dimensions of food security Food and Agriculture Organization of the United Nations: Rome 2013. 7 FAO The State of Food Insecurity in the World – Undernourishment around the world Food and Agriculture Organization of the United Nations: Rome 2012. 8 WHO Global Status Report on Noncommunicable Diseases 2010 World Health Organization: Geneva 2011. 9 L. J. Hubbard and C. Hubbard “Food security in the United Kingdom: External supply risks” Food Policy vol. 43 pp. 142-147 December 2013. slide 5: International Journal of Engineering Research Science IJOER ISSN: 2395-6992 Vol-2 Issue-12 December- 2016 Page | 39 10 Eurovia Land Concentration Land Grabbing and People’s Struggles in Europe European Coordination Via Campesina: Brussels 2013. 11 EAFRD Short Food Supply Chains and Local Food Systems in the EU. A State of Play of their Socio-Economic Characteristics European Agricultural Fund for Rural Development: Seville 2013. 12 European Commission Sustainable Food Security H2020-SFS-2015-2 – Small Farms but Global Markets: The Role of Small and Family Farms in Food and Nutrition Security European Commission: Brussels 2013. 13 European Union EU Farm Economics 2012 European Commission Directorate-General for Agriculture and Rural Development: Brussels 2013. 14 X. Diao P. Hazell D. Resnick and J. Thurlow. The Role of Agriculture in Development: Implications for sub-Saharan Africa – IFPRI Research Report No. 153 International Food Policy Research Institute: Washington D.C. 2007. 15 L. Christiaensen L. Demery and J. Kuhl “The evolving role of agriculture in poverty reduction – An empirical perspective” J. Dev. Econ. vol. 96 2011 pp. 239-254 November 2011. 16 M. Faber and F. Wenhold “Nutrition in contemporary South Africa” Water SA vol. 33 pp. 393-400 2007. 17 S. M. Borras C. Kay and A. H. Akram-Lodhi “Agrarian reform and rural development: Historical overview and current issues”. In A. H. Akram-Lodhi S. M. Borras Jr and C. Kay Land poverty and livelihoods in an era of globalization: Routledge London and New York 2007 pp. 1-40. 18 A. Mohseni-Cheraghlou “The aftermath of financial crises: A look on human and social wellbeing” World Dev. vol. 87 pp. 88-106 November 2016. 19 FAO The State of Food Insecurity in the World – How Does International Price Volatility Affect Domestic Economies and Food Security Food and Agriculture Organization of the United Nations: Rome 2011. 20 S. Noleppa and M. Cartsburg Agricultural Self-sufficiency of the European Union: Statistical evidence Agripol – network for policy advice GbR: Berlin 2013. 21 R. Floyd Food Security in Europe in the Age of Global Climatic Change International Relations and Security Network Center for Security Studies ETH Zurich: Switzerland 2014. 22 R. A. Hoppe J. M. MacDonald and P. Korb Small Farms in the United States: Persistence Under Pressure United States Department of Agriculture Washington D.C. 2010. 23 C. Dimitri A. Effland and N. Conklin The 20 th Century Transformation of U.S. Agriculture and Farm Policy United States Department of Agriculture: Washington D.C. 2005. 24 D. Gunders Wasted: How America Is Losing Up to 40 Percent of Its Food from Farm to Fork to Landfill Natural Resources Defense Council: New York 2012. 25 WHO World Health Statistics 2008 World Health Organization: Geneva 2008. 26 Eurobarometer Special Eurobarometer 378 – Active Ageing European Commission: Luxembourg 2012. 27 UNEP/IFAD Smallholders Food Security and the Environment United Nations Environment Programme/International Fund for Agricultural Development: Kenya/Rome 2013. 28 K. Rønningen B. E. Flø. G.A. Olsson S. K. Hanssen and S. When Sustainability Assessment of Agro-eco-systems and Rural Development in Mountain Areas Scenarios for Eastern Jotunheimen Report 9/05 Centre for Rural Research: Trondheim 2005. 29 F. Bass T. Krishnan and D. Jain “Why the bass model fits without decision variables” Mark Sci vol. 133 pp. 203-223 1994.

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