Development of Tools for Planning and Coordinating the Production of Small Farmers as a Response to Market Opportunities

For multiple reasons, the consumption of fresh fruits and vegetables in the United States has progressively increased. This has resulted in increased domestic production and importation of these products. The associated logistics is complex due to the perishability of these products, and most current logistics systems rely on marketing and supply chains practices that result in high levels of food waste and limited offer diversity. For instance, given the lack of critical mass, small growers are conspicuously absent from mainstream distribution channels. One way to obtain these critical masses is using associative schemes such as co-ops. However, the success level of traditional associate schemes has been mixed at best. This dissertation develops decision support tools to facilitate the formation of coalitions of small growers in complementary production regions to act as a single-like supplier. Thus, this dissertation demonstrates the benefits and efficiency that could be achieved by these coalitions, presents a methodology to efficiently distribute the value of a new identified market opportunity among the growers participating in the coalition, and develops a negotiation framework between a buyer(s) and the agent representing the coalition that results in a prototype contract.There are four main areas of research contributions in this dissertation. The first is the development of optimization tools to allocate a market opportunity to potential production regions while considering consumer preferences for special denomination labels such as “local”, “organic”, etc. The second contribution is in the development of a stochastic optimization and revenue-distribution framework for the formation of coalitions of growers to maximize the captured value of a market opportunity. The framework considers the growers’ individual preferences and production characteristics (yields, resources, etc.) to develop supply contracts that entice their participation in the coalition. The third area is the development of a negotiation mechanism to design contracts between buyers and groups of growers considering the profit expectations and the variability of the future demand. The final contribution is the integration of these models and tools into a framework capable of transforming new market opportunities into implementable production plans and contractual agreement between the different supply chain participants.