Proceedings of the CLTT Symposium

Gulfport, MS, USA, February 26-27, 2014

Resilient regional supply chains for sustainably-grown food

Michelle Miller
College of Agricultural and Life Sciences
Center for Integrated Agricultural Systems
University of Wisconsin-Madison
1535 Observatory Drive, Madison, WI 53706 USA

Abstract
Market pull for local food, especially the pull from metro areas, is creating new small business opportunities for logistics and
transportation at a regional level. Complex Adaptive Systems theory provides a framework for developing regional food
supply chains. First/last mile challenges, market differentiation, multi-modal transportation options, and differential
vulnerability of metro regions to freight disruptions are a few of the issues on the table in the Upper Midwest. Public and
private institutions that are not directly conducting business may support the emergence of complex adaptive systems to
encourage regional small business development and the logistics necessary to build regional values-based food supply chains.
Keywords: sustainable agriculture, regional food supply chains, Complex Adaptive Systems
1. Introduction
Weve all experienced it poor system design. And when a system starts to break down, problems often multiply and
cascade. Food systems are no exception. We see food system failures in the increasing rates of obesity and diabetes,
antibiotic resistance, food insecurity, food safety scares, difficulty accessing healthy food in rural and inner city communities,
excessive food and packaging waste, and in the environmental problems associated with agriculture, such as hypoxia in the
Gulf of Mexico, and ubiquitous ground water contamination. In addition to these shortcomings, the current food system is
dependent on low cost fuel for transportation, predictable growing seasons, and inexpensive labor.
As fuel costs rose over the last few decades, weve seen an increase in sector reorganization of production, processing,
warehousing and retailing to restore efficiencies to the supply chain. Vertical integration emerged, in part, as a way to
increase agreement between supply chain functions, with implications for small and locally-owned businesses that form the
backbone of rural communities and small towns. Farmers, meanwhile, report an increase in extreme weather, with serious
consequences to crop production. Major coastal storms hitting the Gulf, the Pacific Northwest, and the Atlantic states impact
food production and distribution, with consequences rippling out globally. These mega storms may overshadow less severe
extreme weather, yet these less obvious extremes also impact the food supply chain. For instance, apple growers east of the
Upper Mississippi River lost most of the 2012 crop. Wisconsin, Michigan, and New York were heavily hit. The talk between
growers was that it could have been the early spring followed by frost that damaged the trees or prevented pollination
because the trees were out of sync with pollinators, or it may have been the J anuary thaw that rendered the flowers sterile.
Apples didnt make their way to food pantries, as was commonplace in other years. Grocers, too, notice that extreme weather
is impacting their supply chains, and as drought in the Colorado River Basin drags on, agriculture interests must negotiate
with five major cities to retain water rights critical to growing food in the desert. Labor shortages in agriculture are becoming
increasingly problematic as the nation debates immigration reform and people continue to leave rural areas in hopes of
economic opportunity in metro regions. Food system shortcomings and vulnerabilities point to a need for systemic change.
Rather than ignore these indicators that system re-design is in order, many actors are increasingly proactive [1]. Farmers are
developing ways to raise food more sustainably in response to environmental, economic and social pressures. Biomimicry
and diversity are important components of developing sustainable farming systems, so farmers look to natural systems for
inspiration. Grassland ecology, landscape restoration, agroforestry, and breeding programs are instrumental in developing a
more sustainable agriculture [2,3]. System redundancy in this case, sourcing food from diverse locations - is a critical
element of resiliency. Retailers are starting to source product from a diversity of sources and geographic regions, including
closer to home, creating supply webs rather than chains. The Farm-to-School movement continues to grow and thrive, despite
the significant challenges actors face to accommodate local, often raw, product into established food service procedures [4].
This national movement links local farmers and their fresh product to school cafeterias while providing healthy food
education in the classroom through school gardens, taste testing, and other curriculum innovations. While classroom and field
Proceedings of the CLTT Symposium
Gulfport, MS, USA, February 26-27, 2014

education on healthy food choices is relatively easy to incorporate, food service professionals face formidable obstacles when
contending with limited budgets, unprocessed food, labor shortages and aging commissaries.
The grocery industry recognizes that consumer demand for local food is strong and showing no signs of slowing. Industry
publications note the rise in farmers markets, organic food purchases, the demand for food from local farms, a desire for
authentic food, and support for regional economies [5, 6]. As more consumers choose to purchase local food, independent
grocers, vertically integrated chains, and food service are seeking ways to enter this market in an authentic way. Farmers,
especially mid-career family farmers, want to connect with these consumers through wholesale markets while retaining added
value to their wholesale products through organic certification, branding artisan processing or by marketing their farm [8]. To
connect these famers to consumers through longer supply chains, however, requires supply chain development at a regional
level that will impact transportation infrastructure over the long run and require a re-scaling of logistics tools.
From disciplines as diverse as Operations Management and Community Psychology, there is recognition that systems change
is difficult to plan, but change is something that can emerge when conditions are favorable [9-12]. When there is a high level
of agreement and high certainty, systems evolve very slowly and methodically. When there is low agreement and low
certainty, the environment is chaotic and unorganized. Complex Adaptive Systems (CAS) self-emerge when there is high
agreement and low certainty, such as our experience during times of crisis, or low agreement and high certainty.

Figure one: Complex Adaptive Systems (CAS)
As uncertainty increases, it is possible to support the emergence of CAS through interventions that encourage and reward
cooperation along the supply chain or through continued interventions that lower risk associated with uncertainty (such as
federal commodity, conservation, and water subsidies programs). Both approaches can be used simultaneously. Systemic
interventions that encourage big picture thinking are highly effective at optimizing the emergence of complex systems.
Encouraging a cycle of observation modeling application observation, forest thinking and other systems thinking
strategies may empower people to recognize new approaches as they emerge and incorporate creative strategies into the
managing resources under their control [13]. Creating a space for novel response enables unforeseeable innovation to occur
and invests participants in their own success and that of the larger group.
Now is such a time in need of complex adaptive systems. Farmers, faced with increasing production uncertainty, are looking
for supply chain partners who share their values on environmental protection, animal husbandry, community development,
taste, and fair trade [8]. A growing consumer segment seeks products that reflect these environmental, social and economic
Proceedings of the CLTT Symposium
Gulfport, MS, USA, February 26-27, 2014

values. Who are the logistical partners who can make the connections necessary for regional values-based food supply chains
to work well?
2. Methods
The University of Wisconsin Center for Integrated Agricultural Systems (CIAS) is the sustainable agriculture research center
at the UWs College of Agricultural and Life Sciences [14]. For 25 years, weve engaged a Citizens Advisory Council,
composed primarily of farmers, to inform the Centers work on sustainable agriculture. Faculty associates and staff develop
research projects based on farmer observations, needs, and insight. CIAS has expertise in case studies on emerging regional
supply chains through our work on mid-scale agriculture [15], scaling up food production from direct markets to wholesale
[16], local food transportation [17, 18], and supply chain development [19]. As part of our commitment to participatory
research, weve sought to create conditions where Complex Adaptive Systems can emerge in response to a need for greater
agreement, especially when there is high uncertainty, such as with supply chains for new products. The Center meets
formally and informally with small to mid-scale farmers and regional food supply chain participants to ascertain where
agreement could be strengthened or where uncertainties could be mitigated. Most recently we organized and hosted a
regional conference on transportation and local food as part of a Cooperative Agreement with USDA [20]. The primary intent
of this meeting was to support the emergence of CAS.
Networking Across the Supply Chain brought together over 100 leaders in regional food supply chain development and
implementation. We focused the discussion to the Upper Midwest region, where the major metro markets are Chicago land
and the Twin Cities. This region represents about 21 million people, and at least four distinct growing regions.
Representatives from dairy, meat, fresh and processed product supply chains participated. We organized four panels
farmers, distributors, retailers, and a panel of academics who summarized the issues in play throughout the meeting. After
each panel, we organized conversation around tables to discuss issues in more detail. We maximized networking time to
ensure that informal conversations were allowed to develop, and potentially lead to new business relationships.
The purpose of the meeting was to create a space where supply chain participants could reach a higher level of agreement
necessary to strengthen regional food supply chains. The overwhelming response to the meeting was positive. Participants
indicated that they learned a lot listening to the challenges and opportunities across the full supply chain, that they made new
business contacts, and that the networking time was extremely valuable.
3. Conversations on regional food supply chains
Pulling together leaders across the full gamut of the regional, sustainable supply chain allowed a number of conversations to
emerge that suggest potential opportunities to rethink food freight, as food provisioning evolves in uncertain times. Six key
issues can be synthesized from the meeting discussions.
What do consumers want? Market demand, or farmer / consumer agreement is driving food system change, so the central
conversation at our meeting revolved around defining consumer demand for local. Participants began to reach agreement that
local is a relative term. Consumers in metro areas consider local to mean the regional production areas surrounding the
metro region, while more rural consumers think of local as the product from farmers that they personally know, who sell at
farmers market, or whom they know through other community relationships. Proximity has become a proxy for a
constellation of desirable attributes, including sustainability, authentic, fresh, healthy, fair trade, community,
organic, grass fed, among others. These attributes add value to products only if they are effectively attached to the
product along the entire supply chain. Communicating these attributes to consumers through branding, certification, and
merchandizing is a real challenge, especially if products are not available in quantities to which large retail chains have
become accustomed.
Why are markets different in different cities? Participants questioned why Minneapolis has a history of provisioning food
regionally while Chicago does not. As a warehousing and freight hub, Chicago has a greater reliance on a national and global
food system. What does this mean for metro regions should fuel prices continue to rise, extreme weather challenges to
agriculture and infrastructure continue or intensify, or labor shortages lead to reduced harvests? Some metro regions are
clearly more reliant on national food freight transportation than others, and are therefore more vulnerable to commodity
production disruption and freight disruption. This could be mitigated by stronger regional supply relationships. Serving larger
metro regions may help build rural economies or could drain them dry. Food sovereignty issues are engaged in this
conversation.
Proceedings of the CLTT Symposium
Gulfport, MS, USA, February 26-27, 2014

How is the market structured? The consumer food market is complex and highly differentiated. Distributors specialize in
reaching these different markets, so regional food supply chain business relationships will be highly specialized. New
businesses emerging to meet the market may find that targeting higher end markets will help fuel their start-ups and stabilize
their businesses and logistical relationships. This will make it possible to later serve lower margin clients, such as big box
stores and institutional food service.
What does the supply chain look like? Aggregating sufficient product at an acceptable quality so that the story stays
attached to the product is a primary challenge in the First Mile. Farmers and start-up aggregators are meeting these
challenges head-on and making significant gains in the Upper Midwest. There are few opportunities for farmers to find and
develop business relationships with like-minded distributors, logistics professionals and processors, creating a leverage point
for change. Last Mile challenges are more difficult to address. How do independent supply chain businesses solve
warehousing and last mile distribution challenges in major metro regions? How do farmers enter vertically-integrated supply
chains at sufficient volume while retaining product value? How do buyers manage more complex delivery, invoicing and
merchandizing relationships? How is risk and profit fairly shared across the supply chain?
How are supply chain relationships developed? Logistics emerged as a key leverage point in developing regional,
sustainable food supply chains. Logistics is the day-to-day (some would argue hour-to-hour) alignment of businesses
engaged in supply chain commerce. It is possible to build small business opportunity by increasing the likelihood that
businesses will have both formal and informal opportunities to develop trusting business relationships to support the logistics
function. This is done nationally through the farmer-organized Produce Marketing Association. Similar associations for
regional food may be a logical next step to increase the interface between potential supply chain partners that is necessary to
self-organize supply chains. Regional branding is an important component of the logistics discussion, as one approach to
keeping the valuable story attached to the product. There is a need to redesign logistics tools intended for use nationally to a
scale more appropriate for regional application.
What does a green transportation system look like? Participants noted concern about fuel costs, freight traffic
congestion, and Hours-of-Service regulations. Would it be possible to use Lake Michigan to ship from Chicago to other port
towns? What about Mississippi River barges? How might short line rail fit into the picture? There was considerable interest
in exploring multimodal transportation options, and developing a vision for a more sustainable regional transportation
approach to moving food from farm to metro regions. Rather than simply respond to changing supply, logistics and markets,
why not actively envision and develop a more sustainable food transportation system?
4. Discussion
A safe, abundant, healthy, and sustainable food supply is in the national interest. Indeed, the meme that our food travels an
average of 1500 miles originated in a 1969 Department of Defense study on national food security [21]. To ensure an
optimal food supply, it is important to address system deficits and vulnerabilities proactively. What are indicators of success?
Two indicators discussed at the La Crosse meeting were 1) improved food quality in schools and other institutions; and 2) a
phase-out of food pantries. Other indicators of system-wide shifts, especially in the context of systems interdependent with
agriculture (e.g. transportation, packaging, food waste), need to be determined [22, 23]. Life cycle analysis is an under-
utilized tool that could help us think through options for systemredesign. European researchers are using Life Cycle Analysis
to reconfigure their system, pointing to opportunities for the US. [24]. Changing a system as complex, extensive, and critical
as the food system occurs when people and their organizations are empowered to make small incremental changes that add up
to significant system corrections. Transformational change at a smaller scale creates resiliency at larger scales [25].
There is considerable tension in managing the supply chain for both sustainability values and business efficiencies [25].
Creating a dynamic equilibrium between values and efficiencies engages business governance and involves sharing risk
across the supply chain equitably. For trade within the supply chain to be fair, transparency between strategic partners is
essential. We know that the longer the supply chain, the more likely there will be a crack the whip effect. Transparency and
increased communication will help to mitigate the oscillations between supply and demand and may demonstrate that this is a
systems effect, not one that involves ill intent or incompetence.
Consumer demand is driving the move to values-based food supply chains. Farmers are looking for ways to attach the values
they add to their products in such a way that their unique story survives the trip through the supply chain to the point of
purchase. Exploring technologies like QR codes shows promise, and branding and merchandizing are in the development
stage, but ultimately farmers and distributors are investing in people to carry the message through the chain.
Proceedings of the CLTT Symposium
Gulfport, MS, USA, February 26-27, 2014

In our region weve seen a natural progression emerge. High-end restaurants are ideal entry points for start-up supply chains,
where farmers with direct marketing experience can bring their product to wholesale markets. Chefs know how to market the
farm story to diners able to pay for authenticity and artisan qualities. As farm businesses mature and consumers become more
familiar with their options, farmers and grocers start to forge relationships. Gourmet grocers and independent grocers who
share sustainability values are the first grocers to exchange some market efficiencies for value-added product. They
accommodate more complex relationships with regional growers. Eventually, larger-volume buyers figure out ways to adjust
their business practices and more farmers begin to produce and aggregate product to accommodate larger markets, as is
happening with J ust Local Food in Viroqua, WI and the Wisconsin Local Food Hub Cooperative [26,27]. The Wallace
Center at Winrock International is documenting the emergence of local food enterprise nationally, most recently in its 2013
report [28].
Metro regions get most of their food delivered through freight truck. Congestion, double parking, and safety concerns in
heavy traffic, especially for cities that serve as regional food distribution hubs, are major concerns. Traffic concerns are also
a barrier for smaller freight companies that tend to partner in regional food supply chains. Urban freight managers are looking
to Europe for best practices. The City of Paris is consolidating product on the metro edge and then redistributing inward. This
is not without additional cost, but solves some of the congestion associated with under-utilized trucks [29]. Paris is also
experimenting with barge transportation for food deliveries within the city [30].
Should system uncertainties outpace efforts to align food system actors, we may find ourselves in the midst of
disorganization and crisis. At historical times of crisis, such as the Great Depression, public and private attempts were made
to find ways to suppress uncertainty in food systems. This is problematic, because as a top-down approach it is more likely to
trigger system archetypes, such as fixes that fail. Symptoms may be fixed, but unintended consequences lead to new
symptoms and further fixes that fail. When a systems archetype is identified (and there are nine commonly recognized
archetypes), it the system that is poorly designed, rather than incompetence or ill-will afoot. [31]

Figure 2: System archetype: fixes that fail
Fuel costs, extreme weather and labor shortages are just three of the uncertainties that are increasingly of concern. Food
production used to be tethered to environmental regions, and urban regions grew near food production regions. This is no
longer the case. Much of our fresh produce comes from irrigated deserts, and is shipped cross-county via freight [see maps at
32, 33, 34]. Rising fuel costs are changing the landscape at an increasing pace. For example, a canning company with its
processing infrastructure located in Wisconsin shifted vegetable production to Mexico to increase efficiencies in the 1980s
and 90s. It put its Wisconsin processing facilities on the market this summer and will rebuild in Mexico because sustained
high fuel prices, labor shortages, and soft market demand for canned produce make it more cost effective to rebuild closer to
production than to retain its existing facilities and invest in Upper Midwest agricultural capacity. Farming systems are tied to
environmental systems and these systems are experiencing extreme disruption at the local and regional levels, so there is
increasing uncertainty in food production. In the 30-year update to Limits to Growth, Meadows, Randers and Meadows
assert, there is just enough time, with no time to waste to figure out a sustainable way forward [35].
Private and public institutions have a role to play in supporting complex adaptive system development. Creating an
environment conducive to CAS for values-based food supply chains is a good place to start. Institutions can do this by
helping farmers, processors, distributors, and retailers develop the trust and alignment necessary for successful business
relationships. Learning how to work together to keep the sustainability story attached to the product is key to realizing the
Proceedings of the CLTT Symposium
Gulfport, MS, USA, February 26-27, 2014

full value of regional and local food markets. Vertically-integrated supply chains are in a position to include farmers and
other independent businesses as full partners, helping to alleviate uncertainty, reduce risk, and share the wealth.
Another way to support CAS development is by encouraging systems thinking. Sharing observations and developing
scenarios in a group setting are simple and powerful activities to stimulate adaptation [36]. Teaching systems thinking
through games is an effective and fun way to build core competencies and develop adaptation reflexes. The classic Beer
Game engages players in a supply chain dilemma managing the oscillations between supply and demand. Players quickly
experience how their reaction to a single shift in demand creates a wildly oscillating supply chain. Schneider National, a
provider of truckload, logistics and intermodal services that serves more than two-thirds of the Fortune 500 companies, is
using games to improve systems thinking skills for employees and clients [37]. Schneiders Engineering group modeled its
Trucking Game after the Beer Game, to teach supply chain partners about trucking and logistics so that there would be
greater agreement throughout the chain. Schneider is also developing the Dispatch Game to help dispatchers understand how
computer-assisted dispatch optimization works and illustrate its business application. The Dispatch Game could be
potentially useful for regional independent supply chain partners in efforts to optimize distribution at a smaller scale between
independents. Schneider is now working with game developer Forio and Harvard Business School to offer an on-line
simulation for both games.
5. Conclusion
Complex Adaptive Systems are one way that we can redesign our food system during this period of rapid change and
increasing uncertainty. Small business entrepreneurs are in a position to respond nimbly to regional complexity and find a
way forward in complex markets as they develop resilient supply chains for sustainably-grown food. Our food systems are
interdependent with transportation systems. What is the vision for a sustainable transportation system to provision our
metropolitan regions? What can logistics professionals contribute to building regional food supply chains that are both
efficient and sustainable? Creating an environment where regional supply chain businesses, food and transportation system
planners, and public-interest organizations think together creatively is a critical next step toward adaptation to uncertain
times.
Acknowledgements
This work was supported by Cooperative Agreement No. 12-25-A-5639 between the Agricultural Marketing Service / USDA
and the Center for Integrated Agriculture at the University of Wisconsin-Madison, as well as grants from the National Center
for Freight & Infrastructure Research and Education, CFIRE 04-23 and 05-17, and state tax dollars. I am part of a team of
dedicated faculty, staff and students who have worked on transportation and local food issues since 2008. Current team
members are Teresa Adams, PhD, and Ernie Perry, National Center for Freight & Infrastructure Research & Education;
Alfonso Morales, PhD, & J anice Soriano, Department of Urban and Regional Planning; Michelle Miller & Lindsey Day-
Farnsworth, UW Center for Integrated Agricultural Systems. Past team members are Rosa Kozub, Anne Pfeiffer, Bob
Gollnik, J ason Bittner, Peter Allen, Ben Zeitlow, David Nelson, and Brent McCown, PhD.
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