Marketing agricultural products through short chains is increasingly seen as a means for more connection between consumers and agricultural and artisanal producers with new business models.
The term short chain can be used in different ways in practice. This then focuses in particular on the purpose of the short chain. You have short chains focused on trade (profit) and those focused on a new earning model with a fair price for all links in the region.
The Short Chain Task Force (TKK) Foundation follows the EU definition of short chain in Regulation (EU) No 1305/2013, Article 2(m): 'A short food chain is a supply chain with a limited number of operators committed to cooperation, local economic development and close geographical and social relations between food producers, processors and consumers.'
Total revenue from the sale of food and ornamental horticulture products on agricultural holdings is estimated at EUR 1.359 billion. This is based on farms represented in the Agricultural Census 2020, and covers the period April 2019 to March 2020. The figures on short chains based on the Agricultural Census 2020 are expected to underestimate due to splitting of farms.
The highest revenue from short chains is realised in the province of South Holland (€356 million). About an 80% of the turnover comes from greenhouse horticulture, where many (business) sales take place via mostly an intermediate link between producer and consumer. In no other province is the share of a business type as strong as in greenhouse horticulture in South Holland. A close second is the province of North Brabant with €212 million in revenues. The largest contributors here are the business types other horticulture (about a third share) and greenhouse horticulture (between 20 and 25%). Next, in North Holland and in Gelderland, most of the revenue is realised through short chains. In the three northern provinces, Utrecht and Zeeland, estimated revenue levels are significantly lower, ranging from 29 million (Groningen) to 44 million (Friesland). In terms of estimated revenue value, the provinces of Overijssel, Flevoland and Limburg represent the middle group. The differences by province are partly due to the degree of presence of farm types in the provinces. Glasshouse horticulture regions in particular score a high turnover density. Looking at the shares of the main business types in total turnover, greenhouse horticulture scores highest by far with 44% (€595 million). This is followed by the group other horticulture with almost €210 million. This includes open ground vegetable farms, tree nurseries, mushroom farms and flower bulb farms. A good third is dairy farming with €196 million. This is about a third of the revenue realised in greenhouse horticulture. An important component in short-chain dairy farming is self-diluting milk.
Producers underestimate sales (like marketing) and need to cooperate (more) to do so. There are several opportunities. In Zeeland, for instance, hospitality and recreation among others are interested buyers. But who takes the first step to organise a broad supply and who bears the risk? Entrepreneurs need to gather more knowledge of the sales market (who, where, what requirements). This combined with actively developing their own skills. For example, you will also have to deal with other paying parties. For example, what opportunities do circular agriculture/circular economy or landscape management offer? The themes of soil - food quality - biodiversity - water and climate also touch on the (short) chain. Producers are often stuck in their existing chain. For example, a minimum of x% turnover must be delivered to the cooperative or the requirement is to self-purify a maximum of 10,000 kg of milk per year.
Buyers demand more than just a distinctive product. It's also in freshness and security of supply. Parties want to be assured that you can always deliver. Logistics is a big challenge for many short-chain initiatives. Short chains need to be organised logically and efficiently. In farm sales, logistical problems obviously play little or no role. But especially when selling at locations other than the farm and when scaling up (high costs demanded fineness of distribution, refrigeration in line with food safety standards, processing capacity). Coordination and cooperation is important. Joining forces, trusting each other and transparent rules of the game are important here. It is quite difficult to outsource your logistics. Especially if, as an entrepreneur, you are used to driving your products around yourself and getting first-hand feedback on your product and/or service. Yet this is where the challenge lies, in particular, because many customers demand a broader product package than what the short-chain producer can supply himself. So how do you best bundle an order so that it is processed or handled in one place? It does not help if you have no or a limited overview of the supply in your region. The lack of this - and thus finding the right moment to scale up - seems more complex than the question of whether or not to outsource your logistics.
The costs often far outweigh the benefits in a niche situation. The entrepreneur cannot yet generate structural income in the beginning but sees added value. Using subsidies or other financially supportive initiatives is therefore not a luxury for short-chain entrepreneurs.
Conclusion: More knowledge with (new) forms of cooperation between artisanal entrepreneurs and consumers in the short chain is needed to increase the supply of (sustainable) short chain products at a fair price.
Source: Agricultural production serving the short chain. A national measurement. Wageningen Economic Research Wageningen, June 2021
