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Major Issues of Reducing Post-Harvest Losses from Farm Gate to Storage. Tony Shih- Hsun Hsu National Taiwan University Aug. 5, 2013. OUTLINE. Major Trends in Agriculture Issues on Returns to Scale Supply Chain Management

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Major Issues of Reducing Post-Harvest Losses from Farm Gate to Storage

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Major Issues of Reducing Post-Harvest Losses from Farm Gate to Storage

Tony Shih-Hsun Hsu

National Taiwan University

Aug. 5, 2013


  • Major Trends in Agriculture

  • Issues on Returns to Scale

  • Supply Chain Management

  • Issues on Agribusiness: The Quiet Revolution in Staple Food Value Chains

  • Issues on Sustainability: Cost/Benefit Analysis

  • Agricultural Policies on Reducing Losses: A Food Value Chain View

Major trends in agriculture

During the first ten years of the 21st Century, we have witnessed a rapid transformation in the face and practice of agriculture, one of the oldest enterprises in human civilization. Among the major new developments or trends are:


  • Agricultural production is merging with agribusiness, food supply chain management, and operating at ever-increasing scales with greater efficiency and profit.

  • Agriculture is moving from labor intensive toward more capital intensive enterprise.


  • Trade and exchange of products are becoming even more active.

  • Treaties such as WTO, FTA, TPP and RCEP are having far-reaching effects on the agriculture.

  • Multi-national companies with international production and marketing are becoming the key players.

Science and Technology

  • Science- and technology-driven agriculture is critical for survival and success.

  • Biotechnology, in particular, will be part of the solution to deal with issues such as food safety, food shortages, etc.

Environmental Protection

  • Excessive use of chemical fertilizers and agro-chemicals are increasingly problematic to the environment.

  • The larger scale of crop and animal production today has a negative impact on land, air, and water quality.

  • Solutions to these problems— new regulations and environmentally-friendly technologies—are not only increasing in demand, but also becoming a necessity for sustainable agricultural development.

Energy production

  • With oil price increase and increasing concern about global climate change, governments, industries, and research institutes around the world have stepped up research to decrease the use of fossil fuels and to invest in clean, renewable energy sources, including bio-ethanol, bio-diesel, biogas, and biomass.

  • For the production of these bio-fuels, the agricultural system—with its scale, infrastructure, and logistics—is uniquely qualified to offer cost-effective solutions.

  • This will be a new and vital aspect of agriculture in the 21st Century.

Major Issues of Reducing food loss/waste are embedded in the trends in agriculture

  • Food loss refers to the decrease in edible food mass at the production, post-harvest and processing stages of the food supply chain, mostly in developing countries.

  • Food waste, a symptom of developed countries' consumer lifestyles, refers to the discard of foods at the retail and consumer levels.

  • This food wastage represents a missed opportunity to food security and comes at a steep environmental price.

Issue on returns to scale

According to Thomas Reardon’sResearch past 10 years on China, Bangladesh, India, Indonesia, Philippines, Vietnam

On eve of Green Revolution, debate in these countries on development path to choose:

  • large-farm development path

    • with supporters saying large estate farms = fast development

    • supporters saying (1) there are no good technologies for small farms; (2) and small farms won’t adopt new technologies

  • “small farm development path”

    With supporters saying

  • Green Revolution provides technology that makes small farmers as or more productive than large estate farms

  • small farm path fits “land scarce, labor abundant” situation

  • failure of big collective farm (early) path of China

  • small farm path promotes “broad-based rural income growth”

  • Via local production linkages

  • Via local consumption linkages

c) All six countries adopted “small farm development path” starting with the Green Revolution in the 1970sto now:

  • massive investments in rural infrastructure

  • massive investments in wholesale markets

  • massive investments in agriculture R&D and extension

  • gradually gave land control rights to small farmers as incentive to invest long-term

  • liberalized food markets to create incentive for small farmers to invest and modernize

Supply chain management

Segmentation of Production

  • Production is “sliced and diced” into separate fragments.

  • “Global value chain” - The possibility of slicing up and optimizing value chain activities among multiple companies and various geographical locations

  • In these chains, core activities are organized as separate but coordinated phases.

Segmentation of Production

  • Food supply chain: farmers, farm input suppliers, traders, mills, cold storages, and retailers

  • With specialization in specific tasks and their close integration into a highly coordinated business model, these chains of related activities result in the creation of more “added value” than the sum of the value of the constituent parts and processes.

Segmentation of Production

  • Today’s most integrated value chains combine two interlinked business models: a demand chain and a supply chain

Schematic presentation of a value chain

Definition of Supply Chain

“All activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be supplies, intermediates, third-party service providers, and customers.”

- Council of Supply Chain Management Professionals (CSCMP)

Definition of Supply Chain

  • Coordinating the timely operation of industrial networks is a complex exercise, involving the provision of logistic services and supported by advanced information and decision system (e.g., infrastructure services).

  • Outsourcing v.s. Insourcing

  • With specialization in specific tasks and their close integration into a highly coordinated business model, these chains of related activities result in the creation of more “added value” than the sum of the value of the constituent parts and processes.

Vertical Integration

  • Vertical integration is about corporate strategy and relates to the “make” or “buy” decision companies invariably face.

  • While outsourcing is an example of the “buy” approach (act of purchasing from an external supplier), vertical integration involves an “insourcing” or “make” option (choice of producing an item or keeping a specific activity internally).

Vertical Integration

  • Reduced operational costs and better coordination of the supply chain are the key benefits sought by vertically integrated enterprises.

  • Vertical integration can be achieved not only through direct ownership, but also by means of contracted relationships (at “arm’s length”) with suppliers.

  • Outsourcing and “Market failure”

An example of vertical integration

Innovation and Best Practices in Agricultural Production-The Case of DouNan Farmers’ Association in Chinese Taipei

Business Weekly Cover’s Story

  • 15 young farmers constitutes the farming team

  • Each can earn 3 million NTD (100,000 USD) per year

Business Weekly

Case Study - DouNan Farmers’ Association (FA)

Yunlin County,

DouNan Town

  • Total Population: 47,000

  • FA members: 9,107

  • safety labeling system demo in 2003.

Custom Farming Teamin DouNan

Innovations and Policies

  • Innovations in farming system

    • Satellite System

    • Supply Chain Management

      • Strategic planning to add product values

      • Modernization in Post-harvest Processes

      • Adopting Good Agricultural Practices (GAP)

      • Zero post-harvest losses with recycling

  • Policies

    • “Small Landlord & Big tenant” Program

    • Encourage old farmers to retire early

Satellite System (1/2)

  • Concept: In a district with agricultural structure of satellite system responsible for marketing and planning.





Farmer’s Association





Super market


Custom farming team






Satellite System (2/2)

Tenant farmer FieldManagers

(6 people)

Sales Group

Farmers’ association

(3 people)

Custom Farming

Machinery operator (6 people)



Lease Land











Foreign Market


  • Responsible for leasing farm land.

  • Monitoring crop growth, Traceability

Till, fertilize, sow, harvest with mechanical power

Efficient soil conservation practices

Use cold storages to provide off-season products for better price

Direct marketing to reduce transaction costs

Issue on agribusiness:the Quiet Revolution in staple food value chains

Issues of Reardon’s research on the 6 countries:

  • What progress have they made in “small farm modernization”?

  • What progress have they made in developing supply chains from small farms to domestic market (95% of the food market in Asia), especially the rapidly growing cities (urban areas are 75% of food market in Asia) and export markets?

Summary of findings based on detailed survey evidence

  • In past 10 years in the 6 countries

  • large sample surveys in all segments of food supply chains (farmers, farm input suppliers, traders, mills, cold storages, and retailers)

  • nearly 10,000 farmers and supply chain actors surveyed

Found surprising findings:

 rapid and widespread modernization AND diversification of small farms

  • rapid modernization of food supply chains ..

    … upstream from farm: in supply of inputs and services to farms,

    … downstream, services after the farm-gate, in wholesale, processing, and retail

    … with small farms benefited, “sandwiched” between the modernizing upstream and downstream

1) Rapid modernization of small farms (1-3 hectares)

  • Rapid Commercialization of small farms shifted from subsistence farms to “small commercialized farms”

    - selling 70-90% of output

  • small farms rapidly becoming “small businesses”

  • Rapid Intensification of small farms  Shifted into high use of new varieties, purchased seed, fertilizer, pesticide, herbicide

  • Rapid mechanization of small farming: rapid shift to high use of farm machinery to free labor from grain farming to higher income activities (horticulture, rural nonfarm jobs)

    - very rapid increase in rental of machines

    - very rapid development of “farm machine services small enterprises: rice harvest services;mango sprayer-traders

2. Rapid Diversification of Small Farms

  • Small farmers: “climbing the value ladder”!

  • Shifting from rice/wheat  into vegetables, fruit, fish, livestock, dairy, grams/pulses (Earn 4-8 times more than in rice farming)

  • Shifting from low-quality rice  high quality rice (50-100% higher returns) (Vietnam, China)

  • Shifting from just farm income  to farm + rural nonfarm income (now 50% of farm household incomes)

3) Quiet Revolution in food supply chains: upstream + downstream from farms

  • Mainly “grassroot” revolution: small/medium enterprises

  • Driven by private sector (not government intervention)

  • Emergence of 1000’s of small enterprises in input and services supply

  • Rapid spread of “cold storages”

  • Rapid modernization of wholesale markets and traders!

  • Rapid modernization of rice mills

  • Spread of supermarkets in all 6 countries

    Supply chain development important because it forms 50-70% of food costs to consumers

    Very few post-harvest losses!

Issue on SUSTAINABILITY- cost/benefit analysis

Abundance of Agricultural Residues Availability



Fruit and vegetable


Wood, driftwood, shavings



Biomass Refinement Logistics

  • Collection and transportation of available biomass

Agricultural and Industrial Application of Biomass Briquette

Greenhouse energy supply & CO2

Electricity Generation in furnace

Dehydrated food

Livestock feed and bedding

Mushroom cultivation

Biomass Briquette

Biomass Transport

Organic Cultivation and refinement


Activated charcoal for organic

soil additive

Sugar fermentation

Versatile paper products

Health Food Storage

High yield biomass pulp


Biomass Crusher & Dust Remover

Biomass Dryer

Palm EFB Press & Broker

Oil Palm Waste

Mobile Briquette System

Briquette Machine Feeding System

Shredded size

Forest Waste

Wood Waste Broker

Biomass Briquette

Biomass Boiler

Sugar Cane

Bagasse From Sugar Mill

Stover Shredder

Briquette Packing & Consumer Produce

Rice Straw, Grass

Counter Pressure Turbine & ORC Biomass Power Generator

Stover Balling

Industrial Park User

Corn Stover

Baling and Shredding on Site

Mobile Production of Biomass Briquettes

Biomass Briquettes for Different Applications

Biomass Recycling

Role of Government: IMPORTANT

  • According to Reardon’s research, in all 6 countries (except grain in India) government role in direct intervention is VERY SMALL

    - tiny role in input supply

    - tiny role in crop marketing

b) In all 6 countries the role of government as “enabling farmers and grass-roots private sector” is VERY LARGE

  • agricultural research: seed varieties

  • roads

  • ports

  • electricity grids

  • permitting cell phone expansion

  • information and extension

AGRICULTURAL POLICIES on reducing losses- a Food Value chain view

  • Reasons for food losses and waste: financial, managerial and technical limitations in harvesting, storage and cooling , packaging and marketing

  • Need to help increase efficiency in reducing food losses and waste through well supply chain management

  • Reducing logistic costs

    • Reducing supply chain barriers could increase world GDP over 6 times more than removing all tariffs (Source: “Enabling Trade: Valuing Growth Opportunities”, WEF-WB Report 2013)

    • Investments in infrastructure, transportation, food industries and packaging industries are also required.

  • Agricultural prices and CPI

    • Prices and value added

  • Over-production due to government inappropriate policies

  • Population aging and low fertility rate

  • Adaptions in response to Climate Change

  • Integrated approach for Economy, Environment, and Energy (3E) problems

    • one way to address the haze problem

    • Incentives for collecting agricultural residues and loss/waste for biomass use

  • Power of agribusiness entrepreneurship

    • Profit maximization and cost minimization

  • Policies taking care of interests of all stakeholders and enhancing the role of public-private partnership (PPP) along the entire food supply chain

  • Quantitative assessment and large sample survey

  • Many thanks for Listening

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