Logistics Assessment of Farm to School Programs in Mexico

Mexico recently surpassed the United States, being now the country with highest rates of overweight and obesity in adults, according to a study published in September 2010 by the Organization for Economic Co-operation and Development (OECD). In addition, Mexico is considered one of the fastest growing countries in childhood obesity. Olivier De Schutter, rapporteur of the United Nations (UN), believes that the situation is alarming and that Mexico should declare state of emergency for the obesity epidemic.

As part of the Federal Government’s efforts towards healthier eating habits in schools, TIS Consulting Group acquired the task of undertaking a project to identify the needs of supply and procurement of fresh produce (fruits and vegetables) for public schools in Mexico or farm to school programs. The purpose of the project is to design a distribution network between the producer and final consumer (public schools); reducing the number of intermediaries in the network in order to benefit the producer as well as the consumer.

The above project aims, among others, the following objectives:

• Identify the food requirements of the student population in basic public education (elementary and middle schools), where the focus would lie in fresh produce (fruits and vegetables) that could be supplied locally and regionally by the producers in Mexico.
• Analyze barriers that refrain from achieving a satisfactory, economic, quality, timely and reliable supply to schools.
• Designing an optimal distribution network that meets the needs of the market (demand) and given the conditions of production in the country (supply).

As part of the activities, 30 public elementary and middle schools were visited in the states of Aguascalientes, Queretaro, Sonora, Veracruz and Yucatan by members of TIS Consulting Group. From the field visits, information provided by the Ministry of Public Education, and interviews with a physician who specializes in child nutrition; an estimation of the potential demand for fruits and vegetables was made for two scenarios, which refer to cover 50 % and 100% of the volume required by the student population. Also, monthly estimates of production for fruits and vegetables were obtained from the Agrifood and Fisheries Information Service (SIAP, by its spanish acronym) for year 2009.

Correspondingly, a network of consolidation-distribution of fresh produce –for the farm to school program consumption- was designed. This design was based on optimization models that determine the location of consolidation centers, and distribution and processing centers throughout the country, in order that the healthy food guidelines published by the Ministry of Public Education are met at minimal cost.

The optimization model is divided into two phases:

• The first phase is a maximal covering model, which seeks to find the optimal location of distribution centers and its zone of influence.
• The second phase is a mixed integer model whose objective function seeks to minimize transportation costs from collection centers to distribution centers.

The maximal covering model results are valid for the two scenarios studied and cover 100% of the student population. To achieve this, 300 distribution and processing centers must be established throughout the country. Therefore, any shortage in the solution is directly related to the lack of production of certain fruits and/or vegetables (at certain times) –and not with the distribution process.

In contrast, the mixed integer model was solved for each of the scenarios described above. As part of the results, a design of distribution network necessary to collect and distribute the product volumes was developed. The flow of the distribution network is shown in the figure below:

EXAMPLE OF A DISTRIBUTION NETWORK

Where:

• Consolidation Centers (CC): it is a center for receiving, packing and consolidation, which should be established near the crop since it is the entrance of the produce to the cold chain.
• Consolidated Transportation: it is the transportation between the consolidation centers and the distribution and processing centers.
• Distribution and processing centers (DC): it is a center where the products from the CC are received. Its main function is the reception, final packaging, in some cases processing (washing, cutting and individual packaging) and distribution to schools.
• Distribution: it is the transportation required for retail distribution to each school.

The distribution network was designed with the objective of minimizing total costs and obtain the most efficient and feasible network. The outcomes of the two scenarios are shown below:

• To cover 100% of the demand based on menus, 3 million 415 thousand tons of products need to be distributed through the creation of 165 collection centers, obtaining a service level of 91.85%; this collection centers need to supply 300 distribution and processing centers that will supply to all Public Schools in Mexico.
• To cover 50% of the demand based on menus, 1 million 796 thousand tons of products need to be distributed through the creation of 136 collection centers, obtaining a service level of 96.58%; this collection centers need to supply 300 distribution and processing centers that will supply to all Public Schools in Mexico.

An analysis of economic feasibility of the proposed distribution network was prepared, which concludes that the development of the distribution network is profitable and attractive, to both, private investors and farmers who will participate in the supply of fruits and vegetables to schools.

References:

CNNMéxico.com. (20 de junio de 2011). México debe declararse en emergencia ante epidemia de sobrepeso: ONU – Salud. Obtenido de goo.gl/Ko2xa

Organisation for Economic Co-operation and Development. (11 de octubre de 2010). Health: Obesity rising in developing countries, warns OECD. Obtenido de goo.gl/uNQea