Effects of scale economies and production seasonality on optimal hub locations: the case of regional fresh produce aggregation

Houtian Ge, Patrick Canning, Stephan Goetz and Agnes Perez

Agricultural Economics, 2018, vol. 49, issue 2, 157-169

Abstract: Interest in supporting local and regional food systems is rising and food hubs have attracted considerable attention among Federal, State, and local policymakers. This study explores the problem of endogenous hub location in fresh produce value chains in the Northeastern United States. To overcome limitations in the literature, we incorporate the effects of economies of scale and production seasonality into our models. Three experimental models are designed to examine the effects of alternatively applying yearly, quarterly, and monthly data on model solutions. We explicitly assess how interactions of scale economies and seasonality influence the structure and spatial attributes of an optimal regional produce aggregation hub system. The three models generate marketed different solutions and in many respects they lead to different conclusions about developing local/regional supply chains. The monthly model allows for production seasonality and actual hub operation cycle frequency and thus leads to more efficient hub solution with rich policy implications.

Date: 2018
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https://doi.org/10.1111/agec.12405

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