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Connecting a myriad of farmers to food hubs in Brazil through impactful supply chains

Data-driven food supply chains thriving efficiency, short to cut food waste, inclusive to combat food malnutrition, income disparity and ali

Photo of Magali Aquino
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Written by

Lead Applicant Organization Name

Massachusetts Institute of Technology, Food and Retail Operations Lab

Lead Applicant Organization Type

  • Small company (under 50 employees)

How long have you / your team been working on this Vision?

  • Just beginning now

Lead Applicant: In what city or town are you located?

São Paulo

Lead Applicant: In what country are you located?

Brazil

Your Selected Place: what’s the name of the Place you’re developing a Vision for?

Pinheiros Sub-county is located in São Paulo city, within São Paulo State in Brazil. It covers an area of 37,2 km2 and has four districts: P

What country is your selected Place located in?

Brazil

Describe your relationship to the place you’ve selected.

Brazil is the ninth largest economy of the world and one of the most important countries of the emerging market group called BRIC (i.e., Brazil, Russia, India and China). On the other hand, healthy food market in Brazil accounted for US$22.5 billion, placing Brazil as the fifth country with the world with the healthiest consumption of nutritious products and the sixth country of the world in terms vegetarian diets (Euromonitor International, 2019). In consequence, sales of healthy products, including produce items, grew dramatically in the last five years (SEBRAE, 2019). In addition, considering that Brazil has one of the largest populations of the world (210 million inhabitants), the country positions itself as an interesting setting to reinvent ways to boost the agri-business and food industry.

Despite Brazil is a big country, consumption preferences in growing urban environments like Sao Paulo might give an idea of several opportunities to link a highly fragmented set of farmers to an evolving retail landscape. Sao Paulo accounts for over 30% of the gross domestic product and hosts around 12 million inhabitants. In consequence, paulistas experience the dynamics of trade and macro-, and micro-economic oscillations first hand. Given that there is no-size-fits-all strategy to create innovative food supply chains, a careful understanding of purchasing drivers, socio-demographic features, infrastructure, processes and performance is needed to couple strategies to diverse city districts.


Describe the People and Place: Provide information that would be helpful for an outsider who has never been there and may have no context about this Place to better understand the area.

São Paulo or “The stone jungle” is known for its unpredictable weather conditions, mostly rainy in summer and with temperatures within 20C and 40C. On the other hand, winters are between 10C and 25 C with almost no rains. The Subcounty of Pinheiros is key because was the first city founded in São Paulo and has built its bases with immigrants. By the way, SP is the city with the largest populations of Portuguese, Italian, Japanese, Spanish and Lebanese ethnic origins outside their respective countries; and their cultures still arises combined with the Brazilian one. 

That is why São Paulo attracts tourists: a rich historical heritage, fancy fashion and art events and a complete food experience. The focus on the Brazilian culture is a city distinctive characteristic, and not only tourists but their inhabitants can look forward to a very full and exciting food experience in more of 15.000 restaurants. 

People in São Paulo hence its diverse, and hopes to succeed in life by hard-working, at the same time they like to reward themselves with food and drink options; when “going down” to the beach is not possible – either because of work agenda, weather or traffic jams. A garlic smells early in the morning while walking nearby Faria Lima Avenue, because restaurants gets ready for sacred lunchtime at 12pm. The classic and democratic dish contains rice and beans (feijão), along with fresh produce vegetables and a protein (meat, fish or chicken). 

Although a healthy diet is arising among its inhabitants as well its consumption, concerns about fresh products origin, veggie dish options, sustainability it’s not covered as by expectations yet. A busy life with no time to cook at home, the trend of solo-living as most of their inhabitants comes from other countries or states, restaurants and bars are points not only for nourishment but socializing. 

What is the approximate size of your Place, in square kilometers? (New question, not required)

280589

Challenges: Describe the current (2020) and the future (2050) challenges that your food system faces.

Population in SP will reach its maximum in 2045 and start decreasing about 0,12 on year basis, hence, population in 2050 will be about 22.8 million inhabitants. Life expectancy will increase up to 80 years and almost 20% of its population will be aged. Probably the human development index will be maintained as the highest in São Paulo state and food concerns will increase. The challenge is, to São Paulo outskirts be developed enough to provide fresh food in Sorocaba and Campinas regions (less than 200 km to São Paulo), Paraná state and North-east region. Each region provides a different type of fresh produce: fruits, vegetables; and all providers are reunited to re-distribute to the Southeast region in Sorocaba area, less than 200 km of Pinheiros subcounty. 

In general terms, it is important to highlight challenges from two perspectives: 

- Supply: The diversity of sourcing for fruits and vegetables is highly disorganized, dependent on poor agricultural practices and a de-synchronized harvesting period with the market. In addition, there is a disconnection between farmers and the market due to the lack of technology, standardized processes, among other issues. This carries a set of unstructured distribution channels that compete to serve the same people, but depriving the ones who need the most to keep profitable operations, wasting plenty of food due to a traditional push- inventory model. - Demand: Besides the dynamism of consumption preferences and needs, there is also a wide variety of profiles to be served in terms of frequency, variety and quantity of produce items. In addition, there is also an effect carried through the supply chain due to the well-studied bullwhip effect, given the lack of visibility that uncertain quantities to be ordered brings to this complex system. In addition, there is also a lack of awareness to eat fruits and vegetables that forces shopkeepers of nanostores to invest their scarce budget in consumer- packaged goods to avoid wasting fruits and vegetables and jeopardizing their money. 

This lack of coupling between supply and demand forces both fragmented markets (farmers and retailers/end consumers) make myopic decisions that increase costs, waste and benefit only population segments who can afford to pay more for having instant access to fresh produce items. Even worse, creates a vicious circle where people cannot afford nutritious food and shopkeepers won’t make it accessible due to the risks of going into the business. This actually drives the creation of food deserts and limits the connection of small farmers to a growing market that depends on long supply chains. These traditional supply chains depend on a large number of intermediaries and deprive farmers to get paid in a fair way for their hard work. 

This is the list for the challenges we envision: Inclusion, zero waste, affordable prices, all synchronized, necessary technology to streamline processes, organized community with excellent agricultural practices on the side of farmers and on the side of consumers and retail and food service shopkeepers, an informed and conscious community. 

Address the Challenges: Describe how your Vision will address the challenges described in the previous question.

The purpose of this study is to improve drastically the supply chain of fruits and vegetables in urban areas with particular focus on first-mile collection and the consolidation in the farmer’s side to reduce waste, to optimize logistics operations (e.g., handling, inventory management, distribution) and reduce costs, risks for the supply chain stakeholders. 

High Level Vision: With these challenges addressed, now provide a high level description of how the Place and the lives of its People will be different than they are now.

Firstly, people will be concerned and aware of where their products come from, mostly fresh-produce ones. As the city increases its population, the food distribution challenge from São Paulo outskirts will be consolidated after long years of fragmentation – otherwise, transportation costs and demand will not be fulfilled. New sales channels that connect demand and supply, removing no value-added intermediaries will be key – mostly, the ones based in technology platforms to easily predict demand and crop-on-demand as well. 

Full Vision: How do you describe your Vision for a regenerative and nourishing food future for your Place and People for 2050?

Our vision addresses the six interconnected themes: Environment, Diets, Economics, Culture, Technology, and Policy. We are in touch with farmers directly as we are engaged through Frexco and we not only understand their concerns, challenges, but we interchange experiences, information and the willingness to make a real change and impact their economy. Farmers, retail and restaurant shopkeepers they all share something in common: their business sustains a familiar economy, transportation costs to access demand or supply is challenging and usually they do not own a vehicle. A daily sales that do not occur impact on their economy directly and they are affected by cash friction, demand uncertainty and unknown supply chain. 

The challenges we foresee are production capacity, demand-oriented production against price-speculation oriented production (reflected by farmers as per the many years they have been price-manipulated). 

7 comments

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Comment
Spam
Photo of Sampson Agboola
Team

I like your idea, can you please tell me our you gather data, and what technology you use for this?

Spam
Photo of Magali Aquino
Team

Hi Sampson,
Sure. We are gathering data from Market research reports, consumer behavior trends, supply chain efficiency reports (Transportation costs and its breakdowns), and collecting data from business and academic experimentation and research.
We are a team of academics and entrepreneurs (MIT, Insper and Frexco).
Thanks for your comments. Happy to discuss further.

Spam
Photo of Simone Silotti
Team

Parabéns pela iniciativa e coragem! Magali.
Será que o meu projeto Sal da Terra pode ser útil para sua região (aqui nesta plataforma)?

Acho que precisamos nos conectar.

Um forte abraço

Spam
Photo of Magali Aquino
Team

Oi Simone,
Acho que precisamos nos conectar para conversar, temos a oportunidade de uma boa sinergia.
Abs!

Spam
Photo of Aura Stewart
Team

Magali, I identified similar challenges in my submission to the ones you mention on yours, "Inclusion, zero waste, affordable prices, all synchronized, necessary technology to streamline processes, organized community with excellent agricultural practices on the side of farmers and on the side of consumers and retail and food service shopkeepers, an informed and conscious community." I strongly believe that the way for achieving a transformative and sustainable food system is by considering the economic ecosystems where it is embedded. When I use the word "sustainable" I am referring to something that will survive through major disruptions while maintaining its identity. I think without ensuring that financially benefits are accessible to most, if not all, of the actors of a food system, that food system will not be viable in the long term. I would like continue learning about your project and how it evolves. Do you have a group or blog where you will report on your progress and I can subscribe to?
Regards,
Aura

Spam
Photo of Magali Aquino
Team

Hi Aura Stewart ,
Thank you for your feedback and I agree that financial support is key to keep operations sustainable in time. But in this project, our focus is to re-design the supply chain so that visibility and cost-efficient networks are less financial-dependent as we remove intermediaries.
We are a team working on it (MIT, Insper, Frexco); with no publications yet but will share with you if something is done soon.
Thanks!

Spam
Photo of michael akande
Team

Hi Magali,
Your vision is quite an interesting one. I agree that finding a synergy across the supply chain is a viable solution to providing nutritional foods to people in any given area or region. I would have liked to read more about how this process would work and what the extended impact would be in Sao Paulo, Brasil. My vision shares many similarities with yours.

Best Regards!