There is no temperature-controlled supply chain, or cold chain, in small and medium-sized farms due to insufficient economies of scale and inadequate investment.
The highest portion of procurement cost is depreciation of vehicles. Customer communication cost for farmers amounts to very little because they generally use cell phones for only a short time, and most customers are repeat customers.
The inventory cost of farmers is also relatively insignificant because most farmers do not have sufficient funds readily available to buy a large quantity of supplies.
Usually, small-scale farmers buy supplies using one-year credit terms from their local suppliers; however, we did not factor the interest paid on such loans into our calculation.
After categorizing farms according to the number of mangosteen stems in a farm, we found that large-sized farms obtain increased benefits or economies of scale through savings in material handling, transportation, procurement and inventory costs.