AEC 305 Exam 1

define institutional marketing:
the study of various individuals, agencies and businesses that preform/effect the marketing process
define functional marketing:
specialized activities preformed within the market process
define behavioral marketing:
examining the performance of management decisions
examples of institutional marketing:
farmers/producers, processors, government agencies, bankers
examples of functional marketing:
production, packing, storing transport, finance
examples of behavioral marketing:
how the market preforms
macro analysis:
an analysis of the entire market
micro analysis:
a firm level decision making analysis
example of macro:
how does California drought impact the US food prices?
example of micro:
how do I get a premium for cows that are GMO free?
How is the Ag market unique from other consumer goods?
1. Everyone is a consumer of food
2. Nature of demand
3. Biological factors/weather
4. Price volatility
5. Market structure
6. Political influence/govt. presence
markets over TIME are linked by _______ costs
storage
markets over FORM are linked by ______ costs
processing
markets over SPACE are liked by _______ costs
transportation
what is the food marketing system compromised of?
input suppliers, farmers, agribusinesses (processors, wholesalers etc.) consumers and the government (federal agencies, law makers)
what do PRODUCERS/FARMERS want from our ag/food marketing system?
1. Good prices (high $)
2. Market information on prices
3. Availability of inputs “reasonable costs”
4. Access to markets
5. Close proximity to deliver products
6. Ability to ad value
7. “Reasonable” regulations
what do CONSUMERS want from our ag/food marketing system?
1. Fair low prices
2. Abundant supply
3. Variety of products
4. Convenience (how far away)
5. Quality/freshness
6. Safe/nutritious
7. Nutrition labels
8. Multiple payment options
9. Organic/non GMO
10. Acceptable animal care measures
11. Environmentally friendly
How do farm programs /subsidies impact food prices and obesity?
it limits the supply of food prices, and the price of corn, soy chicken etc. is unjustifiably low because of farm subsidies.
How is the government involved in our food marketing system?
1.consumer: food safety and availability, food prices, health/nutrition
2. agribusiness: transportation, finance, interest rates/ inflation
3. farmers: price, weather income
4. environment: air, land, water, climate
How are changing demographics in the US population are affecting the food marketing system?
age: more people, more mouths to feed therefore eating more often
ethnicity: different ethnicities eat out more ofter. Blacks 12%, hispanics 16% asians 4% white 72%
gender: more female
marketing bill:
measures the animal cost for transporting, processing and distributing domestic farm foods.
market basket:
a fixed quantity of US farm originated food to track price.
farm to retail price spreads:
difference between the farm price and the retail price
Describe the trends in the US farm value, marketing bill, and consumer food expenditures ?
the percent of the farm value is declining. It only looks at: farm revenues, yields, farmers are selling more quantities now then before, excludes non-food items, and excludes farm items that aren’t produced for the export market
how much does farm value account for the retail food dollar?
15-17 cents
what is the reason that americans spend 10% of their disposable incomes on food?
technological advancements in food and farm sectors
what are 4 factors that impact the farm to retail price spread?
-degree of processing/marketing services
-changes in marketing cost
-degree of market competition
-changes in commodity prices
what is the difference between nominal and real prices?
nominal: actual (observed) prices
real: nominal prices adjusted by the rate of inflation
how to convert nominal –> real value?
(nominal value/price index value) X100 = real value
what is an index?
a summary statistic that allows one to compare changes in a given variable over a given time period.
what are the 3 basic items needed to calculate an index?
Components, weights, base period
what are price relatives?
the ratio of the prices during 2 different periods
how to calculate price relative?
(P1= price for 1 period / Po=price in the initial (base) period) x 100= price relative
what concerns do you have for a simple price index?
-it dissent account for the general rise in all prices (inflation)
-assumes each commodity has the same weight or overall importance in calculating index value
what are 3 different ways that economists use CPI?
-Economic indicator (measures inflation)
-adjust dollar value (income/wages)
-deflator (convert nominal–>real values)
what are the 3 major components of CPI?
housing, food and transportation
what 2 of the 3 major components of CPI have the biggest impacts on inflation rates in recent years?
food and energy
_____________ prices are generally more volatile than consumer retail food prices.
farm commodity
Are global food prices MORE or LESS volatile than US food prices?
more
what is measured as a residual using the supply/use identity?
consumption or disappearance
what are some reasons why world food price changes tend to be more volatile than US food price changes?
-changes in commodity price
-more volatile global supplies due to yield variability
-US infrastructure is better
-intense US food marketing system
-Govt. corruption in foreign countries
-Govt. intention in some foreign countries may limit production/trade.
what compromises total supply?
beginning stocks, production and imports
what compromises total use?
disappearance, exports and ending stocks
total supply must = ________
total use