AGR 130 Chapter 16

Approximately how many retail food stores are there in the United States?
100,000
How many universal product codes (UPCs) does a typical supermarket have?
40,000
Approximately how many eating and drinking establishments are there in the United States?
377,000
Food Marketing
All activities and services that occur between the producers of food and foodstuffs and the consumers
What does food marketing create for the consumer?
Utility
Which food marketing utility is created by storage activities?
Time
Which food marketing utility is created by the transportation function?
Place
Which food marketing utility is created by the processing function?
Form
Which food marketing utility is created through exchange in the marketing system?
Possession
What are the four utilities of food marketing?
Time, Place, Form, Possession
Food Bill
The value of total expenditures on food in any given year
In 2007, how much did Americans spend on food including alcohol?
$1.3 trillion
$4,340 per person
How much of the disposable personal income does the food bill represent?
9.8%
What is the largest single item in the average family budget?
Health care
What is the second largest single item in the average family budget?
Food
How much does food at home represent of the food bill now?
49%
How does food away from home represent of the food bill now?
51%
Food Marketing Bill
Portion of the food bill created by marketing system
How do you calculate the food marketing bill?
Food bill minus farm value
What represents 48% of the 2006 food marketing bill?
Labor
Domestically Produced Farm Food
Total food expenditures minus alcohol, imported food, and nonfarm food items (salt and yeast)
Farm Share
Value of farm production as a percentage of the retail price of food
How much of the marketing bill for domestic farm food is the farm share?
19%
How much of the marketing bill for domestic farm food do the farmers earn?
7% out of the 19%
How much of the food marketing bill for domestic farm food goes toward inputs purchased by farmers?
12% out of the 19%
How much of the marketing bill for domestic farm food pays for utilities (total retail price)?
81%
Why does beef have such a high farm value share of retail food prices in 1999?
There is little time utility because there is no season
Transportation (rail) = low cost
Form change is substantial but very efficient and relatively low cost
What are the food market levels?
Assembly, Commodity Processing, Food Processing, Distributors, and Retailers
Assembly
The collection of small amounts of product from many producers to create a large enough amount of product for efficient shipment
Grain Elevator
A grain storage facility that buys grain from farmers by the truckload and sells it to processors by the railcar load
Commodity Processors
Companies that buy raw agricultural commodities and process them into food product ingredients
What are examples of commodity processing companies?
Cargill, ConAgra
Food Processors
Companies that buy ingredients and/or raw agricultural commodities and process them into retail products
What are examples are food processing companies?
Campbell’s, Heinz, Kellogg’s
Distributors
Wholesales and others who buy large lots of food from processors and distribute it to many retailers in smaller lots
Retailers
The supermarket and other vendors from whom the public buys food
Industrialization
The use of modern industrial concepts of production routinization, procurement through strategic alliances, coordination, and contracting in the food system
What are the facilitating functions of the food marketing system?
Grades and standards
Financing
Risk Bearing
Market Information
Marketing Margin
The difference between the prices of a product at any two points in the marketing chain
Derived Farm-Level Demand
The primary retail-level demand minus the marketing margin
Derive Retail-Level Supply
The primary farm level supply plus the marketing margin
Marketing Efficiency
A measure of the costs of performing marketing tasks
Elasticities by Market Level
In any given market for any given commodity, the elasticities of supply and demand will always be more inelastic at the farm level than at the retail level
What two food regulation acts were passed by Congress in 1906 following Upton Sinclair’s The Jungle?
The Meat Inspection Act
The Pure Food and Drug Act
What federal agency was created by Congress following Silent Spring?
The Environmental Protection Agency
What food regulation act was passed by Congress in 1972 following Silent Spring?
The Federal Insecticide, Fungicide, and Rodenticide Act
What act was passed in 1996 for the federal regulation of chemical use in food crops?
The Food Quality Protection Act