The Agricultural Marketing System Chapter 3 Terms

Biological lags
The period between a decision to produce and the actual harvest or collection of output. For example, there is a lag of about 30 months between the breeding of a cow and the slaughter of the fed animal born from that breeding.
Business logistics
The process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements.
Commodity
An economic good such as corn or wheat that can be legally produced and sold by almost anyone. This contracts with a differentiated product, which belongs to a specific seller and may often be trademarked as her exclusive property.
Commodity handling
The marketing of commodities, such as fresh meat or vegetables, tends to be highly price competitive because the commodities offer few or no profitable opportunities for advertising and promotion. Also known as product marketing.
Concentration ratio
The percentage of industry sales (or purchases) made by its four largest firms. Data is provided by the US Census and are widely used as one measure of industry structure.
Conglomerate
A firm doing business in several (or many) unrelated markets. For example, Altria is a major player in cigarettes, beer, groceries, cheese and ice cream, baked goods, coffee, breakfast cereals, and many other manufactured items.
Convenience yield
The value that motivates a processor to store or offer incentives for input supplies to store or market a product, even though there is a negative expected return to storage.
Economies of size
The economic concept that cost per unit of production decreases as the size of the business increases.
Expected price
The price that a seller estimates he can obtain at some later date. Because of biological lags, farmers typically make production decisions on the basis of prices estimated several months or years before actual harvest or production of the commodity.
Inelastic supply
A supply curve is defined as inelastic when a 10% increase (decrease) in price yields a less than 10% increase (decrease) in the volume offered for sale. Remember that a supply curve that is inelastic for the first crop season after a price change may become elastic in a later seasons as farmers have more time to adjust their production.
Margin maker
Those commodity handlers that have little or no power to set their sales prices may focus on maintaining a margin, or specific differential, between sales prices and purchase prices. For example, a grain elevator may set its offer prices to farmers by subtracting a margin from the daily futures closing price.
Market intelligence
The data about current volumes of sales, current and futures prices, and events (such as disturbances in weather or in politics) that may influence upcoming prices and sales.
Perishability
The quality of a food that loses its desirable characteristics (thus its value) over time. The speed of such quality deterioration varies among commodities and among methods of handling.
Product marketing
The marketing of most processed foods (such as canned fruits, cake mixes, and frozen entrees) provides profitable opportunities for promotion and reduces the emphasis on price competition. Also known as commodity handling.
Realized prices
The price obtained by a seller. These are often quite different from the estimates made when farmers commenced production.
Risk bearing
Being in a position to experience gain or loss as a result of externally controlled changes in the amount or price of one’s holdings of commodities or other assets.
Standardization
The development and use of constant measures of quantity and quality of various goods. For example, the US is gradually shifting to a metric system for measuring quantities.