Food Markets, Production, and Marketing
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Transcript Food Markets, Production, and Marketing
AGRICULTURAL AND FOOD MARKETS,
PRODUCTION, AND MARKETING
Market functions,
institutions, and
behaviors
Food marketing
issues
Characteristics of
markets
Trends in agricultural
markets
MKTG 442
MARKETS, PRODUCTION, AND MARKETING
Lars Perner, Instructor
1
AGRICULTURAL
PRODUCTS
FOOD
FINAL
MKTG 442
TEXTILE
INGREDIENT
PAPER
FEEDING
ENERGY
PACKAGING
MARKETS, PRODUCTION, AND MARKETING
TEXT
Lars Perner, Instructor
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Functions in Agricultural Markets—
one way to analyze
Selling
Storage
Transportation
Processing
MKTG 442
Facilitating
Standardization
Financing
Risk bearing
Market Intelligence
MARKETS, PRODUCTION, AND MARKETING
Lars Perner, Instructor
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Selling to
Processors
For final products (e.g., flour)
For manufacturing of ingredients
Intermediaries
Wholesalers
Retailers
Customers
Consumers
Institutions
MKTG 442
MARKETS, PRODUCTION, AND MARKETING
Lars Perner, Instructor
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Storage
Storage
Seasonal
MKTG 442
Timing of production
vs. cost of storage
Feasibility of timing
market (turkeys vs.
wheat)
Queuing
MARKETS, PRODUCTION, AND MARKETING
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Transportation
Cost vs. speed
Perishability
Value of freshness to
customers
Ability to predict
demand
Need for bulk
reduction (see
processing)
MKTG 442
MARKETS, PRODUCTION, AND MARKETING
Lars Perner, Instructor
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Processing
Treatment of product
(e.g., wheat to flour)
Reduction of bulk
(oranges to
concentrate—not
orange juice yet)
Creation of labor
saving food products
(e.g., frozen pizza)
MKTG 442
MARKETS, PRODUCTION, AND MARKETING
Lars Perner, Instructor
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Facilitating
Farmers’ agents
Matching demand and supply
Other information search—e.g., demand
forecast
Negotiations
Logistics handling
MKTG 442
MARKETS, PRODUCTION, AND MARKETING
Lars Perner, Instructor
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Standardization
Agricultural grades
and labeling
Food branding
MKTG 442
MARKETS, PRODUCTION, AND MARKETING
Lars Perner, Instructor
9
Financing
Long term lending
Short term lending
Farm mortgages
Equipment loans
Advances against
harvests
Financing of store
and processor
inventory
Futures contracts
MKTG 442
MARKETS, PRODUCTION, AND MARKETING
Lars Perner, Instructor
10
Risk Bearing
Futures contracts
Investments in new
food products (most
will fail)
Evaluation of credit
worthiness of
farmers and other
parties
MKTG 442
MARKETS, PRODUCTION, AND MARKETING
Lars Perner, Instructor
11
Market Intelligence
Market research
Forecasting
Demand
MKTG 442
For existing
products
Spread of new
products
Supply
MARKETS, PRODUCTION, AND MARKETING
Lars Perner, Instructor
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Institutions
Marketing middle people
Merchant
Retailer
Wholesaler
Agent
Brokers
Commission
Speculative
Processors/manufacturers
Facilitative organizations
MKTG 442
MARKETS, PRODUCTION, AND MARKETING
Lars Perner, Instructor
13
Behavioral Systems
Input-output
Communications
Different parties provide goods and services
moving toward final products
Matching supply and demand
Adaptation to outside changes—e.g.,
Consumer tastes
World supply
MKTG 442
MARKETS, PRODUCTION, AND MARKETING
Lars Perner, Instructor
14
Food Marketing Efficiency
Getting final products to consumers at
lowest cost for given services
Lower spread between farm costs and
retail food costs does not necessarily
mean greater efficiency—intermediate
functions may add value
Types of efficiency
Operational
Pricing
MKTG 442
MARKETS, PRODUCTION, AND MARKETING
Lars Perner, Instructor
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Agricultural Production and
Marketing
Structure of U.S. agriculture
Product characteristics
Dominated by small, family farms
Raw material
Bulkiness and perishability
Quality variation
Production characteristics
MKTG 442
Total product
Annual variability
Seasonality
MARKETS, PRODUCTION, AND MARKETING
Lars Perner, Instructor
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Production characteristics
Total product
Increase due to productivity
Annual variability
Seasonality
Geographic concentration
Varying production costs
Farm supply industry (derived demand)
MKTG 442
MARKETS, PRODUCTION, AND MARKETING
Lars Perner, Instructor
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Marketing Problems
Lack of control over
Own output
Market supply
Lag in results of adjustment efforts
Decision of whether to engage in marketing
efforts
Free rider problem
Superior bargaining power of large buyers
Cost squeeze
MKTG 442
MARKETS, PRODUCTION, AND MARKETING
Lars Perner, Instructor
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Some Trends
Differentiated products
Specialty/nice products
Interdependence of
manufacturers and
suppliers
High price risk
Science and innovation
Closed information
systems
MKTG 442
Private and proprietary
research
Resource and
environmental
conservation
Managerial and
interpersonal skills
Industrialization
Global competition
Farm incomes moving
toward incomes of other
sectors
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