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AGRICULTURAL AND FOOD MARKETS, PRODUCTION, AND MARKETING

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AGRICULTURAL AND FOOD MARKETS, PRODUCTION, AND MARKETING Market functions, institutions, and behaviors Food marketing issues Characteristics of markets – PowerPoint PPT presentation

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Title: AGRICULTURAL AND FOOD MARKETS, PRODUCTION, AND MARKETING


1
AGRICULTURAL AND FOOD MARKETS, PRODUCTION, AND
MARKETING
  • Market functions, institutions, and behaviors
  • Food marketing issues
  • Characteristics of markets
  • Trends in agricultural markets

2
(No Transcript)
3
Functions in Agricultural Marketsone way to
analyze
  • Selling
  • Storage
  • Transportation
  • Processing
  • Facilitating
  • Standardization
  • Financing
  • Risk bearing
  • Market Intelligence

4
Selling to
  • Processors
  • For final products (e.g., flour)
  • For manufacturing of ingredients
  • Intermediaries
  • Wholesalers
  • Retailers
  • Customers
  • Consumers
  • Institutions

5
Storage
  • Storage
  • Seasonal
  • Timing of production vs. cost of storage
  • Feasibility of timing market (turkeys vs. wheat)
  • Queuing

6
Transportation
  • Cost vs. speed
  • Perishability
  • Value of freshness to customers
  • Ability to predict demand
  • Need for bulk reduction (see processing)

7
Processing
  • Treatment of product (e.g., wheat to flour)
  • Reduction of bulk (oranges to concentratenot
    orange juice yet)
  • Creation of labor saving food products (e.g.,
    frozen pizza)

8
Facilitating
  • Farmers agents
  • Matching demand and supply
  • Other information searche.g., demand forecast
  • Negotiations
  • Logistics handling

9
Standardization
  • Agricultural grades and labeling
  • Food branding

10
Financing
  • Long term lending
  • Farm mortgages
  • Equipment loans
  • Short term lending
  • Advances against harvests
  • Financing of store and processor inventory
  • Futures contracts

11
Risk Bearing
  • Futures contracts
  • Investments in new food products (most will fail)
  • Evaluation of credit worthiness of farmers and
    other parties

12
Market Intelligence
  • Market research
  • Forecasting
  • Demand
  • For existing products
  • Spread of new products
  • Supply

13
Institutions
  • Marketing middle people
  • Merchant
  • Retailer
  • Wholesaler
  • Agent
  • Brokers
  • Commission
  • Speculative
  • Processors/manufacturers
  • Facilitative organizations

14
Behavioral Systems
  • Input-output
  • Different parties provide goods and services
    moving toward final products
  • Communications
  • Matching supply and demand
  • Adaptation to outside changese.g.,
  • Consumer tastes
  • World supply

15
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
    efficiencyintermediate functions may add value
  • Types of efficiency
  • Operational
  • Pricing

16
Agricultural Production and Marketing
  • Structure of U.S. agriculture
  • Dominated by small, family farms
  • Product characteristics
  • Raw material
  • Bulkiness and perishability
  • Quality variation
  • Production characteristics
  • Total product
  • Annual variability
  • Seasonality

17
Production characteristics
  • Total product
  • Increase due to productivity
  • Annual variability
  • Seasonality
  • Geographic concentration
  • Varying production costs
  • Farm supply industry (derived demand)

18
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

19
Some Trends
  • Differentiated products
  • Specialty/nice products
  • Interdependence of manufacturers and suppliers
  • High price risk
  • Science and innovation
  • Closed information systems
  • 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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