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Understand what comprises the Food Manufacturing/Processing Industry. Understand the changes occurring within this industry and the resultant implications. Specifically: Which food types receive the greatest value-added throughout the manufacturing process. Recent mergers / consolidation

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U s food manufacturing l.jpg

  • Understand what comprises the Food Manufacturing/Processing Industry.

  • Understand the changes occurring within this industry and the resultant implications.

  • Specifically:

    • Which food types receive the greatest value-added throughout the manufacturing process.

    • Recent mergers / consolidation

    • Prevalence of production contracts, owner-integration and marketing contracts per product type.

  • Identify recent trends in new product offerings and those bearing nutritional claims.

  • Understand the degree of direct foreign investment and recent changes to the trade deficit.

  • U.S. Food Manufacturing

    EconS 451: Lecture #2

    Source: U.S. Food Marketing System, 2002, ERS-USDA


    U s food manufacturing processing definition l.jpg
    U.S. Food Manufacturing / Industry.Processing Definition

    • All firms and establishments that manufacture or process foods or beverages for human consumption and

    • Other related products such as manufactured ice, chewing gum, vegetable and animal fats/oils and prepared feeds for animals and fowl.

    Source: U.S. Food Marketing System, 2002, ERS-USDA


    A value added business l.jpg
    A Value-Added Business Industry.

    Source: U.S. Food Marketing System, 2002, ERS-USDA


    Nominal value of processed food shipments l.jpg
    Nominal Value of Industry.Processed Food Shipments

    • Indication of a mature market

    Source: U.S. Food Marketing System, 2002, ERS-USDA


    Where the value added by manufacturers occurred l.jpg

    Value added = Shipment Value - Cost of Production Industry.

    Ratio of Value Added = 1-(Value Added / Shipment Value)

    Meat

    Dairy

    Fats / Oils

    Where the Value Added by Manufacturers Occurred

    Ratio of Value Added

    All < 30%

    http://www.ams.usda.gov/mnreports/nw_ls410.txt

    • Bakery Products

    • Beverages

    All > 60%

    Source: U.S. Food Marketing System, 2002, ERS-USDA


    Unique agriculture attributes l.jpg
    Unique Agriculture Attributes Industry.

    Source: U.S. Food Marketing System, 2002, ERS-USDA



    Primary commodities under contract l.jpg
    Primary Commodities Under Contract Industry.

    • Sugar Cane

    • Market Eggs

    • Potatoes

    • Fresh Veg.

    • Hatching Eggs

    Production Contracts

    Ownership Integrated

    Marketing Contracts

    • Sugar Beets

    • Processed Veg.

    • Broilers

    • Hatch Eggs

    • Potatoes

    • Sugar Cane

    • Market Turkeys

    • Milk

    • Citrus Fruits

    • Other Fruits/Nuts

    • Dry Beans / Peas

    Source: U.S. Food Marketing System, 2002, ERS-USDA


    Concentration continues top four firm market share l.jpg
    Concentration Continues: Industry.Top Four Firm Market Share

    Source: U.S. Food Marketing System, 2002, ERS-USDA


    Mergers and acquisitions l.jpg
    Mergers and Acquisitions Industry.

    http://www.newint.org/issue172/facts.htm

    http://en.wikipedia.org/wiki/Philip_Morris

    http://money.cnn.com/magazines/fortune/fortune500/snapshots/562.html

    http://www.kelloggcompany.com/kelloggco/our_company/index.html

    Source: U.S. Food Marketing System, 2002, ERS-USDA


    Number of acquisitions divestures l.jpg
    Number of Acquisitions / Divestures Industry.

    Source: U.S. Food Marketing System, 2002, ERS-USDA



    New food products introduced into market l.jpg
    New Food Products Introduced into Market Industry.

    Source: U.S. Food Marketing System, 2002, ERS-USDA


    Type of nutritional claims l.jpg
    Type of Nutritional Claims Industry.

    Source: U.S. Food Marketing System, 2002, ERS-USDA


    Relationship between coupon distribution and redemption l.jpg
    Relationship between Coupon Industry. Distribution and Redemption

    Source: U.S. Food Marketing System, 2002, ERS-USDA


    Imports exports and fdi l.jpg
    Imports, Exports and FDI Industry.

    Source: U.S. Food Marketing System, 2002, ERS-USDA


    Other manufacturing changes l.jpg
    Other Manufacturing Changes Industry.

    • Total Employment slightly growing in food processing industry

      • Meat Processing accounts for 30%

      • Fruit and Veg. Processing accounts for 13%

      • Bakery Products 12%

  • Cost of Inputs Decreases between 1997-2000

    • 12% Less for crude foodstuffs

    • 4 % Less for intermediate materials (packaging, etc.)

  • Source: U.S. Food Marketing System, 2002, ERS-USDA


    Summary l.jpg
    Summary! Industry.

    • Total U.S. Food Manufacturing accounts for about 2% of GDP, the total food and fiber system is about 12% of GDP.

    • Proportion of disposable income spent on food continues to drop while total value of all processed food shipments remains relatively flat.

    • Concentration in the food processing sector has increased.

    • New food products introduced into the market have declined since 1995.

    • Those new food products that have been introduced focus on specific nutritional / health claims.

    • Food coupon redemption rates are very low.

    • Trade deficit in U.S. Food Manufacturing grows.

    Source: U.S. Food Marketing System, 2002, ERS-USDA


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