mktg 442 some specific markets lars perner, instructor 1 some specific agricultural products markets...
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MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 1
SOME SPECIFIC AGRICULTURAL SOME SPECIFIC AGRICULTURAL PRODUCTS MARKETSPRODUCTS MARKETS
Beef and dairyBeef and dairy Poultry and eggsPoultry and eggs TobaccoTobacco
MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 2
LivestockLivestock
FARMBreedingRaising
Fattening
WHOLESALING
RETAIL
MANUFAC-TURING
MEATPACKAGING
SLAUGHTER
RAISING
BREEDING
FATTENING
RESTAURANTSAND
INSTITUTIONS
MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 3
Livestock Marketing IssuesLivestock Marketing Issues
Channels are often shorter to preserve Channels are often shorter to preserve freshness freshness higher cost of distribution higher cost of distribution
Relatively high value-bulk ratioRelatively high value-bulk ratio Production concentration in some areasProduction concentration in some areas Significant price cyclesSignificant price cycles
Stock must actually be held back to increase Stock must actually be held back to increase future production!future production!
Growth of feedlotsGrowth of feedlots Economies of scaleEconomies of scale
MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 4
Meat ProductionMeat Production
1,000 POUND STEER
60%HIGHER VALUE
CUTS
40%HAMBURGER
540 LBS.RETAIL MEAT
620 POUND
CARCASS
MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 5
HIGHER PRICES
LOWER PRICESGREATEROUTPUT
INVESTMENT(CAPACITY
ADDED)
DISINVESTMENT(CAPACITY LOWERED)
Price Cycles (Review)Price Cycles (Review)LAG TIME
LAG TIME
LAG TIME
LAG TIME
LAG TIME
MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 6
Consumption Over TimeConsumption Over Time
U.S. Red Meat Consumption Trends
0
50
100
150
200
1940 1950 1960 1970 1980 1990 2000 2010
Year
Poun
ds
per
Capit
a
Beef Pork Lamb Total red meat
Year Beef Pork Lamb Total
1950 67 64 4 135
1955 72 62 4 138
1960 69 60 4 133
1965 78 55 3 136
1970 86 55 3 144
1975 90 43 2 135
1980 78 57 1 136
1985 81 51 1 133
1990 65 46 1 112
1995 65 49 1 115
1998 65 49 1 115
MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 7
Livestock AssemblyLivestock Assembly
OptionsOptions Local cooperative associationsLocal cooperative associations Country dealersCountry dealers Concentration yardsConcentration yards Terminal public marketsTerminal public markets
Move toward decentralized dealingsMove toward decentralized dealings
MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 8
Meat PackagingMeat Packaging
Heavily concentrated industryHeavily concentrated industry Vertical integration into processing Vertical integration into processing
but not retailingbut not retailing Low traditional margins, due in part Low traditional margins, due in part
to over-capacityto over-capacity
MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 9
Milk and DairyMilk and Dairy
About 10% of farm salesAbout 10% of farm sales ProductsProducts
MilkMilk WholeWhole Low-fatLow-fat Non-fatNon-fat CreamCream
YogurtYogurt Ice creamIce cream ButterButter CheeseCheese
MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 10
PoultryPoultry Large increase in Large increase in
turkey consumptionturkey consumption Increased efficiency in Increased efficiency in
chicken productionchicken production Increase in post-farmer Increase in post-farmer
value (e.g., fast food)value (e.g., fast food) Processing is very Processing is very
labor intensive labor intensive shift shift of production to low of production to low wage areaswage areas
Per Capita Chicken Consumption
0.00
20.00
40.00
60.00
80.00
100.00
1940 1960 1980 2000
Year
Pounds
PCConsumption
MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 11
Poultry PricesPoultry Prices
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
1940 1960 1980 2000
Farm value
Retail
Farm1993
Ret1993
Prices adjusted for inflation in 1993 dollars
MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 12
Chicken as Healthy FoodChicken as Healthy Food
Kentucky Fried Chicken is now known as KFCKentucky Fried Chicken is now known as KFC Chicken first entered fast food menus mostly Chicken first entered fast food menus mostly
as as Fried chickenFried chicken Fried chicken sandwichesFried chicken sandwiches NuggetsNuggets
Broiled chicken sandwiches are increasingly Broiled chicken sandwiches are increasingly availableavailable More delicate and more perishableMore delicate and more perishable Less convenient to eatLess convenient to eat Less of a fried tasteLess of a fried taste
MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 13
Chicken ExportsChicken Exports
Increasing demand for meat in Increasing demand for meat in expanding economiesexpanding economies
WTO calls for opening of agricultural WTO calls for opening of agricultural marketsmarkets
Exports of lower value dark meat Exports of lower value dark meat from U.S. markets from U.S. markets
History of heavy export subsidiesHistory of heavy export subsidies
MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 14
TobaccoTobacco
High value crop but decreasing High value crop but decreasing proportion of farm cash receiptsproportion of farm cash receipts
Large economies of scale in cigarette Large economies of scale in cigarette manufacturing and strong brand manufacturing and strong brand differentiationdifferentiation
Supply control program (since 1933) Supply control program (since 1933) with allocation to eligible farmerswith allocation to eligible farmers