5 pages
Mr.Q
att00007.zipcontent/FS14/ABM/100/FS14-ABM-100-001-97DGDT-EL-02-036/2_OverviewFoodSystem.F14.pptx
Overview of the Agri-Food System
An Introduction to the Who and the What
What is the Agri-Food System
Who are the Players?
What do the Players Do?
Key Questions . . .
What is the Agri-Food System?
Collection of markets that work to produce and distribute food and agricultural products to the final consumer
“Market Channel” or “Supply Chain” for food and agricultural products
“Stable to Table”
“Farmgate to Dinner Plate”
Farmgate to Dinner Plate
Farmgate to Dinner Plate
Who Are the Players in the Rice Market Channel?
Over-Simplified Agri-Food System
Farm Service/ Agricultural Input Suppliers
Processors (including manufacturers)
“Marketers” (e.g., wholesalers, distributors, & retailers)
CONSUMERS
Producers
Complex Agri-Food System
Farm Service/Ag.Input Supplier
U.S. CONSUMER
Producers
Assemblers
Initial Food Processors
Food Manufacturers
Import/ Export Markets
Food Service Retailers
Large Retail Food Stores
Institutional Wholesalers
Grocery Wholesalers
Small Retail Food Stores
Specialty Retailers
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The Players: Ag. Input Suppliers
Firms that provide inputs to the farmers
Feed -
Fertilizer -
Equipment -
Financial -
Primary customer is the farmer
Firms who produce raw food and agricultural products
Ranchers & Farmers
Nursery & Greenhouse Owners
Produce and harvest our food and agricultural commodities
From whom does the producer buy?
To whom does the producer sell?
The Players: Producers
The Players: Assemblers
Firms who buy raw commodities from producers in order to sell to others
Buy lots of small quantities
Sell large quantities
Does not change the form of the commodity or product
Customer is usually the processor
The Players: Initial Processors
General term for firms who buy raw agricultural commodities and processes them into food ingredients
Adds value by changing the commodity’s form
Sells to another processor or manufacturer
Less commonly known companies because they sell ingredients in bulk
ADM
Cargill
Trend: Merger of commodity processing and assembly
Complex Agri-Food System
Farm Service/Ag.Input Supplier
U.S. CONSUMER
Producers
Assemblers
Initial Processors
Food Manufacturers
Import/ Export Markets
Food Service Retailers
Large Retail Food Stores
Institutional Wholesalers
Grocery Wholesalers
Small Retail Food Stores
Specialty Retailers
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The Players: Food Manufacturer
A pure manufacturer buys ingredients rather than raw agricultural commodities and manufactures them into a final food product
Campbell’s
Kraft
PepsiCo
Trend: merge some of the processing and manufacturing functions to become a “processor/manufacturer” or “food product processor”
Turn raw commodities into final food products
More commonly known names:
Hershey’s - processes cocoa & manufactures chocolate Kisses
ConAgra Foods - processes soybeans & manufactures Wesson Oil & Parkay)
Smithfield – owns and processes hogs, manufactures Lean Generation Pork
Trend in Food Manufacturing
Often used as a general term for any firm engaged in distributing food products from manufacturer to the final consumer
Change the time and place of product, but not the form
BUT way too general a term - why?
The Players: “Marketers”
The Players: Wholesalers
Food-Side analogy to an Assembler
Firms who buy final products from manufacturers in order to sell to others
Buy large quantities - Sell small quantities
Do not change form
Do not sell direct to consumers
Two Categories of Wholesalers
Institutional
Grocery
Primary customer is the HRI Industry (Hotels-Restaurants-Institutions)
Restaurants
Hospitals
Dormitories
Examples:
Sysco
US Foods
Gordon Food Service
Institutional (Food Service) Wholesalers
Primary customers are food retailers
Examples:
SUPERVALU
SpartanNash (Spartan Stores/Nash Finch merged in 2013)
Trend: big retailers serve as their own wholesaler, therefore the term Wholesaler-Retailer (W-R) - in 2012, stopped ranking wholesalers and retailers separately!
Grocery Wholesalers
SpartanNash operates 167 of its own retail stores – common MI stores include D&W Fresh Markets, Family Fare Supermarkets, Family Fresh Market, Glen’s Markets, and VG’s Food and Pharmacy. Independent grocery stores can also be supplied by SpartanNash, for example ShopRite on Trowbridge.
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The Players: Retailers
Firms from whom consumers buy food
Retail Food Stores (supermarkets, convenience stores, supercenters, etc.)
Wal-Mart (#1)
Kroger (#2)
Costco (#3)
Target (#4
Meijer (#17)
Food Service Retailers
Away-from-home purchases
Restaurants & Fast Food
Specialty Retailers
Ethnic Markets
Bulk Food Retailers
Health Food Stores (e.g., Better Health)
Source: SN Top 75 2014
SN Top 75 Retailers
WalMart
Kroger
Costco
Target
Safeway
Supervalu
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The Players: Consumers
“US”
We spend nearly $1.5 trillion dollars a year on food and alcohol
We spend about one-half of our food expenditures for meals away-from-home
We want quality, not quantity
We are ethnically diverse
We are aging
Variety rules!
Concluding Remarks
To Understand the Agri-Food System You Must Understand:
Firms and Functions – who does what?
Determinants of Decisions – what economic factors affect decisions?
Levels and Linkages – how do firms coordinate decisions?
Drivers of Change – what forces inside and outside are affecting the system?
Get to the Bottom Line!
