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SOME SPECIFIC AGRICULTURAL PRODUCTS MARKETS

SOME SPECIFIC AGRICULTURAL PRODUCTS MARKETS. Beef and dairy Poultry and eggs Tobacco. Livestock. BREEDING. SLAUGHTER. MEAT PACKAGING. RAISING. MANUFAC- TURING. WHOLESALING. FATTENING. FARM Breeding Raising Fattening. RETAIL. RESTAURANTS AND INSTITUTIONS.

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SOME SPECIFIC AGRICULTURAL PRODUCTS MARKETS

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  1. SOME SPECIFIC AGRICULTURAL PRODUCTS MARKETS • Beef and dairy • Poultry and eggs • Tobacco

  2. Livestock BREEDING SLAUGHTER MEAT PACKAGING RAISING MANUFAC- TURING WHOLESALING FATTENING FARM Breeding Raising Fattening RETAIL RESTAURANTS AND INSTITUTIONS

  3. Livestock Marketing Issues • Channels are often shorter to preserve freshness  higher cost of distribution • Relatively high value-bulk ratio • Production concentration in some areas • Significant price cycles • Stock must actually be held back to increase future production! • Growth of feedlots • Economies of scale

  4. Meat Production 60% HIGHER VALUE CUTS 1,000 POUND STEER 620 POUND CARCASS 540 LBS. RETAIL MEAT 40% HAMBURGER

  5. Price Cycles (Review) LAG TIME HIGHER PRICES INVESTMENT (CAPACITY ADDED) LAG TIME LAG TIME GREATER OUTPUT LOWER PRICES LAG TIME DISINVESTMENT (CAPACITY LOWERED) LAG TIME

  6. Consumption Over Time

  7. Livestock Assembly • Options • Local cooperative associations • Country dealers • Concentration yards • Terminal public markets • Move toward decentralized dealings

  8. Meat Packaging • Heavily concentrated industry • Vertical integration into processing but not retailing • Low traditional margins, due in part to over-capacity

  9. Milk and Dairy • About 10% of farm sales • Products • Milk • Whole • Low-fat • Non-fat • Cream • Yogurt • Ice cream • Butter • Cheese

  10. Poultry • Large increase in turkey consumption • Increased efficiency in chicken production • Increase in post-farmer value (e.g., fast food) • Processing is very labor intensive  shift of production to low wage areas

  11. Poultry Prices Prices adjusted for inflation in 1993 dollars

  12. Chicken as Healthy Food • Kentucky Fried Chicken is now known as KFC • Chicken first entered fast food menus mostly as • Fried chicken • Fried chicken sandwiches • Nuggets • Broiled chicken sandwiches are increasingly available • More delicate and more perishable • Less convenient to eat • Less of a fried taste

  13. Chicken Exports • Increasing demand for meat in expanding economies • WTO calls for opening of agricultural markets • Exports of lower value dark meat from U.S. markets • History of heavy export subsidies

  14. Tobacco • High value crop but decreasing proportion of farm cash receipts • Large economies of scale in cigarette manufacturing and strong brand differentiation • Supply control program (since 1933) with allocation to eligible farmers

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