Food Laws and the Market and Distribution Systems

1. Food Laws and the Marketand Distribution Systems Chapter 2

2. Objectives • Explain the flow of goods through the market or distribution channel • Identify the major sources from which food and products originate • Describe the various intermediaries used in delivering food and products to food service operators

3. Objectives (cont’d.) • Distinguish among the different values added in the distribution channel • Define the different forces affecting the distribution channel • Explain the function and business of the market

4. Objectives (cont’d.) • Identify the laws and agencies involved in protecting consumers and the food service industry, including the: • Organic Foods Production Act of 1990 • Nutrition Education and Labeling Act

5. Marketing Channel • Buyer acquires food through exchange of goods in marketing channel • Also called distribution channel • Three components of the channel • Sources • Intermediaries • Markets

6. Sources • Sources are where things begin • Growers • Ranchers, farmers, fishermen • Fabricators (processors) • Take raw food and process it further • Manufacturers • Create new products by combining goods from growers and processors (e.g., fruit cocktail)

7. Intermediaries • Middlemen in between sources and food service operators or buyers • Merchant wholesalers • Brokers • Manufacturer’s representatives or agents • Importers • Dealers

8. Intermediaries (cont’d.) • Intermediaries add value to product • Form value • Changes the form of the product • Time value • Obtaining the product just before it is needed • Place value • Product delivered to buyer’s place of work

9. Intermediaries (cont’d.) • Intermediaries add value to product (cont’d.) • Information value • Assistance with recipe development is an example of informational services offered

10. Intermediaries (cont’d.) • Forces that affect the distribution channel • Supply and demand • Weather • Other forces • Political, ethical, legal, technological, and intangible

11. Markets • Giant supermarkets replaced fresh food marketplaces about 50 years ago • Coming into favor in recent years • Farmer’s markets, e-commerce retailers, group purchasing organizations, wholesale clubs, and community-supported agriculture

12. U.S. Code, Federal Agencies, and Food Laws • The U.S. has various agencies that regulate the food supply • The U.S. code is a compilation of laws up to January1996

13. U.S. Department of Agriculture (USDA) • In charge of inspection and safety of all meat, poultry, and egg products • Researches human nutrition and suggests daily requirements • Opens international markets for U.S. agricultural products • Social programs

14. U.S. Department of Agriculture (USDA) (cont’d.) • Safe drinking water to rural communities • Food Safety and Inspection Services (FSIS) is a division of USDA • Inspection is mandatory • Grading is voluntary • Processing plants are following newer rules

15. U.S. Department of Agriculture (USDA) (cont’d.) • All meat inspected by FSIS has round purple stamp on carcass and major cuts • USDA grading • Inspection of meat is mandatory, but grading is voluntary • Standardized across the nation • LCPS: consumer protection

16. U.S. Department of Agriculture (USDA) (cont’d.) • Federal Organic Foods Protection Act • Passed in 1990 • Regulates guidelines for organic food production • Country of Origin Label (COOL) • Law passed in 2009 requires labeling as to where product originated

17. Food and Drug Administration (FDA) • Responsible for nutritional labels on many products • Bioterrorism Act of 2002 • Addresses safety and security of food and drug supplies, drinking water and supplies • Regulates food labeling with respect to health claims

18. Food and Drug Administration (FDA) (cont’d.) • Laws related to nutrition and labeling • Fair Packaging and Labeling Act • Nutrition Labeling and Education Act • Federal Food, Drug and Cosmetic Act • Food Allergen Labeling and Consumer Protection Act of 2004

19. U.S. Federal Trade Commission (FTC) • Independent agency of U.S. government • Mission is to protect consumers and eliminate anticompetitive business practices • Requires that Web advertisements be more accurate in product representations

20. Uniform Commercial Code (UCC) • Series of laws that regulate sales and other commercial transactions • Especially for goods and services that cross state lines • Regulates processing checks, notes, and other commercial papers

21. Environmental Protection Agency (EPA) • Created in 1970 to protect human health and the environment • Researches and sets national standards for environmental programs • Regulations affect the drinking water supply and use of fertilizers and additives

22. Summary • The distribution channel is made up of sources, intermediaries, and markets • Form, time, place and information value are added through the chain • Supermarkets, farmer’s markets, and other types of markets exist

23. Summary (cont’d.) • A variety of U.S. agencies regulate the quality, inspection and labeling of food • Many laws have been passed to protect the consumer • Nutrition labeling • Country of origin • Food allergen information