Food Laws and the Market and Distribution Systems Chapter 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

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

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

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

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)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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