MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 1 SOME SPECIFIC AGRICULTURAL PRODUCTS MARKETS Beef and dairy Beef and dairy Poultry and eggs Poultry and eggs Tobacco Tobacco

MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 2 Livestock FARM Breeding Raising Fattening WHOLESALING RETAIL MANUFAC- TURING MEAT PACKAGING SLAUGHTER RAISING BREEDING FATTENING RESTAURANTS AND INSTITUTIONS

MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 3 Livestock Marketing Issues Channels are often shorter to preserve freshness  higher cost of distribution Channels are often shorter to preserve freshness  higher cost of distribution Relatively high value-bulk ratio Relatively high value-bulk ratio Production concentration in some areas Production concentration in some areas Significant price cycles Significant price cycles Stock must actually be held back to increase future production! Stock must actually be held back to increase future production! Growth of feedlots Growth of feedlots Economies of scale Economies of scale

MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 4 Meat 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 PRICES GREATER OUTPUT INVESTMENT (CAPACITY ADDED) DISINVESTMENT (CAPACITY LOWERED) Price Cycles (Review) LAG TIME

MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 6 Consumption Over Time YearBeefPorkLambTotal

MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 7 Livestock Assembly Options Options Local cooperative associations Local cooperative associations Country dealers Country dealers Concentration yards Concentration yards Terminal public markets Terminal public markets Move toward decentralized dealings Move toward decentralized dealings

MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 8 Meat Packaging Heavily concentrated industry Heavily concentrated industry Vertical integration into processing but not retailing Vertical integration into processing but not retailing Low traditional margins, due in part to over-capacity Low traditional margins, due in part to over-capacity

MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 9 Milk and Dairy About 10% of farm sales About 10% of farm sales Products Products Milk Milk Whole Whole Low-fat Low-fat Non-fat Non-fat Cream Cream Yogurt Yogurt Ice cream Ice cream Butter Butter Cheese Cheese

MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 10 Poultry Large increase in turkey consumption Large increase in turkey consumption Increased efficiency in chicken production Increased efficiency in chicken production Increase in post-farmer value (e.g., fast food) Increase in post-farmer value (e.g., fast food) Processing is very labor intensive  shift of production to low wage areas Processing is very labor intensive  shift of production to low wage areas

MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 11 Poultry Prices Prices adjusted for inflation in 1993 dollars

MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 12 Chicken as Healthy Food Kentucky Fried Chicken is now known as KFC Kentucky Fried Chicken is now known as KFC Chicken first entered fast food menus mostly as Chicken first entered fast food menus mostly as Fried chicken Fried chicken Fried chicken sandwiches Fried chicken sandwiches Nuggets Nuggets Broiled chicken sandwiches are increasingly available Broiled chicken sandwiches are increasingly available More delicate and more perishable More delicate and more perishable Less convenient to eat Less convenient to eat Less of a fried taste Less of a fried taste

MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 13 Chicken Exports Increasing demand for meat in expanding economies Increasing demand for meat in expanding economies WTO calls for opening of agricultural markets WTO calls for opening of agricultural markets Exports of lower value dark meat from U.S. markets Exports of lower value dark meat from U.S. markets History of heavy export subsidies History of heavy export subsidies

MKTG 442 SOME SPECIFIC MARKETS Lars Perner, Instructor 14 Tobacco High value crop but decreasing proportion of farm cash receipts High value crop but decreasing proportion of farm cash receipts Large economies of scale in cigarette manufacturing and strong brand differentiation Large economies of scale in cigarette manufacturing and strong brand differentiation Supply control program (since 1933) with allocation to eligible farmers Supply control program (since 1933) with allocation to eligible farmers