AGR 130 Test one – Flashcards
112 test answers
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What does food marketing create for the consumer?
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Utility
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Which food marketing utility is created by storage activities?
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Time
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Which food marketing utility is created by the transportation function?
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Place
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Which food marketing utility is created by the processing function?
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Form
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Which food marketing utility is created through exchange in the marketing system?
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Possession
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What are the four utilities of food marketing?
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Time, Place, Form, Possession
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Food Bill
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The value of total expenditures on food in any given year
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In 2007, how much did Americans spend on food including alcohol?
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$1.3 trillion $4,340 per person
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How much of the disposable personal income does the food bill represent?
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9.8%
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What is the largest single item in the average family budget?
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Health care
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What is the second largest single item in the average family budget?
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Food
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How much does food at home represent of the food bill now?
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49%
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How does food away from home represent of the food bill now?
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51%
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Food Marketing Bill
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Portion of the food bill created by marketing system
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How do you calculate the food marketing bill?
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Food bill minus farm value
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What represents 48% of the 2006 food marketing bill?
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Labor
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Domestically Produced Farm Food
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Total food expenditures minus alcohol, imported food, and nonfarm food items (salt and yeast)
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Farm Share
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Value of farm production as a percentage of the retail price of food
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How much of the marketing bill for domestic farm food is the farm share?
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19%
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How much of the marketing bill for domestic farm food do the farmers earn?
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7% out of the 19%
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How much of the food marketing bill for domestic farm food goes toward inputs purchased by farmers?
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12% out of the 19%
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How much of the marketing bill for domestic farm food pays for utilities (total retail price)?
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81%
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Why does beef have such a high farm value share of retail food prices in 1999?
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There is little time utility because there is no season Transportation (rail) = low cost Form change is substantial but very efficient and relatively low cost
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What are the food market levels?
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Assembly, Commodity Processing, Food Processing, Distributors, and Retailers
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Assembly
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The collection of small amounts of product from many producers to create a large enough amount of product for efficient shipment
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Grain Elevator
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A grain storage facility that buys grain from farmers by the truckload and sells it to processors by the railcar load
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Commodity Processors
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Companies that buy raw agricultural commodities and process them into food product ingredients
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What are examples of commodity processing companies?
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Cargill, ConAgra
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Food Processors
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Companies that buy ingredients and/or raw agricultural commodities and process them into retail products
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What are examples are food processing companies?
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Campbell's, Heinz, Kellogg's
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Distributors
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Wholesales and others who buy large lots of food from processors and distribute it to many retailers in smaller lots
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Retailers
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The supermarket and other vendors from whom the public buys food
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Industrialization
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The use of modern industrial concepts of production routinization, procurement through strategic alliances, coordination, and contracting in the food system
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What are the facilitating functions of the food marketing system?
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Grades and standards Financing Risk Bearing Market Information
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Marketing Margin
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The difference between the prices of a product at any two points in the marketing chain
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Derived Farm-Level Demand
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The primary retail-level demand minus the marketing margin
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Derive Retail-Level Supply
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The primary farm level supply plus the marketing margin
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Marketing Efficiency
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A measure of the costs of performing marketing tasks
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Elasticities by Market Level
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In any given market for any given commodity, the elasticities of supply and demand will always be more inelastic at the farm level than at the retail level
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What two food regulation acts were passed by Congress in 1906 following Upton Sinclair's The Jungle?
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The Meat Inspection Act The Pure Food and Drug Act
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What federal agency was created by Congress following Silent Spring?
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The Environmental Protection Agency
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What food regulation act was passed by Congress in 1972 following Silent Spring?
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The Federal Insecticide, Fungicide, and Rodenticide Act
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What act was passed in 1996 for the federal regulation of chemical use in food crops?
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The Food Quality Protection Act
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Economics 1
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The study of choices and decisions
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Economics 2
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The social science that deals with the allocation of scarce resources among an unlimited number of competing alternative uses
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Agricultural Economics
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The social science that deals with the allocation of scarce resources among those competing alternative uses found in the production, processing, distribution, and consumption of food and fiber
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Why is agricultural economics different than economics?
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The production process is completely different because it deals with the biological cycle
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What are the three foundations for economics?
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Self-Interest, Scarcity, Choice
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What are the five basic economic decisions?
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What, How, How Much, When, For Whom (to produce)
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What are the two economic systems in the United States?
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Price system and command system
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Price System
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Consumers vote with their money
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What is the price system similar to in economics?
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Capitalism
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What is the price system similar to in politics?
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Democracy
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Command System
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Someone tells you how to vote with your money
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What is the command system similar to in politics?
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Communism
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What economic system is used in the United States?
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Mixed System
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What industries in the United States are command based?
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Healthcare, public education, security/defense
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What industries in agriculture are command based?
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Illegal substances (marijuana, tobacco, hemp)
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Macroeconomics
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The study of the entire economics system, usually at the national or international level
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What does macroeconomics focus on?
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How the total economic system operates
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What are examples of macroeconomics?
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GDP, imports/exports, labor force, rate of inflation, money supply, interest rates
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Approximately how much of the United States cropland is used for exports?
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40%
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Microeconomics
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Deals with economics of individual producers and consumers
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What are examples of microeconomics or production?
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What inputs to purchase, what production technique to use, which product to produce
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Microeconomics of Production
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The economics of the individual producer or firm making management decisions
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Microeconomics of Consumption
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The economics of the individual consumer making decisions about the allocation of the family budget
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Market Economics
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The study of dealings in a particular commodity by all of its potential buys and potential sellers taken as a group
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Agribusiness
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Firms engaged in farm service marketing, agricultural production, food processing, food distribution, and consumption
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Marketing
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The study of the creation of value that occurs as a good moves from producer to consumer
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Economic Models
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A conceptualization, based on assumptions, of how economic activity occurs
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Ceteris Paribus
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All else equal
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Price
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Per-unit concept
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Cost
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Total concept of price times quantity purchased
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Opportunity Cost
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A measure of how much of an earning opportunity is foregone by using a resource in its current employment
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Total Economic Cost
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Account Cost + Opportunity Cost
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Economic Profit
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Earned Money - TEC
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If you get a negative economic profit, what have you done to the economy?
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Destroyed value
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Diminishing Returns
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As additional units of an economic variable are used, the additional impact of that variable will eventually increase at a decreasing rate
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The Law of Diminishing Marginal Utility
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The amount of total utility gained from consuming a good eventually increases at a decreasing rate assuming ceteris paribus
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The Law of Diminishing Marginal Product
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If you add additional units of inputs to fixed amounts of other inputs, the additional production from each additional input will eventually decrease
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Where are economic decisions made?
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On the margin
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Margin
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The slope
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Marginal
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An additional or incremental unit of something
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Correlation
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Causation Fallacy - If 2 things are related, then because they're related, one causes the other
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Post Hoc Fallacy
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After this, therefore because of this
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Fallacy of Composition
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What is true for part is true for the whole
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Zero
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Sum Game Fallacy - If someone gains, someone else must lose
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Facts
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What we know to be the case
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Beliefs
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What we think to be the case
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Values
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What we think should be the case
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Food Industry
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all firms, large and small, engaged in the production, processing, and/or distribution of food, fiber, and other agricultural products.
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Farm Service Sector
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those firms that produce and distribute the goods and services that farmers (producers) buy as a part of their business activities.
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Producers sector
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those firms engaged in the production of raw food, fiber, and other agricultural products.
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Processors sector
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those firms that convert raw agricultural products into food products in the form that the consumer eventually buys.
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Commodities processors
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buy raw agricultural products that have not been processed and convert them into food ingredients. A flour miller who buys wheat and sells flour is an example.
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Food product processors
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buy food ingredients and process them into the form where they are ready for sale to the consumer. For example, Hunt's buys tomatoes and vinegar and makes them into ketchup.
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Food service distributors
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those firms that distribute food products from food product processors to away from home dining facilities.
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Marketers sector
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the set of firms that distributes food products from processors to the final consumer when and where the consumer wants it. That consumer may be a retail shopper or someone eating at an away from home dining facility.
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Farm structure
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the study and analysis of farm characteristics such as the physical and economic size of farms, ownership of farms, and characteristics of the farm manager and his or her family.
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Farm
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defined by the U.S. Department of Agriculture as any establishment that has (or should have had) at least $1,000 sales of agriculture products during the year.
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Typology
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a system developed by the USDA that classifies farms based on economic size and characteristics of the farm operator.
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Concentration
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the dominance of an industry by a few, firms, usually measured by the percentage of the total market owned by the largest four (or any other number) firms.
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Market Power
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the ability of a firm or group of firms to control price and/or quantity traded in a market because of the dominance of the firm(s) in the market.
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Globalization
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the expansion of firms across national boundaries.
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Coordination
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the communication system that conveys consumer wants to producers. Traditionally, prices were the primary means of comuunication. More recently management information systems have replaced prices.
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Vertical integration
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the combination of different businesses at different stages of production/ marketing sequence under a single management.
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Biofuels
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alternatives to petroleum-based fuels produced from biological or plant-based feedstocks.
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Ethanol
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A biofuel form of alcohol that can be mixed with gasoline for use in automobiles.
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