Price Determination in the Australian Food Industry A Report

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Figure 132. Targeting the stomach How they eat? Overlay this matrix with the changing way that people buy Where they eat? Who is the target? New food products and marketing aim to influence, define and capture sufficient critical mass in the niches and nodes within the sectors of this cube. VALUE-ADDING IN FRESH FOOD Price Determination in the Australian Food Industry A Report Not just an elaborate transformation thing Value-adding is not limited to the fields of development which see a raw material or a commodity form of product transformed into a different form that is easier for the next user or end consumer. There is considerable value-adding that is undertaken through fresh food chains as product moves from picking or harvesting through to the retail stand in the store. Fresh food intermediaries – including packers, wholesalers and retailers – are often criticised for adding margin to the final price of the product. The table on the right identifies some of those processes and the nature of the value-adding that is undertaken. 130
Does the fresh chain add value? Examples of the role of intermediaries in the fresh product chain in view of the differentials between retail prices and farmgate returns are as follows: Stage Value added Costs added Grower • Production in accordance with Production costs growing specifications • Harvesting to optimise fruit quality Packing house • Grading for consistency Packing and storage fee • Packing into market consignments Freight cost • Storage in controlled environment • Freight product to market Wholesaler • Collection and presentation of product Wholesaler’s fee or deducted margin in a central location to buyers • Marketing produce to retailers either in market or direct to buyers in retail or food service • Storage in controlled environment Logistics costs to store Retailer • Presentation of product to the Retailer margin to cover costs of consumer in retail outlet doing business • Storage in controlled environment Costs of storage, display, handling ADJUSTMENT Purpose This report seeks to identify and explain major adjustment challenges facing food sectors and subsectors – in the context of a study of the factors determining the prices of food. There are several situations where rapidly changing market arrangements have created adjustment problems. In this section: • key areas are identified where strong adjustment is occurring due to commercial forces, trade impacts or other external factors; • an illustration is provided of the ongoing and recurring impact that drought has on food supply and pricing. Price Determination in the Australian Food Industry A Report 131
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Price Determination in the Australi
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© Commonwealth of Australia 2004 T
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FOOD AND AGRICULTURE BUSINESS GROUP
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FIGURES Price Determination in the
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• The current focus of retail cha
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• assertions as to market power i
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Overview - main drivers of prices i
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Food lines The analysis of food pro
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Figure 1. Overview of the approach
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Figure 2. Corporate profitability I
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Figure 4. Major drivers of prices a
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5.3 The greater influence of prevai
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DAIRY - PACKAGED MILK Overview of t
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Figure 10. Whole milk, 2 litre, sup
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Prices through the chain Our analys
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Figure 16. Natural cheddar cheese:
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Farmgate prices Farmgate prices are
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DAIRY - ANALYSIS OF PRICING OF DAIR
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Figure 25. Dairy butter and blend s
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‘Step-ups’ are paid by several
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THE MEAT SECTOR Analysis of the det
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The approach taken The pricing anal
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The changing value chains - various
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The approach taken Assumptions used
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Figure 39. Lamb market sales, ’00
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Figure 41. Lamb: Major drivers of p
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Observations The price comparison s
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Figure 46. Pork products, supply ch
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Figure 48. Value and cost-adding fr
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Supply chain management Wholesale m
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Figure 51. Fresh vegetables: Major
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FRESH HORTICULTURE - WHOLESALE MARK
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FRESH HORTICULTURE - ANALYSIS OF PR
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market access - in the United State
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The industry’s product mix The ke
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PROCESSED FRUIT AND VEGETABLES Anal
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Figure 69. Frozen vegetables, peas,
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PROCESSED PINEAPPLES - ANALYSIS OF
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Figure 75. Fresh fruit, with juice,
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GRAIN AND OILSEED PRODUCTS Analysis
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Figure 79. Flour, 1kg, supply chain
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Figure 82. Share of retail price of
Page 92 and 93: OILSEEDS - OVERVIEW Background The
Page 94 and 95: Figure 87. Oils and fats, supply ch
Page 96 and 97: The amount represented by the retai
Page 98 and 99: Industry risks The key area of risk
Page 100 and 101: • The major cost faced by egg pro
Page 102 and 103: Figure 96. Consumer price index, fo
Page 104 and 105: • Many such operators have indica
Page 106 and 107: SUGAR PRODUCTS Analysis of the dete
Page 108 and 109: Figure 103. White sugar, 2kg, suppl
Page 110 and 111: Projected export returns for the co
Page 112 and 113: • Export prices are driven by glo
Page 114 and 115: Retail prices • The average retai
Page 116 and 117: Industry risk • The overall retur
Page 118 and 119: 4. The performance of Australian fo
Page 120 and 121: THE PERFORMANCE OF AUSTRALIAN VERSU
Page 122 and 123: THE PERFORMANCE OF GLOBAL BRAND MAN
Page 124 and 125: THE PERFORMANCE OF PRIMARY MANUFACT
Page 126 and 127: Our purpose in preparing this secti
Page 128 and 129: GROCERY RETAIL - WHAT DETERMINES PR
Page 130 and 131: The consumer trend towards eating o
Page 132 and 133: GROCERY RETAIL - PERFORMANCE OF GRO
Page 134 and 135: 6. Issues for consideration ISSUES
Page 136 and 137: PRODUCER INTEGRATION Does integrati
Page 138 and 139: Industries have in several cases ta
Page 140 and 141: Examples include: • 1 litre milk
Page 144 and 145: MAJOR ADJUSTMENT - WHAT’S HAPPENI
Page 146 and 147: THE IMPACT OF DROUGHT The sector Di
Page 148 and 149: Price Determination in the Australi
Page 150 and 151: Oczkowski, E, Murphy, T 1999, Influ
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Price Determination in the Australian Food Industry A Report

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