Price Determination in the Australian Food Industry A Report

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Figure 48. Value and cost-adding from farmgate to retail, pork Value and cost added through slaughter and processing into carcass portions Value and cost added through further processing into cuts, packaging and presentation Farmgate Wholesale Retail Dressed carcass $ 140 Carcass whole portions plus cuts $ 203 Retail products $ 578 Co-products Waste products $ 20 Sale/ recovery values Co-products include blood, offal, skin and fat which are sold for a variety of end uses. Price Determination in the Australian Food Industry A Report 52
FRESH HORTICULTURE PRODUCTS Analysis of the determinants of prices and costs in product value chains FRESH HORTICULTURE – OVERVIEW Background Fresh fruit and vegetables are a major food category and an important aspect of a study of food pricing in the context of the Australian food industry. The industry’s product mix It is estimated by HAL that the gross value of production of all fruit and vegetables in 2001 was $4.6 billion. The estimated gross value of production of the major lines that have been covered in the analysis are estimated by HAL as follows, representing lines which collectively make up 37 per cent of the horticulture sector. Figure 49. Gross value of production, fruit and vegetables, $m, 2001 $m 500 400 409 458 300 200 281 217 272 100 0 apples tomatoes bananas oranges potatoes broccoli 70 Source: HAL 2003 Supply factors There have been changes over time in the structure of many commodity sectors, with increasing farm sizes, a greater prevalence of irrigated farms and migration of production away from close proximity to urban areas. There are few major restrictions other than quarantine on the importation of fruit and vegetables – freshness and perishability remain key limitations but this is being overcome in certain areas with key import competition expected from New Zealand (apples) and Southeast Asia (pineapples, bananas). Demand factors • Fresh fruit and vegetables are the most frequently purchased, freshest items in the shopping basket. Despite the profile given to the fresh produce industry, it is estimated at only 4.5 per cent of consumer food expenditure. • Increased spending is due to better range and availability, and increased focus on health and nutrition in food, yet per capita consumption is now flat after a period of growth. • Time-poor consumers are driving the need for more convenient products (less preparation required) and convenient shopping locations. • Consumer expectations continue to rise with the growing availability of high quality alternative health and snack food offers. • There is a challenge for the fresh produce sector to retain consumer loyalty, especially amongst the young, as there is a wide array of new health, snack and other product alternatives supported by highly competitive marketing. Price Determination in the Australian Food Industry A Report 53
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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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Page 14 and 15: • The current focus of retail cha
Page 16 and 17: • assertions as to market power i
Page 18 and 19: Overview - main drivers of prices i
Page 20 and 21: Price Determination in the Australi
Page 22 and 23: Food lines The analysis of food pro
Page 24 and 25: Figure 1. Overview of the approach
Page 26 and 27: Figure 2. Corporate profitability I
Page 28 and 29: Figure 4. Major drivers of prices a
Page 30 and 31: 5.3 The greater influence of prevai
Page 32 and 33: DAIRY - PACKAGED MILK Overview of t
Page 34 and 35: Figure 10. Whole milk, 2 litre, sup
Page 36 and 37: Prices through the chain Our analys
Page 38 and 39: Figure 16. Natural cheddar cheese:
Page 40 and 41: Farmgate prices Farmgate prices are
Page 42 and 43: DAIRY - ANALYSIS OF PRICING OF DAIR
Page 44 and 45: Figure 25. Dairy butter and blend s
Page 46 and 47: ‘Step-ups’ are paid by several
Page 48 and 49: THE MEAT SECTOR Analysis of the det
Page 50 and 51: The approach taken The pricing anal
Page 52 and 53: The changing value chains - various
Page 54 and 55: The approach taken Assumptions used
Page 56 and 57: Figure 39. Lamb market sales, ’00
Page 58 and 59: Figure 41. Lamb: Major drivers of p
Page 60 and 61: Observations The price comparison s
Page 62 and 63: Figure 46. Pork products, supply ch
Page 66 and 67: Supply chain management Wholesale m
Page 68 and 69: Figure 51. Fresh vegetables: Major
Page 70 and 71: FRESH HORTICULTURE - WHOLESALE MARK
Page 72 and 73: FRESH HORTICULTURE - ANALYSIS OF PR
Page 74 and 75: market access - in the United State
Page 76 and 77: The industry’s product mix The ke
Page 78 and 79: PROCESSED FRUIT AND VEGETABLES Anal
Page 80 and 81: Figure 69. Frozen vegetables, peas,
Page 82 and 83: PROCESSED PINEAPPLES - ANALYSIS OF
Page 84 and 85: Figure 75. Fresh fruit, with juice,
Page 86 and 87: GRAIN AND OILSEED PRODUCTS Analysis
Page 88 and 89: Figure 79. Flour, 1kg, supply chain
Page 90 and 91: 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
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Retail prices • The average retai
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Industry risk • The overall retur
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4. The performance of Australian fo
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THE PERFORMANCE OF AUSTRALIAN VERSU
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THE PERFORMANCE OF GLOBAL BRAND MAN
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THE PERFORMANCE OF PRIMARY MANUFACT
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Our purpose in preparing this secti
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GROCERY RETAIL - WHAT DETERMINES PR
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The consumer trend towards eating o
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GROCERY RETAIL - PERFORMANCE OF GRO
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6. Issues for consideration ISSUES
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PRODUCER INTEGRATION Does integrati
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Industries have in several cases ta
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Examples include: • 1 litre milk
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Figure 132. Targeting the stomach H
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MAJOR ADJUSTMENT - WHAT’S HAPPENI
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THE IMPACT OF DROUGHT The sector Di
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Oczkowski, E, Murphy, T 1999, Influ
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Price Determination in the Australian Food Industry A Report

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