Price Determination in the Australian Food Industry A Report

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FIGURES Price Determination in the Australian Food Industry A Report 1. Overview of the approach 12 2. Corporate profitability 14 3. Food prices: Key concepts 15 4. Major drivers of prices and costs in agrifood products 16 5. Milk utilisation, 2001–02 19 6. Milk product mix 20 7. Growth in large pack sizes, litres sold per quarter, average 21 8. Growth in private label milk, 2 litre, litres sold per week 21 9. Packaged milk: Major drivers of prices and costs 21 10. Whole milk, 2 litre, supply chain map 22 11. Retail versus farmgate packaged milk, $/litre equivalent in nominal amounts 23 12. Supermarket segment retail prices, milk, 2 litre, 1998–2003 23 13. Supermarket sales, packaged milk, 2 litre, % of retail sales value 24 14. Shares of supermarket sales of cheddar cheese 25 15. Sales in supermarkets, cheddar, 1kg and 500g, tonnes per annum 25 16. Natural cheddar cheese: Major drivers of prices and costs 26 17. Natural cheddar cheese, 500g and 1kg, supply chain map 26 18. Retail price of cheddar cheese, 1998–2003, 500g and 1kg, $/kg 27 19. Retail price of cheddar cheese packs, $/kg 27 20. Retail versus farmgate cheddar cheese prices, $/litre equivalent nominal amounts, 1998–2003 28 21. Share of retail dollar, cheddar cheese, margin analysis over time 29 22. Share of supermarket sales of spreads, 2002 30 23. Supermarket sales of spreads, tonnes 31 24. Dairy spreads: Major drivers of prices and costs 31 25. Dairy butter and blend spreads, supply chain map 32 26. Retail selling prices, dairy spreads, 500g tub, 1998–2003 32 27. Influences on farmgate environment, 2002 33 28. Milk prices, 2 litre packs, $/litre, July 2003 34 29. Meat consumption, kg/person, 2002 36 30. Share of meat output 37 31. Market share, meat, June 2003 37 32. Processing meat 38 33. Beef production, tonnes, 1997–2002 38 34. Beef: Major drivers of prices and costs 40 35. Rump steak, grassfed, 1kg, supply chain map 41 36. Farmgate, retail and wholesale price trends, cents/kg, 1998–2003 41 37. Shares of retail beef prices, 2003 42 38. Value and cost-adding from farmgate to retail, beef 43 39. Lamb market sales, ’000 per annum, 1997–2002 44 40. Consumption in the domestic meat market, kg/person 45 vi
41. Lamb: Major drivers of prices and costs 46 42. Leg of lamb, supply chain map 47 43. Farmgate OTH, wholesale and retail lamb trends, cents/kg, 1999–2003 47 44. Share of pork product market, 2002 48 45. Pork: Major drivers of prices and costs 49 46. Pork products, supply chain map 50 47. Farmgate, wholesale and retail pig meat trends, 1998–2003 50 48. Value and cost-adding from farmgate to retail, pork 52 49. Gross value of production, fruit and vegetables, $m, 2001 53 50. Fresh fruit: Major drivers of prices and costs 55 51. Fresh vegetables: Major drivers of prices and costs 56 52. Fresh fruit and vegetables, generic, supply chain map 57 53. Tomatoes, apples, supply chain map 57 54. Retailer risk management 58 55. Fresh fruit and vegetable markets – the practices 59 56. Orange products 61 57. End use of orange varieties 61 58. Shares of different retail prices, valencia oranges, loose and 3kg bag 62 59. Prices of valencia oranges, 1kg, $/kg, Brisbane 62 60. Total industry production, apples, ’000 tonnes, 1997–2000 63 61. Price of red delicious apples, 1kg, $/kg, Sydney, 2001–2003 64 62. Share of retail, apples 64 63. Prices of field gourmet tomatoes, 1kg, $/kg, Brisbane 65 64. Prices of cavendish bananas, 1kg, $/kg, Melbourne 65 65. Prices of granny smith apples, 1kg, $/kg, Melbourne 65 66. Prices of valencia oranges, 1kg, $/kg, Brisbane 65 67. Share of fruit and vegetable product market 66 68. Processed frozen vegetables: Major drivers of prices and costs 67 69. Frozen vegetables, peas, beans, supply chain map 68 70. Processed potatoes, supply chain map 68 71. Retail prices for frozen peas, cents/kg, 1993–2003 69 72. Retail and farmgate prices for pineapple, 450g tin, cents/tin, 1996–2003 70 73. Use of raw material in processing 70 74. Fruit juice, citrus: Major drivers of prices and costs 71 75. Fresh fruit, with juice, supply chain map 72 76. Shares of different retail prices, fresh juice 73 77. Market mix of the industry’s use of flour, 2002 74 78. Flour products: Major drivers of prices and costs 75 79. Flour, 1kg, supply chain map 76 80. Retail price of flour by label, 1kg pack, $/kg 76 81. Retail price of flour, 1kg pack, $/kg, 1993–2003 77 82. Share of retail price of packaged flour 78 83. Cost components of flour 78 84. Industry’s use of oils and fats 80 85. Market mix of the industry’s use of oils, 2002 80 86. Oilseeds: Major drivers of prices and costs 81 87. Oils and fats, supply chain map 82 88. Market mix of cooking oils, 2002 83 Price Determination in the Australian Food Industry A Report vii
Page 1: Price Determination in the Australi
Page 4 and 5: © Commonwealth of Australia 2004 T
Page 6 and 7: FOOD AND AGRICULTURE BUSINESS GROUP
Page 10 and 11: Price Determination in the Australi
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 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
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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
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OILSEEDS - OVERVIEW Background The
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Figure 87. Oils and fats, supply ch
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The amount represented by the retai
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Industry risks The key area of risk
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• The major cost faced by egg pro
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Figure 96. Consumer price index, fo
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• Many such operators have indica
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SUGAR PRODUCTS Analysis of the dete
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Figure 103. White sugar, 2kg, suppl
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Projected export returns for the co
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• 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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Price Determination in the Australi
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Oczkowski, E, Murphy, T 1999, Influ
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