Agriculture - Processing, Distribution, and Marketing

Processing, Distribution, and Marketing

In the United States, food costs attributed to processing, distribution, and marketing have risen while the costs attributed to farming have declined. This is related to the greater efficiency of farming, combined with the increased level of value addition (e.g. more highly processed products) provided by the supply chain. From 1960 to 1980 the farm share was around 40%, but by 1990 it had declined to 30% and by 1998, 22.2%. Market concentration has increased in the sector as well, with the top 20 food manufacturers accounting for half the food-processing value in 1995, over double that produced in 1954. As of 2000 the top six US supermarket groups had 50% of sales compared to 32% in 1992. Although the total effect of the increased market concentration is likely increased efficiency, the changes redistribute economic surplus from producers (farmers) and consumers, and may have negative implications for rural communities.

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