Lecture 15 Flashcards
Major sectors of the food industry
Farm service sector
producers
processors
marketers
Farm Service Sector
Implement dealers, chemical sales, etc.
EX. John Deere
Producers of the food industry
Farmers, Ranchers, etc
Processors
Manufacturers, bottlers, etc
- take the crop and turn it into something we can use
- Raw Commodities or Food Products or Both
EX. ADM
Marketers
Distributers, retailers, etc.
EX. Safeway
Four basic types of subsides
Direct income payments
Counter cyclical payments
Payments for land conservation
Crop insurance
12% of __ produce about __% of the value of all ag products
farms; 75%
What do marketers do?
- Buy food products from processors in bulk
- Store them
- Transport them
- Distribute them to the consumer
Ex. Kroger, Food 4 Less, QuikStop etc.
Greatest problem for U.S. agriculture?
Overproduction which has a result of lower prices
Direct income payments
Cash payments to farmland owners that do not deed on current market prices
- EX. Gives money to those growing corn and go to people who don’t even grow corn
Countercyclical payments
Cash payments to farmland owners that are higher when prices are lower and vice versa
- Gov’t puts a threshold, sets price at threshold for that particular crop
payments for land conservation
Cash payments to farmland owners who take steps to improve soil, land, water, and air quality
Crop insurance programs
federal crop insurance corporation
- insure crops against natural disasters
Pros of Subsidies
- Weather and uncertainties of farming –> ensures a livable wage
- Address the problem of inelastic demand of food and overproduction
- Cheap food for the poor and consumers in developing countries
Cons of subsides
- Inequality w/ respect to other sectors of the econ
- promote poverty in developing countries by driving down world prices
- most subsidies go to those who need it least
- inequality w/ respect to growers of unsubsidized crops (prob for CA farmers)
- encourages overproduction w/ enviro consequences
