Agriculture Reference
In-Depth Information
wholesale trade sector involves a large group of varied organizations—some quite small and
some very large. Chain stores own their warehousing facilities, but typically break this out
into a separate operating unit with the objective of generating a profi t.
Wholesalers perform a variety of functions for their retail customers. It is important to
note that wholesalers are facilitators and that they may take market risk if they take title to
the goods they handle. These fi rms are responsible for distributing the product in appropriate
quantities across a geographic region. Often wholesalers will fi nance inventory purchases
for the retailer. In this case, the retailer does not have to borrow money from the bank, but
uses the wholesaler as a source of operating funds. Many wholesalers offer services like
automatic ordering, customer traffi c surveys, and a suggested shelf-stocking arrangement,
among others. The idea is for the wholesaler to forge a profi table working relationship with
their retail clients.
Merchant grocery wholesalers are classifi ed into three groups by the types of products
they distribute: (1) general line distributors, (2) specialty distributors, and (3) miscellaneous
distributors. First, general line distributors operate 8 percent of the total number of food
wholesalers, but employ 17 percent of the wholesaler workforce (Wholesale Trade 2011).
Also known as broad line or full line distributors, these companies handle a complete line of
groceries, health and beauty products, and household products. Supervalu, Nash Finch, and
Sysco are examples of general line distributors. Second, specialty distributors are typically
smaller than general line distributors, and focus on specifi c items such as packaged frozen
food, dairy products, meat or fi sh products, confectionery, or fresh fruit and vegetables.
Specialty wholesales account for 54 percent of the food wholesaling establishments, employ-
ing 46 percent of the workforce. Finally, miscellaneous distributors carry narrow lines of dry
groceries (coffee, snack foods, bread, or soft drinks), which are distributed directly to retail
food stores. Accounting for 12,000 food wholesalers, miscellaneous food wholesalers
employ 37 percent of the wholesale industries' workers.
Food processing and manufacturing
In 2007, U.S. food processors accounted for 11 percent of the value of shipments from
all U.S. manufacturing plants, or $590 billion (2007 Economic Census). The Census of
Manufacturers from the U.S. Census Bureau counted 25,616 food processing plants
across the nation. An additional $139 billion of processing was performed by 3,717 beverage
manufacturers, 102 tobacco manufacturers, 423 fi ber, yarn and thread mills, and 239 tanner-
ies. While the number of manufacturers has remained constant since 1997, the value of
shipments has risen 10 percent, from $535 billion in 1997.
The food processing and manufacturing industry turns raw agricultural commodities either
into ingredients for further processing or fi nal consumer products. Meat packers, bakers,
fl our millers, wet corn mills, breakfast cereal companies, brewers, snack fi rms, and tanneries
are examples of food and fi ber processors and manufacturers. These complex fi rms serve
highly varied markets. For example, soybean processors in central Illinois break down
soybeans into two major components: soybean oil and soybean meal, each with its own
unique market conditions. Literally hundreds of products utilize soybean oil as an ingredi-
ent, ranging from margarine to cosmetics. The primary market for soybean meal is as a high
protein livestock feed supplement.
Processors of meat products account for about 22 percent of the total value added by food
processors and manufacturers (
Figure 1.10)
. Processors of bakery, fruits, and vegetables and
dairies all account for more than 10 percent of total processing activity. While over 21,000
