1

Chapter 4Forces Affecting the Distribution

Systems

Economic Force

Political Force

Ethical Force

Other Forces

Legal Force

TechnologicalForce

Sources(growers, manufatuures,

and processors)

Intermediaries(middlemen)

Retailers(hospitality operators)

Consumers

3

Economic Force

Supply and demandSupply and demand Basic commodities are Basic commodities are

typically acquired through typically acquired through a bidding procedurea bidding procedure

Co-op farmersCo-op farmers Established market pricesEstablished market prices

Perceived valuePerceived value Perceived quality + Perceived quality +

Perceived services / EP costPerceived services / EP cost

4

Economic Force, Cont.

What is the difference between AP price What is the difference between AP price and EP cost?and EP cost?

Monopolistic competitionMonopolistic competition

5

Political Force Lobbyists –The NRALobbyists –The NRA Primary sources have the most influencePrimary sources have the most influence Typically used to influence produce Typically used to influence produce

availability, prices, and channel member availability, prices, and channel member behaviorbehavior

6

Ethical Force

Define ethical behaviorDefine ethical behavior What is ethical?What is ethical?

Codes of ethical behaviorCodes of ethical behavior ExamplesExamples

7

Legal Force

Sherman Act (1890)Sherman Act (1890) Meat safety legislationMeat safety legislation

Sinclair Lewis’ The JungleSinclair Lewis’ The Jungle Pure Food Act (1906)Pure Food Act (1906) Meat Inspection Act (1907)Meat Inspection Act (1907) USDA established in 1862USDA established in 1862

Primarily focuses on meat, poultry, and eggsPrimarily focuses on meat, poultry, and eggs

8

Legal Force, Cont.

Meat safety legislationMeat safety legislation Poultry Products Inspection Act (1957)Poultry Products Inspection Act (1957) Wholesome Meat Act (1967)Wholesome Meat Act (1967) Wholesome Poultry Products Act (1968)Wholesome Poultry Products Act (1968)

The Federal Food, Drug, and Cosmetic Act (1906)The Federal Food, Drug, and Cosmetic Act (1906) FDA administers this lawFDA administers this law They evaluate contaminate levelsThey evaluate contaminate levels

9

Legal Force, Cont.

Seafood safety legislationSeafood safety legislation PUFI for a feePUFI for a fee FDA has the authority to examine seafood in FDA has the authority to examine seafood in

interstate commerce.interstate commerce. Federal Trade Commission (1914)Federal Trade Commission (1914)

Amended by the Wheeler-Lea Act (1938)Amended by the Wheeler-Lea Act (1938) It deals with advertising, deceptive promotions, It deals with advertising, deceptive promotions,

monopolies,and conduct in the marketplacemonopolies,and conduct in the marketplace

10

Legal Force, Cont.

Clayton Act (1914) Clayton Act (1914) Used to control antitrust violationsUsed to control antitrust violations

Tying agreementsTying agreementsExclusive dealingsExclusive dealings

Perishable Agricultural Commodities Act (1930)Perishable Agricultural Commodities Act (1930) Control interstate commerceControl interstate commerce Prohibits unfair practices in sale of produceProhibits unfair practices in sale of produce

11

Agricultural Adjustment Act (1933) & Agricultural Adjustment Act (1933) & Agricultural Marketing Agreement Act (1937)Agricultural Marketing Agreement Act (1937) Ensure steady flow of perishable productsEnsure steady flow of perishable products

Robinson-Patman Act (1936)Robinson-Patman Act (1936) Known as the “small business protection act”Known as the “small business protection act” Promotional discounts favoritism through a Promotional discounts favoritism through a

quantity limits provisionquantity limits provision Predatory pricingPredatory pricing

Gas station exampleGas station example

Legal Force, Cont.

12

Legal Force, Cont.

Heart Act (1966-1969)Heart Act (1966-1969) Packaging pictorial aspectsPackaging pictorial aspects Misleading descriptions and illustrationsMisleading descriptions and illustrations Package label regulationsPackage label regulations

13

Other Laws

Franchise lawFranchise law Contract lawContract law Agency lawAgency law Title to goodsTitle to goods Consignment salesConsignment sales WarrantiesWarranties PatentsPatents RebatesRebates

14

Technology Force

Genetically engineered foodsGenetically engineered foods Preservation methodsPreservation methods Value added foodsValue added foods TransportationTransportation ComputerizationComputerization PackagingPackaging

15

Copyright ©2008 John Wiley & Sons, Inc.