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8/10/2019 Chapter 7 International
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Types of Food ExportsProviding what cannotefficiently be grown inimport market
High value/value addedLow value
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Types of Food Exports
Providing diversity in foodsupply
Niche productsCountry reputation
deSpaChocolatier bringsperfection to the art of Chocolatewith more than seventysumptuous varieties superblyhand-crafted and lavished withluxury.....
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VERY BRIEF REVIEW OF ECONOMICS
Trade balances and theirimpact on exchange rates ifthe US imports more from
Japan the exports there,there will be less demand for$ and more demand forJapanese yen- thus the priceof the yen, in $ will increase,so you get fewer yen for a $
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Comparative Food Spending
Percentages, 1994Philippines: 56%India: 51%
Mexico: 25% (modestincomes, relatively highprices)South Africa: 28%
Japan: 18% (veryexpensive food but highincomes)West Germany: 17%
Denmark: 15% (25%sales tax!)
France: 15%Netherlands: 11%U.K.: 11%Canada: 10%
Percentages of totalexpenditures includesnon-consumer spendingsuch as government andindustry. U.S. figure: 7%
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Measuring the Wealth: Nominal vs. Purchase Parity Adjusted GNPs Examples (2001)
Country Nominal GNP PPAUnited States $34,280 $34,280
Japan 35,610 25,550
Argentina 6,940 10,980
Czech Republic 5,310 14,320
Mexico 5,530 8,240
China 890 3,950
Source: World Bank (http://siteresources.worldbank.org/ICPINT/Resources/GNIPC.pdf )
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Measuring the Wealth: Nominal vs. PurchaseParity Adjusted GNP
Nominal GDP is the value of goods andservices produced per person in a countrywere to be exchanged into dollars.Purchase Parities of GPDGDP and GNP are almost identical GNP
include income made aboard
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Cautions on Interpreting Per
Capita Figures Averages are not very meaningful!
Regional variationsSocio-economic differences
Comparison to U.S. dollar and U.S.costs is arbitrary
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Protectionism
Differing interests ofconsumers and
manufacturersBenefits of tradetend to be morediffused thanbenefits to specificgroups ofprotectionism
U.S. ProtectionismImport limitations on
some crops (e.g.,sugar)Subsidies of others e.g., chickens
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Approaches to Protectionism
Tariffs a duty ortax or fee, is put on
products imported
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Approaches to Protectionism
Quotas : A Countrycan export only a
certain number ofgoods to theimporting country
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Approaches to Protectionism
Voluntary exportrestrictions: involve
agreements madeby countries to limitamount of goodsthey export to an
importing country
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Approaches to Protectionism
subsidies to domesticproducers/exporters USchicken have receivedsubsidies for chickensexported
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Approaches to Protectionism
Non-tariff barriersDifferent standards in testingforeign and domestic products forsafety, disclosure of lessinformation to foreignmanufactures needed to getproducts approved, slowprocessing of imports at port ofentry, or arbitrary laws which
favor domestic manufacturers.For perishable food products, asignificant danger is having ashipment held up waiting forcustoms clearance
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Justifications for Food Market Protection
Protection of an infantindustry notapplicable to foodproducts
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Justifications for Food Market Protection
Resist unfair orinappropriatecompetition: US sugarindustry contends thatmost foreignmanufactures subsidizetheir sugar production,so the US must followto remain competitive
dost go well withWTO
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Justifications for Food Market Protection
Maintain domesticliving standardsPreserve jobs Cantemporarily protectdomestic jobs Hawaiisugar workers
HILO -- Hawaii CountyCouncil ChairwomanKeiko Bonk-Abramson iscriticizing a Hamakuacoast land deal
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Variations in Food Taste Preferences
Often learned early
in life. It islikely that wewill continueto prefer the
kind of foodwe ategrowing up.
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Variations in Food Taste Preferences
Preferred foodsoften tied towardavailability and localconditions
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Variations in Food Taste Preferences
Ties to occasions
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Variations in Food Taste Preferences
Impact of religionKosher Law clearly
specifies that koshermeat comes fromanimals with splithooves that chew
their cud.
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Taste Variations: Some Favorites
Raw fish (Japan)Snails (France)
Insects (Africa)Fermented herring(Sweden)Blood sausage
(Denmark) Various animal organs
How strange couldthis be to others?
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Culture and Food Expectations
Attractiveness ofprepared foodsOccasions for eating
out
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Culture and Food ExpectationsRituals Food is essentialto existence, and to thereligious experience aswell. Every religion hasrituals where food isoffered to theworshipped, shared,
eaten, or even tabooedTolerance for individualdifferences in taste
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Food Positioning
Positioning strategies A country of origin may affectthe image of food products either favorably orunfavorably.
Emphasis for congruent products (e.g., Russian Vodka, Belgian chocolate, German beer)De-emphasis (e.g., French beer, German wine)
Attitudes among consumers in new market towardcountry of origin
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Food Adaptation Decisions
Positioning decision: to adapt or not toadapt
Optimizing food for local tasteMaintenance of product mystiquePartial adaptation
Position relative to competitorsResearch needed for adaptations
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Some Adaptation IssuesServing sizeLegal constraints
Taste e.g.,sweetness, spicinessLabelingPackagingHealth issues (e.g.,lactose intoleranceamong Asians)
PositioningPrice rangeUsage occasionPurpose served
Branding
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Some Diffusion Examples
Chinese foodIn the U.S.In Denmark
PizzaSushiMcDonalds across the World
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Some Other Issues
Promotional options and choices Availability
Cost effectivenessReach of appropriate target market
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State and Federal Exportsupport
Federal programsSubsidies
Foreign market development/marketresearchExport assistance
State programsPromotion of products from within thestate