Cain, Jarvis L.

Van Meir, Larry

English

Research Papers in Economics

FOOD DISTRIBUTION RESEARCH PRIORITIES TO ALLOW MAJOR
IMPROVEMENTS IN TOTAL SYSTEM PRODUCTIVITY BY 1985
Food Processing
Larry Van Meir and Jarvis Cain
Director, Division of Economics and Statistics
National Canners Association
and
Professor, Department of Agricultural and Resource Economics
University of Maryland
In order to get a complete look at
the food processing industry and to be
consistent with our “Total Systems
Concept”, this segment will be con-
sidered in three only partially separ-
able parts--a) production, b) in-plant,
and c) movement of products to next
point in distribution system. Addi-
tionally, priorities will be set regard-
ing the productivity element within
each part and an effort will be made to
classify the element as controllable or
uncontrollable from the processing
firms managements point of view. Also,
a fourth category of “general” produc-
tivity elements-- those which pervade
the entire industry--will be discussed.
1. Production
a. Uncontrollables
Factors such as seasonality--
product availability during only part
of the year; geography--size of farm,
differing planting, growing, and har-
vesting conditions and urban pressures;
and perishability --varies by product but
none can escape it, head the list. Each
individual product has certain character-
istics which effect productivity through-
out the entire system. Research work on
growth regulators can have a significant
impact on productivity. Further, there
are problems of input availability which
are plaguing firms now. Given some of
our resource allocation problems, these
input shortages could get worse. Over
the longer run, such things as weather
modification, dramatic relocation
of growing areas, and the introduction
of “synthetic elements” into the food
growing-processing system can have an
effect on productivity in the growing
area. Research on these factors will
not only effect cost and quality of raw
products, but also will effect opera-
tional efficiency in the processing
plant.
b. Controllable
The previous discussion might
lead one to believe that there is little
that individual firm management can do
to effect productivity in the production
of food items to be processed. If viewed
in the short run “catastrophe avoidance”
sense, this is true. However, from the
longer range point of view, a continuous
evaluation of the “grow or buy” decision
on raw stock availability is the place
where individual firm management can
have a significant impact on total sys-
tems productivity. It is within the
process of selection and adoption of
varieties, cultural practices, equipment
and technology where the greatest poten-
tial for improving productivity and prod-
uct quality exists. The optimum relation-
ship between economies of size in grow-
ing and in processing needs much research
effort.
In addition, there is a significant
area for productivity improvement in the
interface between product delivery and
plant receiving. The problems are not
July 75/page 16
Journal of Food Distribution Researchonly scheduling but a meshing of tech-
nology to avoid product spoilage or
loss , to provide for efficient product
flow into the plant, and to minimize
the extent of “passed-over” acreage.
All these factors contribute to more
efficient use of processing facilities.
2. In-Plant
a. Uncontrollables
Within the limitations discussed
above, the quantity and quality of prod-
uct flow are pretty much uncontrollable
at the plant level. Another serious
problem has to do with availability and
utilization of repair parts and regu-
larized maintenance and replacement’
schedules. The processor lives in
mortal fear of major breakdown during
the peak of processing season. The parts
scarcity situation only serves to
heighten this problem.
b. Controllable
Number one priority in-plant
regarding productivity is the area of
labor. Such items as 1) availability,
2) training, 3) motivation, 4) capacity
for growth, and 5) work attitude are
highlighted.
Secondly, interface between the
processing level and the next level in
the distribution system is extremely
important.
Third on the priority list is the
area of technological breakthroughs.
Each commodity processed has its own
level of technological constraint
regarding productivity. Breakthr~ughs
on these constraints can impact prod-
uctivity for the entire system. In
some cases the problem is application
of existing technology and the attitude
of firms, in differing stages of maturity,
toward acceptance of new ideas.
Fourth is substitution of capital
for labor. In some products (free flow-
ing by nature), we have gone about as
far as possible in this substitution
process. In view of the materials and
energy situation, there are those who
say we have gone too far and the process
may tend to start reversing itself.
Much work needs to be done in this area.
3. From Plant to Next Point in
Distribution System
a. Uncontrollables
Top priority, especially for
long haul merchandise, is the tragic
state of the nation’s rail system. A
complete overhaul of the rail system is
needed to meet processors and other
shipper needs.
Scheduling problems occur with
other modes of transport and need work
to increase productivity in flow of prod-
uct within the distribution system.
b. Controllable
Priorities here are difficult to
set. Some problems are 1) small orders,
handling and overhead costs, 2) con-
sumer packaging at processing point and
handling (container, carton and packing
medium-- 2/3 of weight’) over long dis-
tances, 3) lack of change in buyer’s
opinions and attitudes regarding con-
sumer needs, and 4) complete adoption
of the pallet exchange program through-
out the system.
4. General
a. Government--Unquestionably this
is the top general problem regarding
productivity. Such items as 1) cost of
compliance with regulation, particularly
where results are of questionable
benefit, 2) constraints on productivity
by regulation, 3) indecision in
Journal of Food Distribution Research July 75/page 17implementing regulations, 4) frequent
change in interpretation of regulation,
and 5) lack of uniformity, of enforce-
ment and regulatory scope at federal,
state and local levels, 6) conflicts
between agencies, 7) interface between
various government activities, are all
roadblocks to productivity.
b. Energy--skyrocketing costs of
energy, have forced a rethinking of the
entire processing situation.
c. Water-- availability, cost and
regulations are all items here.
d. Processing technology–-broader
application of existing or new process-
ing technology (e.g. aseptic canning,
dehydration, freeze-drying, etc.) which
would allow for more productive delivery
of nutrients throughout the total food
sys~em.
e. The Electronic Front-end in
Retail Stores--Universal product code
must be put on packages by food
processor, benefits to total system--
cost to processor. Electronic funds
transfer will have an impact here also.
f. Management-- this is largely a
perspective problem to get management
to view the food industry in a total
system context.
As in other segments of the food
industry system, productivity has many
aspects within the processing industry.
Some can be dealt with internally, but
most also effect the rest of the system.
******
July 75/page 18 Journal of Food Distribution Research

FOOD DISTRIBUTION RESEARCH PRIORITIES TO ALLOW MAJOR IMPROVEMENTS IN TOTAL SYSTEM PRODUCTIVITY BY 1985: FOOD PROCESSING

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