CAB - AN ANALYSIS OF CALIFORNIA'S EXPORTERS OF PROCESSED FOOD PRODUCTS: I. INTRODUCTION

- Research Publications -

AN ANALYSIS OF CALIFORNIA'S EXPORTERS OF PROCESSED FOOD PRODUCTS
by
John W. Hagen and Dr. Juan C. Batista
I. INTRODUCTION

CATI Publication #961102
© Copyright November 1996, all rights reserved

The U.S. food processing industry is large and diverse. U.S. food manufacturers produced output valued at $395 billion in 1992. During that year there were more than 15,000 manufacturers throughout the nation producing more than 230,000 packaged food products. (USDA).¹

In California, there were 2,521 food and kindred product manufacturers in 1992, according to the U.S. Census of Manufacturers.² These firms, which represent 17 percent of the nation's food manufacturers, processed products valued at $35 billion during 1992, or approximately eight percent of total national production. The size and structure of the firms that participated in the production of food products in California range from large, multi-national firms such as Del Monte, to small, single-product proprietorships.

In 1992 U.S. food manufacturers exported products valued at $22.7 billion, or five percent of their total sales. It was found in 1991 that nearly one-half of the exported processed food products consisted of four product groups: meat products, seafood, soybean oil, and sweet corn milling (Epps and Handy).³

In years past, U.S. processed food products held a dominant position in world markets. Today, changes in world economics and competition have frequently created a U.S. negative balance of trade in these products. While U.S. food processors have expanded their exports, most of the foreign sales have been produced by foreign subsidiaries (USDA - Food Review). ⁴

California's food processors account for about 10 percent of the nation's total exports of manufactured food products (U.S. Census of Manufacturers).²; The main export commodities are beef products, almonds, grape products, and seafood. California's economy gains considerably from the export of food products. It is estimated that for every $1 million in exports from the state, five jobs are created in California (CDFA).⁵

While American firms have historically held substantial market shares in the world supplies of processed food products, their dominance seems to be slipping; this is despite a strategy of exporting value-added products as a means to stay ahead in the world economy. Exports of U.S.-manufactured processed food products have grown an average of about three percent annually (USDA - Food Review).⁴

In comparison, sales of processed food products manufactured by foreign subsidiaries of U.S. firms have had an annual growth rate of more than 13 percent.⁴

The U.S. Department of Agriculture estimates that U.S. firms manufacture their processed products in foreign countries because they can obtain lower labor and ingredient costs and obtain greater economies of scale for their domestic output (USDA) .⁴

This study was done to develop a demographic profile of the industry. It is intended to be a part of a larger study conducted by the U.S. Department of Agriculture, Agricultural Marketing Services. The over-all objective is to attempt to determine how the USDA can assist food processors in promoting exports of value-added products. Expanding food exports contributes to the economic viability of American agriculture and reduces the nation's negative balance of trade.

OBJECTIVES:

This study had the following objectives:
To identify California firms that process food items, including beverages.
To ascertain the size and structural components of California firms that manufacture frozen, canned, beverage, snack and dried products.
To identify the sales volume, number of employees, and age of non-exporting food processors and determine why these firms are not involved in export activities.
To identify the exporting food processors and their characteristics.
To identify markets served, transportation modes, marketing channels used, and the importance of export markets for those firms in California that export their products.
To identify trade barriers for those firms exporting.
To make recommendations on how exports of California's processed food products might be increased.

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