CAB - AN ANALYSIS OF CALIFORNIA'S EXPORTERS OF PROCESSED FOOD PRODUCTS: II. REVIEW OF LITERATURE AND METHODOLOGY

- Research Publications -

AN ANALYSIS OF CALIFORNIA'S EXPORTERS OF PROCESSED FOOD PRODUCTS
by
John W. Hagen and Dr. Juan C. Batista
II. REVIEW OF LITERATURE AND METHODOLOGY

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

REVIEW OF LITERATURE

This literature review was done to ascertain if previous food processor studies had identified similar characteristics of firms associated with exporting or non-exporting as those exemplified by these manufacturing firms.

Ruppel, et al. (1989), concluded that some industry leaders surmise that smaller processors - those that tend to specialize in a limited line of products - avoid exporting because they lack familiarity with the international market. ⁶ Also, as a result of the trade barriers, small firms find it too difficult to participate in export activities. The difficulties appear to be related to lack of contacts, knowledge of the infrastructure, and desire to make the investment.

Reed and Morchant contend in their 1992 study that if the United States wants to increase exports of processed food products, it must rely on small- and medium-sized processors.⁷ Large American food processors alre ady have subsidiaries located in foreign countries. U.S.-owned food processing affiliates operating in foreign countries used minimal U.S.-produced raw materials.⁷

American agricultural and food policies have encouraged the support of low-value agricultural products.⁷ Other countries have subsidized their own exports. As a result this has encouraged American food processors to establish foreign processing facilities rather than exporting American products.⁷ Many U.S. processors manufacture their products in a foreign country for export to another foreign country.

Byford and Henneberry reported in their 1996 study that processed food exporters located in Kansas, Missouri and Oklahoma tend to be larger firms than their non-exporting equivalent counterparts.⁸ In this study the y found that managerial apathy was one of the largest impediments to increasing mid-western food product exports. These mid-western food manufacturers tended to develop their export market in incremental stages.

The Byford-Henneberry study also found that processed food exporters use and appreciate the promotional programs offered by various state agencies. However, many of these programs offer little help with exporting obstacles and provide no motivation for non-exporters to seek out foreign sales.⁸

METHODOLOGY:

To ascertain California food processors' perception of exporting, this study relied on both primary and secondary data. The study was developed in three phases: Phase 1 involved the identification of the firms operating within the industry. Phase 2 included an economic description of the California food processors that manufacture frozen, canned, snack, beverage, or dried products. These product groups were classified in Standard Industrial Classification Code number groups (SIC), as designated by the U.S. Census of manufacturers.² Phase 3 was concerned with a mail survey of 576 California food processors. This was done to evaluate the commonality of exporting and non-exporting food processors.

SAMPLE SELECTION:

A number of sources were reviewed or contacted to determine and identify the population of California food processors: Among these sources were the following:
California League of Food Processors-Mailing List
The Directory of Canning and Freezing
Thomas Food Industry Food Register
Stards Business Directory
California Manufacturers Register-1995
From these directories it was concluded that the "California's Manufacturers Register - 1995" was the most inclusive list of food processors and was used to draw the sample.

This directory listed 622 California firms that processed food products in 1995. A similar USDA study done at Cornell University included 46 California food processors. These 46 firms were deleted from the population in this study. Therefore, the total population of California food processors was considered to be 576 firms. Of this population, 31 percent were reported to have exported products during 1994. Firms processing 14 different product groups were in the survey. These product groups were subsequently aggregated in firms producing finished products of frozen, canned, beverage, snack and dried products.

MAIL SURVEY:

A questionnaire survey was mailed to a sample of 576 California food processors. Prior to sending the questionnaire, a pre-survey letter was sent to all of these processors in an attempt to alert them of this study and to solicit their participation (see Appendix 1). The questionnaire was mailed to these firms approximately a week later (see Appendix 2).

A follow-up letter was sent to the total population three weeks after the questionnaire was mailed to encourage participants to complete the survey (see Appendix 3).

A total of 176 firms returned the questionnaire, a 31 percent response rate. Of these, 14 questionnaires were incomplete and determined to be non-useable. Thus, the sample used in this study represents approximately 28 percent of California food processors operating in 1995.

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