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Under conditions of rising incomes one would expect that additional increments would go to satisfy wants other than food, with the result that the proportion of income spent for food would decline. But the contrary has happened. In 1939 consumer expenditures for food accounted for 22 percent of disposable income; in 1957 food expenditures were 25 percent of income. Part of this rise reflects the more expensive foods that people are eating; part of it reflects more services. Despite the many conveniences and services added to farm products for the benefit of consumers, the farmer's share of the food dollar, at 40 percent. is as high today as it was in 1939. This would indicate that increased costs resulting from greater processing, packaging, and other servicing of food products have been offset by increased efficiencies in the marketing system.

In the industrial-use field, agriculture is faced with serious competition from "synthetic" raw materials, particularly in traditional markets for natural fibers and fats and oils. Synthetic fibers-the rayons, nylons, Orlon, and others-have become important competitive factors in marketing cotton and wool. Fats and oils are being largely displaced in the detergent field by petroleum derivatives, and are feeling the impact of synthetic resin latexes in the paint, varnish, enamel, and other protective-coatings field.

Use of agricultural products has been influenced considerably by activities of the Agricultural Marketing Service-through research, direct measures to increase food consumption, and supporting marketing services. The following statement discusses highlights of work recently completed or currently in progress under each of these headings.

I. RESEARCH

Research to aid in the expansion of markets for farm products employs people of several skills; economists, statisticians, marketing specialists, psychologists, biological scientists, and engineers. The work ranges widely. It includes household and industrial consumer surveys; product testing in the market place; determination of market potentials, distribution patterns, and market availability; evaluation of promotional activities; determination of factors affecting public distribution programs; discovery of better methods of maintaining quality; and current and long-term projections of demand for agricultural products.

Industrial markets.-Except in apparel and household furnishings, cotton has lost a number of industrial outlets, and its use has been diminished in others. Canvas awnings are giving away to other materials; tire cord is now virtually all synthetic; insulated wire and cable show diminishing uses for cotton; seat padding in passenger cars is increasingly of foam rubber. Similarly, wool as upholstery material in automobiles is almost a thing of the past. These are but a few examples of the inroads synthetic raw materials are making on natural fibers.

The Department has studied several of the industrial-use markets for cotton and wool. During the past year a comprehensive report on use of fabrics and fibers in the passenger-car industry was issued. These studies have the support of cotton and wool producer groups including the National Cotton Council and the Wool Bureau.

Such groups are interested also in apparel and household markets, which have held their own much better than other markets, partly as a result of the active promotional efforts of the interested industry groups.

Also published in the past year were studies of teen-agers' attitudes toward cotton and other fibers, women's attitudes toward wool and other fibers in specific apparel uses, and preliminary findings of studies of men's fiber preferences in selected clothing items and of homemakers' appraisals of fibers in items of household furnishings. These "market profile" data are of inestimable value to the merchandising and promoting groups in supplying facts and in permitting them to plan their programs for maximum effectiveness.

A report on an economic evaluation of color in domestic wool calls attention to a nongrade factor which is of importance to wool growers because of the discounts color engenders in the market; possible ways of minimizing the color factor are pointed out.

New and expanded outlets for fats and oils are being explored to offset losses in the soap industry and in the drying-oil industry. Nearing completing is a study of the use of fats in anima! feeds, a growing outlet. Also under way are studies of the potentials for expanding use of fats and oils in the plasticizer indus try, and in the manufacture of synthetic lubricants, lubricant additives, and hydraulic fluids. These studies are being carried out in close cooperation with the Utilization Research Agency of the Department to provide them, as

private manufacturers, with information on directions that physical-science research may profitably follow.

New and improved food products.-During the past year research was initiated to determine the possibilities for expanding the market for cottage cheese through product improvement and industry promotional efforts. It is estimated, for example, that if consumption per person in the South could be brought up to the national average, requirements for fluid milk would be increased by 1.5 billion pounds annually. Further improvement in consumption is possible in other geographic areas also.

Similar research was undertaken to determine the potentials for expanding sales of cultured sour cream, another of the fluid milk byproducts. The test findings in a midwestern city indicate that consumption of this product can be increased a third or more if quality is properly controlled and the product is actively promoted.

Poultry meat consumption increased from 17 pounds per person in 1939 to 31 pounds in 1957. Most of the increase was associated with the rise of the specialized broiler industry. But the increase in per capita consumption of broiler-fryers in recent years has been at low prices. A study conducted in 1956-57 revealed that while household use of broiler-fryers was almost universal, the frequency of use was affected by lack of knowledge or interest in different ways of preparation. About one user in three served only in fried form, neglecting the possibilities of baking or roasting, broiling, barbecuing, or preparation in other ways. Variety in meals is of concern to homemakers. Proper educational and promotional efforts can be employed to overcome this difficulty and stimulate further increases in consumption of poultry meat at equitable prices to producers.

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High acceptability of dehydro frozen peas was found in restaurant use. ings in packaging, transportation, and storage amount to about 2 cents per pound, over $1 million annually if adopted only by a third of institutional users. If, in addition, this becomes a retail item, total savings might run as high as $5 million annually.

Potato flakes, a new convenience form of dehydrated mashed potatoes developed by Utilization Research, were tested by market researchers during the past year and were found to have high initial acceptance and a good repeat-purchase pattern. Several processing plants, in Maine, New York, Idaho, and California, are now producing potato flakes for local distribution. If the product attains national distribution, as seems imminent, it could well arrest the downtrend in potato consumption per person. Since 1940 consumption of potatoes has declined about 1.25 pounds per person per year. The test result in a representative northeastern, middle-sized, urban market indicated a potential sales of potato flakes equivalent to 2.1 pounds of raw potatoes per person per year, without apparent displacement of other potato products. This would require an additional supply of about 6 million bushels of potatoes a year if the full potential were realized. Food merchandising programs.—Many agricultural producer groups are organized to engage in an aggressive program of merchandising their products through advertising, dealer-service, publicity, and in other ways. Such groups include the American Dairy Association, National Broiler Council, Poultry and Egg National Board, National Peanut Council, American Sheep Producers Council, Red Cherry Institute, National and State Potato Councils, Florida Citrus Commission, Sunkist Growers, Washington-Oregon-California Pear Bureau, and many others.

Such groups are frequently in contact with the Department with requests to aid them in determining where their markets are strong and where weak, what types of promotion would be most effective for their products, and what are the habits and attitudes of consumers with respect to theirs and competing products. In response to such requests the Department during the past year completed research on lamb availability and merchandising in retail stores; domestic distribution pattern for rice; the effects of a one-city promotional campaign for lamb; homemakers' use of the opinions about peanuts and tree nuts; homemakers' appraisals of citrus products, avocadoes, dates, and raisins; and consumers' use of and opinions about poultry.

It is difficult to place a dollar value on this type of research assistance. However, if the research is effective in increasing the efficiency of producer merchandising efforts by only 5 to 10 percent, it is worth half to a million dollars for the products enumerated in the last year alone.

Food distribution programs research.-The effectiveness of the Department's national school lunch program and special milk program undoubtedly can be

increased, particularly through greater participation by State and local school officials. Research in the past year provided detailed information on the extent of participation by schools and pupils in the school lunch and special milk programs and indicated major factors associated with such participation,

In another study the effect of the introduction of the special milk program on consumption of milk in two major cities was analyzed. One of the findings indicated that pupil response, which was unexpectedly high, was greatest in schools serving lower-income districts. This apparently surprised some school officials, since it has since been learned that in at least one other major city the policy had been to exclude such schools from the program. The policy was changed as a result of the research findings.

A further study is underway to determine total consumption of foods in the public elementary and secondary schools of the country, broken down into purchased and donated foods. Annual food purchases by schools are estimated to represent nearly a half-billion dollar market. The data will be of value not only to school feeding officials but also to distribution firms seeking to gage the sales potentials for the various food products in the public-school market. Evaluation of changes in the domestic market and future prospects.-Changes in the United States market for farm commodities are continuously under study by the Agricultural Marketing Service using a growing accumulation of economic data. Around 80 percent of the food consumed in this country is consumed in homes. Therefore, such surveys as the 1955 survey of household food consumption contribute significantly to research on the demand for farm products because they identify the major sectors of the present market, and supply some of the information needed for analysis of the factors bringing about changes in consumption rates and in overall demand. Since the release in January and February 1957 of 1,000 pages of statistics on United States household food consumption, the Agricultural Marketing Service has published in the National Food Situation several series of articles describing and analyzing the regional markets for food, the urban market, and the markets for 6 groups of food commodities.

Articles on the remaining commodity groups and studies of the competition between home food production and commercially produced and marketed foods are being prepared for publication. Other articles, research papers, and speeches have described particular aspects of the household market, measured the effects of such factors as urbanization and income and extent of home production on demand, and considered trends in those factors which will largely determine future demand for farm food commodities.

Such analyses of the changing structure of the food market are part of the continuing program of economic appraisal of changes in demand.

Information on changes in the household sector in the food market is combined with statistical analyses of demand and with projections of foreign demand in appraisals of the long-run prospects for expansion of the market for food and fiber. An example of such research is the study for 1975 prepared for the Joint Economic Committee last fall. This area of research has special significance in view of the current situation of production in excess of requirements, and the consequent buildup of stocks. Longer-term demand requirements are based on projections of population growth and an expanding economy. Under these conditions, requirements for agricultural products might well increase as much as 40 to 45 percent by 1975. Companion research on the productive potential of American agriculture to meet these requirements is being conducted by the Agricultural Research Service.

Currently, the scope of work on long-range projections is being broadened. Work on projections of supply and demand for major regions of the country is being initiated. Also, on the basis of accumulated experience, AMS staff is working directly with the Foreign Agricultural Service in plans for the development of comparable long-range projections of total demand and of demand for imported farm commodities for several foreign countries. Such work will form the basis for improved appraisals of the possibility of expanding foreign markets for United States farm products and for planning special programs for market development abroad.

Quality evaluation.-A large proportion of agricultural commodities are marketed on the basis of specifications represented in official grade standards. The accurate identification and measurement of quality present in commodities are of vital importance to the producer in his efforts to produce the level of quality demanded in the market place: to the buyer and seller in price bargaining on the basis of quality at all levels of marketing; and to the consumer in 21494-58-pt. 3——6

providing assurance that the quality is of the level represented, and will b Among the objectives o uniformly represented from one week to the next. quality evaluation is the strengthening of the standardization, grading, an inspection service programs by developing more objective methods and equip ment for identifying and measuring product quality.

Examples of problem areas which have received attention include: simple fat acidity test for grain; sedimentation test for grain as an indicator of bread baking quality; electronic device for determining presence of blood spots i eggs; meters for measuring the quantity of oil and moisture present in cotton seed; equipment for measuring accurately color in tomato juice; automatic de vice for sampling farmer stock peanuts; sampling of grain; determining mois ture content of grain; methods and instruments for measuring fineness, length color, and strength of cotton fibers; and possible evaluations for quickly de termining live-animal composition. Other areas of work that may contribute to consumer satisfaction and development and retention of expanded markets in clude quality evaluations that seek to establish the relative suitability of dif ferent product varieties to different alternative uses such as freezing and canning.

Maintenance and improvement of product quality.-A wide scope of activity is directed toward protecting the quality of products in marketing channels. These include determining and developing optimum temperature, humidity, storage, shipping containers, consumer packages, loading and bracing, and improved equipment, work methods, and plant layout for handling and transit, and marketing operations. A major objective of this work is to protect or improve the quality of the products from a physiological, pathological, and physical standpoint, in addition to increasing marketing efficiency and assuring a higher degree of consumer acceptability. The availability of high-quality products for consumers in the most efficient manner possible is a vital factor in developing and retaining expanded markets. Examples of this work include:

Citrus.-Citrus ocean-shipping tests from California and Florida to Europe established the handling, packaging, and refrigeration requirements for delivery of oranges, grapefruit, and lemons to Europe in attractive, sound condition. Application of these findings will contribute to establishment of confidence in the purchase of these fruits and help to establish foreign markets.

Potatoes.-Important information has been furnished on the suitability of different varieties for potato chips and on various factors such as growing conditions, maturity, and temperature that affect chipping quality. This research has contributed to the production of superior quality potato chips and thus promoted this important outlet for potatoes. Engineering research has shown that when flumes are used in place of conveyors or other equipment for moving potatoes from deep bin storages to conveyors, mechanical injuries to the product are also reduced in addition to improving the efficiency of the labor required. Pears. Research showed that the quality was improved and storage life extended if northwestern pears were stored in boxes with sealed polyethylene film liners. This provided the opportunity for increased sales under more favorable marketing conditions because of the superior quality (appearance, texture and flavor) of the fruit and because good quality pears could be offered on the market for a longer period. More than 4 million boxes of pears were packed in this manner last season.

Annles.-Research showed that Golden Delicious apples do not shrivel but retain superior texture and appearance when stored in boxes with unsealed polyethylene film liners. This provides the opportunity for increased sales under more favorable marketing conditions because the storage life was extended and it was possible to market superior quality fruit for a longer period. Engineering research directed toward the development of improved equipment, work methods, and plant layout has not only increased the efficiency of labor in packing and storage of apples, but has also reduced loss of quality resulting from bruising and stem punctures.

Tomatoes. The development of proper shipping, ripening, and packaging methods for tomatoes is making is possible for better colored and better flavored tomatoes to be offered to the consumer at lower cost. A large chainstore has indicated that their tomato sales in the New York area were markedly increased because of the better quality and because they could be sold at a lower price, since less loss was suffered in the handling and ripening of tomatoes that had not been chilled by too much refrigeration during shipment.

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II. DIRECT MEASURES TO INCREASE FOOD CONSUMPTION

In addition to its research activities to expand markets, the Agricultural Marketing Service carries out a series of food-distribution programs designed to encourage directly the increased utilization of agricultural commodities. These programs serve not only as a constructive outlet for surplus foods acquired under price-support and surplus-removal programs but also help to build a permanently enlarged market for agricultural products.

Progress achieved under the individual programs during 1957 is summarized briefly as follows.

School-lunch program.-The service of complete meals in the program under the National School Lunch Act increased approximately 10 percent during 1957 Over the previous year as peak participation reached 10.8 million children. In addition to the surplus foods received through Government donation, schools speat over $400 million with local merchants-up $35 million from the previous year-for food used in the service of 1.8 billion meals.

Special milk program.-Consumption of milk under the program increased from 1.4 billion half pints to 1.8 billion half pints in 1957 as an additional 8,000 schools entered the program and consumption increased in the schools previously participating. The milk consumed was in addition to the 1.8 billion half pints consumed under the school-lunch program. Together, the 2 programs now account for 3 percent of total United States fluid-milk consumption. Surplus food donation programs.-Food donations by the Department reached a record high in the 1957 fiscal year. Under an active Department effort to dispose of surpluses, a total of 2.8 billion pounds of food was donated during the year to recipients here and abroad. Under the domestic distribution program, the surplus foods were donated to over 12 million schoolchildren taking part in school-lunch programs and about 1.4 million persons in charitable institutions. In addition, about 3 million needy persons in family units received donated foods. Overseas, the surplus foods were sent to needy persons in over 80 countries.

The program's value rests not alone on its effectiveness in moving surpluses. Long range, it helps to create markets by introducing foods that are either new or not commonly used. This year, for example, an improved variety of dried eggs, purchased under a surplus-removal program in the flush egg production season last year, is meeting excellent acceptance in the school-lunch program. Overseas, many millions of undernourished people are finding nonfat dry milk a new and essential part of their diets as a result of the donation program. Plentiful foods program.—This program is designed to encourage the increased movement of plentiful foods through commercial channels by means of Government cooperation with all segments of the food industry in special merchandising campaigns. Activity under this program was stepped up sharply in the 1957 fiscal years as special campaigns were undertaken for turkeys, rice, cheese, canned corn, eggs, lettuce, stewing hens, dairy products, and strawberries. In the case of the canned-corn promotion, for example, it is estimated that the combined Government-industry program resulted in the increased movement of about 2 million cases of canned corn in the months of November 1956 through January 1957, to set a record movement of 14.5 million cases for this 3-month period.

III. SUPPORTING SERVICE ACTIVITIES

The Agricultural Marketing Service makes further contributions to the expansion of market outlets for agricultural products through a group of diverse but closely related service activities. Crop and livestock estimates and the market news service helps farmers, handlers, and dealers make vital day-to-day decisions on the production and marketing of farm products. Inspection, grading, classing, and standardization services promote confidence between buyers and sellers and reduce hazards in marketing due to misunderstandings and disputes arising from the use of nonstandard descriptions of products. Freightrate services, regulatory activities, and marketing services including State matching funds furnish direct assistance to the American agricultural community in other equally important phases of marketing. These broad activities facilitate the orderly and efficient movement of agricultural products from the farmer to the consumer, and thus contribute directly to the maintenance and expansion of market outlets.

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