Meat Quality and Price
Price and quality are key factors for success in food markets and as such are important both for the competitiveness and economic efficiency of firms and of the while supply chain in meeting consumer demands.
The price premium, which high quality products receive compared to low price products, is one measure (in this case financial) of the quality of a product.
This price premium is the result of the interplay of the supply of and demand for quality.
In terms of the demand side of the market, it represents the marginal willingness of consumers to pay a premium for quality.
In terms of the supply side, of markets are competitive, it is equal to the marginal cost of producing a higher quality product.
If the supplier is in a monopolistic quality position, prices will be higher than marginal production cost.
In general, food markets are rather competitive and price is the predominant parameter of success but delivering a premium quality may lessen price competition and give the supplier the opportunity to increase revenue.
The members of each stage of the food supply chain in general and the meat supply chain in particular have their own economic interest and goals.
Consumers would like to pay low prices whilst retailers prefer high prices for food products. Retailers would like to purchase at low prices in the wholesale food market, while the processing industry tries to maximize its returns.
In turn, the processor would like to purchase raw material cheaply from the agricultural sector, while farmers try to get the best price for their produce.
The strategic interests of each stage of the supply chain are in conflict both with respect to price and therefore potentially with respect to quality as well.
Meat Quality and Price
Price and quality are key factors for success in food markets and as such are important both for the competitiveness and economic efficiency of firms and of the while supply chain in meeting consumer demands.
The price premium, which high quality products receive compared to low price products, is one measure (in this case financial) of the quality of a product.
This price premium is the result of the interplay of the supply of and demand for quality.
In terms of the demand side of the market, it represents the marginal willingness of consumers to pay a premium for quality.
In terms of the supply side, of markets are competitive, it is equal to the marginal cost of producing a higher quality product.
If the supplier is in a monopolistic quality position, prices will be higher than marginal production cost.
In general, food markets are rather competitive and price is the predominant parameter of success but delivering a premium quality may lessen price competition and give the supplier the opportunity to increase revenue.
The members of each stage of the food supply chain in general and the meat supply chain in particular have their own economic interest and goals.
Consumers would like to pay low prices whilst retailers prefer high prices for food products. Retailers would like to purchase at low prices in the wholesale food market, while the processing industry tries to maximize its returns.
In turn, the processor would like to purchase raw material cheaply from the agricultural sector, while farmers try to get the best price for their produce.
The strategic interests of each stage of the supply chain are in conflict both with respect to price and therefore potentially with respect to quality as well.
Meat Quality and Price
