Answers to Problems and Discussion Questions Chapter 1 1. Identify the four sectors in the food industry. For firms in each of the four sectors identify what they buy and what they sell. From what firms do they buy inputs; and, to what firms to they sell their outputs? 1. The farm service sector sells items that are used as inputs by farmers, ranchers, and growers. For the most part, they are manufacturing companies (John Deere, Dupont) that buy raw materials such as steel and petroleum and manufacture them into farm inputs such as tractors and pesticides. 2. Producers are those firms that make food and fiber products. They buy inputs from the farm service sector. These inputs are normally combined with some land, labor, and rainfall to produce food products that are sold to the processing sector. 3. The processing sector buys raw agricultural commodities from producers and converts them into food ingredients or food products. Processors are essentially industrial companies that convert corn into soda pop and wheat into bread. Most processors sell their products to one another or in the case of final food products to wholesalers or large retail chains such as Kroger or Wal-Mart. 4. Marketers are those firms that buy food products in bulk from processors and deliver it in small lots to the final consumer where and when she wants it. Marketers serve both the food service (i.e., restaurants, campus cafeterias) and the retail (supermarkets) markets with distribution services. 2. An important part of the farm service sector is the Cooperative Extension Service with an office in virtually every county of the U.S. Contact the local office of your Cooperative Extension Service or visit the website of your state office of Cooperative Extension Service to determine what this publicly funded agency does. Who are the clientele and what are the services provided? The clientele of the Extension Service originally was the farm or rural family. Today Extension serves everybody with educational and leadership programs. The range of services provided extends from information for the weekend gardener to nutrition assistance for the indigent. 3. What proportion of all farm units in the U.S. is economically viable with sal