Emerging Food Marketing Technologies: A

Preliminary Analysis

October 1978

NTIS order #PB-291039
Library of Congress Catalog Card Number 77-600131

For sale by the Superintendent of Documents, U.S. Government Printing Office

Washington, D.C. 20402 Stock No. 052-003-00612-0

ii
—-

Foreword

Food marketing technologies in the United States are undergoing major

changes with a number of global implications. The purpose of this preliminary

analysis was to gain a better perspective of these changes. It has helped to define

the need for a major assessment of alternative global food futures.

The staff of the OTA Food Group conducted the preliminary analysis with the

assistance of the OTA Food Advisory Committee and a 22-member Food Marketing Technologies Working Group. The analysis is a synthesis of many inputs and

does not necessarily reflect the position of any individual.

We thank the Economics, Statistics, and Cooperatives Service of the U.S. Department of Agriculture for permitting Dr. William Gallimore to be detailed to the

OTA Food Group to assist us with this analysis.

RUSSELL W. PETERSON

Director

Office of Technology Assessment
OTA Food Group Staff

J.B. Cordaro, Food Group Manager

Michael J. Phillips, Marketing Cluster Leader

William W. Gallimore, Project Leader ●

Robert L. Smith, Jr., Research Associate

Ann Woodbridge, Achnim”strative Assistant

Phyllis Balan, Administrative Secretary

Jane Mason, Secretary*

Debra Mears, Secretary4

Elizabeth Galloway, Secretary

Contractor

Thomas L. Sporleder

Professor of Agricultural Economics

Texas A&M University

OTA Publishing Staff

John C. Holmes, Publishing O~~icer

Kathie S. Boss Joanne Heming

*Resigned

iv
OTA Food Advisory Committee

Martin E. Abel, Chairman

Senior Vice President, Schnittker Associates

Johama Dwyer, Vice Chairman

Director, Frances Stern Nutrition Center

David Call Laura Heuser

Dean, College of Agricultural Member, Board of Directors

and Life Sciences Agricdtural Council of America

Cornell University Arnold Mayer

Cy Carpenter Legislative Representative

President Amalgamated Meat Cutters and

Minnesota Farmers Union Butcher Workmen of North

Eliot Coleman

America

Director Max Milner

Coolidge Center for the Associate Director

Studv of Agriculture International Nutrition Planning .

Almeta Edwards Fleming

Program

Social Program Coordinator

Massachusetts Institute of

Technology

Florence County, S.C.

Lorne Greene

Robert O. Nesheim

Vice President, Science and

Chairman of the Board Technology

American Freedom From The Quaker Oats Company

Hunger Foundation

Kathleen O’Reilly

Director

Consumer Federation of America

R. Dennis Rouse

Dean, School of Agriculture

Auburn University

Lauren Seth

Agricultural Consultant

Thomas Sporleder

Professor of Agricultural

Economics

Texas A&M University

Sylvan Wittwer

Director and Assistant Dean

College of Agriculture and

Natural Resources

Michigan State University

Richard L. Hall

Vice President, Science and

Technology

McCormick & Company, Inc.
Working Group on

New Food Marketing

Technologies

Processing and Packaging Subgroup

William Gallimore, chairman

OTA Project Leader

Robert Angelotti

Administrator

Food Safety and Quality Service

U.S. Department of Agriculture

Robert Beverly

Manager

Food Research Department

FMA Corporation

Mahlon A. Burnette, III

Director, Scientific Affairs

Grocery Manufacturers of America

Inc.

G. Robert DiMarco

Group Director

Basic and Health Sciences

General Foods Corporation

Peter Allstrom

Food and Beverage Trades

Department

AFL-CIO

Herbert A. Hollender

Chief, Food Technology

Division

Food Engineering Lab

U.S. Army, Natick

James J. Solomon

Market Analyst

Corporate Planning Division

Aluminum Company of America

Dwayne A, Suter

Associate Dean

College of Agriculture

Texas A&M University

James Turner

Partner

Swankin and Turner

Romeo T. Toledo

Associate Professor of Food Science

University of Georgia

James Wishart

Research Director

Amalgamated Meat Cutters and

Butcher Workmen of North

America

Jane Wyatt

Associate Professor of Food Science

and Technology

Oregon State University

Wholesaling, Retailing, Transportation,

and Food Service Subgroup

Michael J. Phillips, Chairman

OTA Food Marketing Cluster Leader

E. A. Atchley

General Transportation Manager

General Mills, Inc.

Gordon Bloom

Senior Lecturer

Sloan School of Management

Massachusetts Institute of

Technology

Ellen Haas

Consumer Coordinator

Community Nutrition Institute

Timothy Hammonds

Vice President for Research

Food Marketing Institute

Lew Norwood

Director of Affiliate Relations

National Association of Retail

Grocers

Daniel Padberg

Chairman

Department of Agricultural

Economics

University of Illinois

Gerald Peck

President

National-American Wholesale

Grocers’ Association

Ernie Renaud

Executive Vice President

Jerrico, Inc.

Harold Ricker

Chairman

Agriculture Marketing Research

Institute

U.S. Department of Agriculture

Don Rothenberg

Consultant

vi
Contents

Chapter Page

EXECUTIVE SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

I INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Objectives and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

II. PRIORITIES FOR TECHNOLOGY ASSESSMENT . . . . . . . . . . . . . . . . . . . . . . .......11

Priority Selection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Fabricated Foods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......13

Food Sanitation in Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......13

Retortable Pouch. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Electronic Checkout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Technologies To Reduce Food Loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...16

Electronic Food Shopping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....16

Returnable and Recyclable Containers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .....17

Technologies Needing More Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

III. SOCIOECONOMIC FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......21

Scenarios for the Future. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......21

Energy and Other Raw Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......23

Pollution, ,. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......24

Demand for Food. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......24

Supply of Food. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......25

Food Safety and Nutrition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......25

Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......26

Changing Lifestyles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......27

Industry Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Other Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......28

FoodWaste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......29

IV. PROCESSING AND PACKAGING TECHNOLOGIES FOR ASSESSMENT . . .......33

Preservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 . 0 . . . . . . . .......34

New and Improved Equipment and Processing Techniques . . . . . . . . . . . . .......37

New and Modified Food Products. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......42

New Sources of Ingredients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......44

Packaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......45

V. DISTRIBUTION TECHNOLOGIES FOR ASSESSMENT . . . . . . . . . . . . . . . . . .......51

Wholesaling. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......52

Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......53

Retailing and FoodService . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......56

Technologies Involving the Total Distribution System. . . . . . . . . . . . . . . . . .......61
Contents—continued

Chapter Page

APPENDIXES

A. The Food Marketing System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......65

B. Procedures Followed in the Planning Assessment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...69

C, Agenda, Objectives, and Procedures for the Working Group. . . . . . . . . . . . . . . . . . . . . . . . 78

D. References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .....86

LIST OF TABLES

TableNo. Page

1. Issue Areas of Food Marketing Technologies With High Priority for Assessment. ...I2

2. Socioeconomic Factors Influencing New Technologies as Indicated in

Questionnaire Responses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......22

3. Processing and Packaging Technologies With High Priority for Assessment. .., ....34

4. Number of Plants and Employees for Food Processing . . . . . . . . . . . . . . . . . . .......34

5. Distribution Technologies With High PriorityforAssessment . . . . . . . . . . . . . . . ....5I

A-1. Establishments, Sales, and Employees for Food MarketingFirms, 1967 and 1972.... 68

E l. Number of Responses to Letter by Type of Respondent. . . . . . . . . . . . . . . . . . .......70

LIST OF FIGURES

Figure No. Page

A-1. Major Components of theDomestic Food System. . . . . . . . . . . . . . . . . . . . . . . .......66

A-2. Farm Value,Marketing Bill,and Consumer Expenditures for Food, 1977..........67

A-3. Components of Bill for Marketing Farm Foods,1976. . . . . . . . . . . . . . . . . . . . .......68
EXECUTIVE SUMMARY
EXECUTIVE SUMMARY

The identification of new or emerging food marketing technologies that will

have significant long-range impacts on society and the U.S. food system was the

objective of this preliminary analysis.

Food marketing is defined as the activities that take place within the food system from the farm gate to the consumer. These activities include processing,

wholesaling, retailing, transportation, and food service. In 1977 consumers spent

$180 billion on domestically produced food. The marketing bill was $123.5 billion,

or 68.6 percent of this total, which represents more than twice the farm value of

that food.

Using a mail survey, a working group, and collateral staff work, the Office of

Technology Assessment (OTA) has identified the social and economic factors that

interact with and may be expected to influence the emergence and adoption of

marketing technologies. The availability and cost of energy, supply of and demand

for food (domestically and worldwide), environmental concerns, food safety,

nutrition and health, and consumer attitudes are the major factors identified.

Other elements include the availability and use of raw materials, importance of

preventing spoilage and waste in the marketing system, and the effect of changing

lifestyles on consumer preferences and attitudes.

These socioeconomic elements and the marketing technologies are outlined

and analyzed using two differing scenarios. The first scenario assumes that only

minor changes will occur in the socioeconomic climate through the year 2000 and

that trends will continue basically the same as they are today. The second, which

is felt to be the more realistic and applicable, assumes changes from the current

situation that will effect concomitant changes in the food marketing system.

Each technology is examined from the following points of view:

. Its current state of development;

. The extent to which it will be used;

. Expected impacts, both negative and positive, of the technology and where

these impacts may be felt; and

● Significant policy issues that may be explored in connection with a given

technology and the effect it may have on society.

On the basis of the foregoing, seven technologies were judged by OTA as

highest priority.

● Texturing, binding, flavoring, and associated technologies that will pr~

duce engineered or fabricated foods to substitute either for a complete

food (such as meat or dairy product substitutes) or for an ingredient or ingredients in currently produced foods.
● Technologies that provide quality assurance in vehicles used to transport

food and food products. These include identification, tracking, and cleaning of contaminated vehicles; freight car design; and the use of certain

vehicles to transport only food and noncontaminating, food-compatible

commodities.

● Technologies that produce the reportable pouch, a multilayer plastic and

aluminum package that will withstand heat processing and produce shelfstable products in no need of refrigeration before opening.

● Electronic checkout in retail food stores, including systems able to scan the

Universal Product Code currently printed on about 80 percent of food

packages in grocery stores.

● Technologies to reduce the extent of food loss throughout the marketing

system—including processing and packaging, transportation, and retailing—and in food service and home preparation.

● Electronic food shopping systems as alternatives to current retailing

systems. These include warehouse-to-door delivery, automated minimarkets, and mobile automated markets that would travel to the customers. The effect of these systems would be to make food available in

areas where the retailing system is now inadequate or to supply food in

areas of special need.

● Technologies for recyclable and returnable food containers that would extend present technology beyond beverages to other applicable foods.

Most of these technologies are directly concerned with preventing food losses

in the food system, conserving resources through more efficient processing methods or waste reduction in the delivery system, and producing new foods to

substitute for traditional ones. Others, such as the electronic checkout and electronic food shopping systems, reflect concerns over technologies that may be

economically justified but that may have undesirable consequences to society’s

quality of life. Some of these technologies are in use, some exist in the develop

mental stage, and some are identified as areas where technological innovation is

needed to respond to an existing, emerging, or potential problem. These technologies will have both positive and negative effects on agricultural producers, food

manufacturers, processors, retailers, labor, and consumers. Will steps be taken

to attempt to maximize the benefits and to minimize the negative consequences?

4
Chapter I

INTRODUCTION
Chapter I

INTRODUCTION

There are two futurists’ ideas that have particular relevance to this

report. The first is that the future should be viewed not as a single future but

many possible ones and that if enough people agree on a desirable future and

work toward that end, this will essentially be the future that will unfold. The

second idea is from the French futurist Bertrand de Jouvenel, who stated that

to preserve the ability to make choices and not become victims of necessity,

public policy leaders should identify emerging situations while they are still

manageable and not yet at the crisis stage.

Although there are many differing conceptions of what the world or the

United States may be like in the year 2000, the outlook is in general more optimistic than pessimistic. One accepted method of predicting and understanding possible changes in the world’s future is to identify present trends. The

following are some of those trends that certain futurists believe will, if they

continue, make the world different i n the future:

●

●

●

our

not

Increasing world political unifica- .

tion and cuItural standardization;

Growing affluence for one-half to .

two-thirds of the people on Earth

with continued poverty for the remai rider; ●

Decreasing importance of the

family as a social unit; ●

Less industry orientation of developing countries;

Increased longevity and personal

mobi I it y;

Rising educational levels; and

Greater emphasis on religion.

That these trends, if continued into the future, will affect al! segments of

lives is not in question; and since the importance of food in our Iives canbe questioned either, it is essential that we be aware of changing conditions that will affect the food sector. American consumers spent an estimated $180 billionl for domestically produced food in 1977, approximately

two-thirds of which ($123.5 billion) was for marketing services. Because food

expenditures have been increasing and marketing services take such a large

share of these expenditures, there is the incentive by industry to develop and

adopt technologies that will help lower marketing costs. The development of

new products, the need to reduce energy consumption, and concerns over

the food supply are other reasons for developing new food marketing technologies. On the other hand, the emergence of change i n certain socioeconomic

factors may create a climate that forces or encourages the industry to

change, economic incentives to the contrary. Understanding the issues involved and their expected impacts on society are important considerations

for future legislative and policy deliberations.

‘This represents 25 percent of total consumer expenditures of $7’30 billion excluding energy and services. Stated another way, Americans spent $2.50 of every $10 at foodstores and away-from-home eating

places. Survey 0/ f3uy/ng Power, 1977.
OBJECTIVES AND PROCEDURES

Policy issues arise from either perceived or

expected impacts resulting from the adoption

of technologies. Impacts may be positive,

negative, or a combination of the two; and not

all impacts create policy issues. That is, negative impacts that are not severe or widespread may not be brought to the attention of

policymakers, while technologies with primarily favorable impacts may create issues

only as to whether policies should encourage

their development and adoption.

The major purpose of this preliminary

analysis was to identify and rank by priority

food marketing technologies likely to raise

major policy and legislative issues. Also included as part of this report is a discussion of

social and economic factors that should be

expected to interact with those technologies.

These factors are equally as important to the

execution of assessments in this area as are

the technologies themselves.

Four types of technologies are discussed:

1. Available technologies in food marketing

that will be more widely adopted,

2. Technologies in the development phase,

3. Technologies that will be developed and

possibly adopted by the year 2000, and

4. Technological gaps.

A four-step approach was used in developing the information for this preliminary

analysis:

1.

2.

3.

4.

Soliciting views on existing and emerging marketing technologies and related

policy implications through mail surveys

of specialists,

Preparing a preliminary report based on

present marketing technologies and

those new technologies revealed through

the mail survey,

Convening a workshop to critique the

preliminary report and elaborate on the

issues, and

Preparing a final report based on all

data.

Details of the procedures followed in the

assessment are given in appendix B, and

materials used by the working group are in

appendix C.
—

Chapter II

PRIORITIES FOR

TECHNOLOGY ASSESSMENT
Chapter II

PRIORITIES FOR

TECHNOLOGY ASSESSMENT

Food marketing comprises the activities that take place within the food

system from the farm gate to the consumer. This includes processing, wholesaling, retailing, food service, and transportation. This excludes all functions

performed by producers on the farm. (See appendix A for background information on the U.S. food marketing system.)

An effective food marketing system should provide an adequate and continuous supply and variety of wholesome, nutritious foods to all consumers

at reasonable prices and provide reasonable returns to producers and selIers.

While simple to state, assessing performance is complex because cost efficiency is a major governing factor, and yet fulfilling other requirements may

increase costs. For example, seeing that food meets safety standards may

add to its cost. In the short run, a technology may increase efficiency and

lower cost to the consumer, while in the longer run it could result in structural changes to the industry that could impede competition and result in

less-than-reasonable prices for consumers. Any technology that would require a large outlay of capital and therefore drive out smaller firms could

lessen competition and increase prices. Likewise, returns to the various

segments of the system must be sufficient to attract needed capital and

make changes necessary to meet performance standards.

The marketing system breaks down logically into two major segments:

processing and distribution. Processing technologies are classified in this

report under five headings: 1) preservation, 2) new and improved equipment

and processing techniques, 3) new and modified food products, 4) new

sources of food ingredients, and 5) packaging. Distribution technologies are

classified under four headings: 1) wholesaling, 2) transportation, 3) retailing

and food service, and 4) those technologies that cross over the above three i n

their application and effects.

PRIORITY SELECTION

Priorities for the processing and distribu- ily on probability of occurrence and expected

tion technologies discussed in chapters IV impacts of each technology.

and V are based on staff work, literature and

research reviews, and contributions from This section synthesizes the priorities and

public participants in the Office of Technol- cuts across both processing and distribution

ogy Assessment’s (OTA) mail survey and and considers the total marketing system. It

workshops. The priorities are based primar- identifies the seven technologies that

11
emerged as highest priority for future assessment (see table 1, which lists the major technologies or technological areas and the areas

on which these technologies may be expected

to impact). The criteria for setting priorities

within this listing include how each technology affects or might affect the total marketing

system, the probability of the development or

adoption of that technology, and its expected

impacts in relation to the food system and the

social and economic climate (see chapter III).

Several technologies discussed in chapters

IV and V represent technological gaps rather

than developed technologies. Those technologies needing further research and development are identified at the end of this chapter.

Cross-fertilization occurs and no one impact can be singled out as the most important

or far-reaching. In many cases, the adoption

of Technology A will impact on Area A, while

the adoption of Technology B will impact on

Areas A and B and in turn affect the adoption

or limit the impact of Technology A. This interrelation and interaction of technologies

and impacts is, in the end, the most important

consideration of a technology assessment.

Nutrition and food safety are affected by

processing and packaging technologies but

may also be affected by technologies in food

distribution (wholesaling, retailing, transportation, food service) such as those in sanitation and loss prevention. Many of the distribution technologies are expected to affect industry structure, and in some instances this

may affect how firms interact with each

other, with other marketing segments, and

with consumers. Capital requirements for

many technologies are the prime cause for

many of the structural changes that take

place. Many technologies are adopted to improve productivity and substitute for labor

(employment), and these generally will give

rise to issues of job loss or labor relocation.

The prospects for future increases in energy

costs encourage development of energy-saving technologies, so that the energy-producing

industries will be affected.

Many of these high-priority technologies

are directly concerned with preventing losses

in our food system, either through more efficient processing methods or waste reduction

in the delivery system, and with producing

new foods to substitute for traditional foods.

This reflects the concern that between now

and the year 2000 our food supply will have

to be better managed and more efficiently

utilized if the United States is to supply food

needed in the rest of the world and keep

domestic prices at reasonable levels.

What follows is a comprehensive summary

of the seven highest priority technologies.

They are also discussed in more detail in

chapters IV and V, and the reader will be

referred to the appropriate pages should

more information be desired.

Table 1 .—Issue Areas of Food Marketing Technologies With High Priority for Assessment

Technologies 1. 2. 3. 4. 5. 6. 7.

Technologies Electronic Recyclable,

Engineered Sanitation in Retort Electronic to prevent food returnable

Impact Areas foods distribution pouch checkout food lOSS shopping containers

Marketing functions

Processing. . . . . . . . . . . . . . . . . . . x x x x x

Packaging. . . . . . . . . . . . . . . . . . . . x x x x x x

Wholesaling. . . . . . . . . . . . . . . . . . x x x x x x

Retailing. . . . . . . . . . . . . . . . . . . . . x x x x x x

Food service . . . . . . . . . . . . . . . . . x x x x x x

Transportation. . . . . . . . . . . . . . . . X x x x x

Nutrition. . . . . . . . . . . . . . . . . . . . . . . x x x x x

Food safety . . . . . . . . . . . . . . . . . . . . x x x x x

Industry structure. . . . . . . . . . . . . . . x x x x

Employment. . . . . . . . . . . . . . . . . . . . x x x x x

Energy . . . . . . . . . . . . . . . . . . . . . . . . x x x x x x

Other resources . . . . . . . . . . . . . . . . . X x x x

12
FABRICATED FOODS

The technologies that are used to produce

fabricated, or engineered, foods are considered high-priority candidates for assessment because they are already in use, their

impacts have already been felt, and it is

highly probable that their development and

use will continue in the years ahead. Sales of

fabricated foods were more than $6 billion in

1972 and are expected to exceed $11 billion

by 1980.

Fabricated foods may be divided into two

types: ingredients (extenders and fillers) and

analogs (substitutes).

The extender used most widely in meat

products today is vegetable protein, usually

from soy, in hamburger or meatloaf. Analogs

are substitutes fabricated to resemble a

specific traditional food, such as breakfast

sausage from vegetable protein or non-dairy

coffee whitener, cheese, whipped toppings,

or egg substitute from vegetable oils.

Several advantages have been cited for

these products: lower cost, extended food

supply in times of shortages, reduction in

energy use, better control of nutrient content,

and more efficient utilization of resources.

The issues that surface from the use of these

foods, however, are already of serious concern to producers, consumers, and nutritionists, among others.

Because fabricated foods make use of a

number of additives and unconventional ingredients about which official standards and

regulations are frequently incomplete or in

disagreement, many persons worry that those

who consume these products are not being

adequately protected. Others, however, believe that these regulations overly restrict the

development and acceptance of what maybe

a viable solution to the problem of maintaining an adequate, dependable, and nutritious

food Supply.

Nutritionists and others are concerned

about the effect consumption of fabricated

foods may have on overall nutrient intake.

While the use of vegetable protein as a meat

extender or analog may be one way of pro

tiding an inexpensive source of protein, the

overall consequences of ingesting vegetable,

rather than animal, protein (either in part or

whole) have not been satisfactorily determined. On the other hand, these technologies

afford the opportunity to supply specially formulated foods that will meet the dietary

needs or improve the nutrient intake of

selected target populations.

Two other issues that should be considered

are adequate labeling and resource use. How

should these foods be labeled to properly

identify ingredients and yet not present barriers to consumer acceptance? If the use of

these foods becomes even more widespread,

how will this affect the agricultural production sector, particularly the meat, poultry,

and dairy producers?

These technologies raise issues in the

areas of food safety, nutrition, regulations,

labeling, and resource use. (See chapter IV,

p. 42.)

FOOD SANITATION IN DISTRIBUTION

Preventing the adulteration and spoilage of could be used to solve this problem, although

food is of concern throughout the food system. development of additional technologies is

Since the problem of maintaining adequate needed.

sanitation is a serious one in the distribution

system, particularly with the railroads, this Contamination of food and food products in

area emerges as a high priority for assess- railcars has two major causes: cars are not

ment. Technologies and systems exist that cleaned adequately and may be infested with

13
pests, chemicals, or micro-organisms; or cars

used to transport food may have previously

transported toxic substances, residues of

which remain.

Several solutions to this problem are possible. Railroads need an efficient tracking

system to monitor cars used to carry toxicants so they will not subsequently carry

food or food products. Also, a method for

detecting contamination in cars is needed.

More thorough cleaning techniques must be

developed for the rail system to have quality

assurance in its freight car fleet.

Examples of possible technologies that

have been suggested are:

1. Freight cars designed specifically for

food products that will be more resistant

to contamination and infestation.

2. Equipment and procedures for decontaminating freight cars. This would include trained inspectors operating with

specific guidelines relative to food safety.

3. Freight cars specifically designed for

food use and a system that will keep

track of this “dedicated” fleet and

schedule the cars efficiently. This must

include an effective means of enforcement to maintain the integrity of the

system.

A major policy issue in this area is funding

the development of these technologies. At

present, the railroads appear unable to

secure the capital needed to initiate and

maintain such a system. Serious attention

should be given to the desirability of policies

that would help railroads finance these

needed improvements. If this system is

needed and feasible, should it be encouraged

through regulations, voluntary cooperation,

or some type of incentive arrangement? (See

chapter V, p. 54.)

RETORTABLE POUCH

The technology that produces the reportable pouch, while still being developed, has

current applications; the pouch has received

limited approval for use from relevant regulatory agencies (Food and Drug Administration

and the U.S. Department of Agriculture). Further adoption and use of this technology can

be expected to have strong impacts and far-

-reaching consequences throughout the marketing system, particularly in the areas of

energy, food storage, transportation, and the

environment. Owing to these expected impacts, reportable pouch technology ranks high

on the priority list for assessment.

The pouch is a multilayer, adhesively

bonded package that will withstand therm~

processing temperatures and that combines

many advantages of the metal can and the

plastic boil-in-the-bag. The quality of foods

processed by this method is said to be

superior to that of foods retorted in conventional cans, and taste tests indicate that it

may approach that of frozen foods.

14

Energy savings are possible in processing

because of shorter cooking times at lower

temperatures. However, while the pouch

itself would appear to offer savings in energy

use, these savings can only be confirmed by a

thorough analysis of different systems that

are or might be used commercially.

Savings of as much as 50 percent (pouch

vs. can) may be projected in the area of transportation owing to improved product-tepackage weight ratio. One question that must be

answered, however, is the relative durability

of the pouch for transportation purposes.

Reportable pouches now in use are protected

by an outer protective package, which limits

the potential savings.

If this technology becomes widespread and

inroads into the $17 billion frozen-food and

$20 billion canned-food markets are as significant as expected, issues to be addressed

include loss of revenue to producers of metal

cans and industries producing raw materials,
displacement and relocation of large segments of the labor force, and possibly considerable loss of jobs.

Environmental impacts of this technology

may be considerable, in both a positive and a

negative sense. The pouches are not recyclable, as compared to cans and most bottles,

which would negate some of the initial energy

and raw materials savings. However, reportable pouches can be used as fuel; therefore,

even without recycling most of the energy initially expended in their manufacture could be

reclaimed, while at the same time minimizing

solid waste problems. It is essential that these

problems be recognized, and that expected

negative consequences be thoroughly assessed before industry attempts to revolutionize

the food packaging industry.

ELECTRONIC CHECKOUT

Electronic checkout systems are already in

use in about 300 stores, or less than 1 percent

of all foodstores, in the United States as of the

end of 1977, There is every indication, however, that the development and use of these

technologies will continue to expand, with

economic and social consequences for retailers, consumers, labor, and the telecommunications sector. Because of these impacts and

the emotions they have aroused, electronic

checkout technologies must be among those

areas considered high priority for assessment.

At present, two electronic checkout systems have been developed. The first is an

electronic cash register, which may be selfcontained or tied to a central store computer.

It relies on individually price-marked items

and manual entry into the register. The second system, which has received the most publicity and generated the most opposition from

consumers, is tied to a central computer and

uses a seamer that reads the Universal Product Code (UPC) currently printed on a number

of food packages. This system, like the first,

has the potential to improve merchandising

decisions resulting from better inventory control, improved labor scheduling, less need for

storage space, more thorough analysis of

sales, increased product movement, and better use of shelf space.

In addition, the UPC scanner system eliminates the need to mark prices on individual

packages, since this information would be

stored in the central computer and transmitted to the terminal when the UPC is read.

Elimination of pricing has created most of the

public opposition to this system. Bills have

been introduced in more than 30 State legislatures and in the U.S. Congress to require that

prices be marked on every item.

Opponents claim that lack of pricing

deprives consumers of information they need

to make rational purchase decisions and to

assure proper charges. Proponents believe

that this is outweighed by the many economic

benefits that may accrue from the use of this

system, stressing that this would probably

result in lower food prices.

This technology will affect society in a

broad sense. What particular components of

the system generate savings, and how much

of the savings are cash savings due to increased productivity of labor versus secondary savings from better management of inventory, pricing policies, etc. ? How much of

these savings would be passed on to the consumer? How, in fact, would this technology

affect consumer purchase decisions if products were not marked with individual prices?

If this is indeed a problem, are there alternative solutions? How would widespread implementation of this system affect industry

structure and competition, given the high initial capital required for installation (about

$200,000 per store)? If individual prices were

required by law, would this deter the growth

of high-volume, low-price discount stores that

might offer substantial savings to consumers?

The adoption of this technology would

cause a reallocation of labor. How would this

affect the 1.7 million foodstore employees and

15
labor in related industries? Increased use What will be the impact on individual privacy

of the electronic checkout may involve in- and liability for losses and errors in the

creased use of electronic funds transfer. system? (See chapter V, p. 57.)

TECHNOLOGIES TO REDUCE FOOD LOSSES

Approximately one-fifth of all food produced for human consumption is lost annually

in the United States. Technologies that

reduce the extent of these losses can help in

substantially increasing the food supply

available from existing resources and will

become increasingly important as worldwide

pressure increases for more food. Such technologies include those that reduce waste in

packaging and transportation throughout the

marketing system and reduce losses that occur from pilferage and general lack of security control.

Waste resulting from mechanical harvesting might be reduced by improved harvesting

technologies or by gleaning the produce left

by mechanical harvesting. Waste resulting

from spoilage and bruising in transportation

might be reduced by using such alternatives

as bulk packing at the field for shortdistance

delivery to stores or by educating consumers

of the benefits of damaged, but equally nutritious, produce. In addition, technologies are

needed that will reduce the amount of food

lost at the retail level by both pilferage and

damage caused in handling.

Several questions remain unanswered,

such as: What is the extent of loss in the

marketing chain, when does it occur, and

what technologies are available to reduce

this loss? Another consideration has to do

with the potential for utilizing produce that

does not now meet grade standards because

of size or blemishes, what consumer objections would have to be overcome to accomplish this, and would it be economically feasible? Technologies to reduce losses at retail,

such as the electronic checkout for better inventory control, should be considered, as

should better designed locking systems for

railcars and trucks to reduce losses during

transportation. (See chapter V, p. 61.)

ELECTRONIC FOOD SHOPPING

These technologies are not as likely to be

widely adopted within the next 10 years as

are the electronic checkout systems, but their

gradual evolution would have very significant

impacts on the marketing system, hence the

high priority accorded them for assessment.

Three electronic food shopping systems are

considered: warehouse-to-door systems, auto

mated minimarkets, and mobile markets.

These technologies apply primarily to large

metropolitan areas and the special distribution needs of rural areas.

Possible advantages of ordering directly

from warehouses and delivering directly to

the consumer include savings in time to the

consumer, in transportation costs, in fuel use,

16

in convenience, and possible safety, particularly to the elderly. An assessment should

analyze these technologies to determine

whether they can indeed provide the same

services as retail stores at less cost. Automated minimarkets, a convenience store

where most items are dispensed automatically, as well as the warehouse-to-door system,

are dependent to a certain extent on some

type of credit, probably electronic funds

transfer (EFT), which would be card-activated. Both systems are dependent, therefore, on the development and use of EFT technology.

Mobile markets would move products into

certain areas on a scheduled basis. Tests in-
dicate that this is a high-cost operation, but

this cost could decrease if the operation were

to become widespread.

The main advantage of all three systems is

that they would make food available in imercity and rural areas, where such services

may be at a minimum. The most apparent disadvantage is that with remote ordering or a

smaller amount of food from which to choose,

the consumer would be faced with a limited

selection and in some instances would not be

able to examine certain foods, particularly

fresh produce, before purchase.

All of these technologies could be examined in relation to alternative systems, such

as industry-cooperative programs for improving stores in the inner city, consumer cooperatives, and direct marketing by farmers in

rural areas.

RETURNABLE AND RECYCLABLE CONTAINERS

Technologies for recyclable containers, returnable cans and bottles, and other refillable containers have a high probability of being an important part of our future; the impacts of adoption will be widespread. These

technologies have developed because of

socioeconomic pressure, and the pressure

will in all events continue to build for new

solutions through technology to the problems

of conserving natural resources and reducing

the expense of keeping our environment free

of pollution from discarded containers. This

is an instance of social and economic pressure creating demand that establishes the

high priority given to these technologies for

assessment.

Returnable and recyclable containers are

being produced today, and many communities

have set up collection points for cans, bottles,

and other recyclable products. The public

definitely seems interested in the concept of

recycling, even if the specific technologies or

systems to date may not have met with their

approval.

These technologies fall into three categories: recyclable beverage containers, returnable and recyclable food containers, and the

general concept of recycling applied to all

food products. The issues, however, are generally the same for all and fall into the areas

of economics and the most efficient resource

utilization.

Returnables may add to the cost of distribution and handling of products (one study

estimates a cost of 2 cents more per quart to

deliver milk in returnable bottles), but

whether this cost would be passed on to the

consumer has not been determined, although

it seems a reasonable assumption. Included

in this issue is the high initial capital cost of

converting production lines in bottling plants

to handle returnables. An assessment should

evaluate policies for overcoming such capital

problems.

Delivery problems may also result from a

widespread conversion to returnable bottles,

since by law they cannot be transported in

the same vehicle as new food products. This

may give rise to new products that do not depend on bottles (such as powders to be mixed

with water in the home).

Recovery and recycling of the materials

from food containers may be one method of

extending our natural resources. Various

technologies for collection and processing of

these materials have been initiated—for instance, large central high-technology plants

for separating recyclable metal, glass, and

other materials from refuse relative to

separation by consumers of these materials

before the refuse enters the recycling system.

There may be no one system applicable for

every situation, but people may have to make

a choice of whether they wish to participate

by paying for a centrally located or industrybased system with taxes or fees, or whether

they would prefer to lower the cost by participating directly. (See chapter IV, p. 47.)

17
TECHNOLOGIES NEEDING MORE RESEARCH

Research is needed to further develop

many technologies identified in this report

that are not now in an adoptable state. The

list below is not in priority order and does not 3

include those technologies selected for highpriority assessment that would more clearly 44

specify needs for more research.

The listing of these technologies should not 5

imply that they are being advocated but

rather that they are currently not developed

to the point of adoption or that not enough 6

research has been conducted to be able to

assess their potential.

The processing and distribution technol- 7. ogies needing further research are:

1. More efficient utilization of water in

processing (see chapter IV, p. 38), 8.

2. Development of containers or railcars

for better quality preservation (chapter

v, p. 55),

Central cutting and packing of meat

(chapter IV, p. 37),

Solar energy technology in processing

(chapter IV, p. 40),

Meals-on-wheels and other delivery of

complete meals to the home (chapter V,

p. 60),

New analytical instrumentation and

processes for detecting ingredients in

foods (chapter IV, p. 39),

[ntermodal terminals constructed in

main food distribution centers (chapter

V, p. 56), and

Moisture reduction processes (chapter

[v, p. 41).

18
Chapter III

SOCIOECONOMIC FACTORS
Chapter [11

SOCIOECONOMIC FACTORS

This preliminary analysis calls attention to the likelihood of the emergence, adoption, and relative importance of food marketing technologies and

their impact on and interaction with other such technologies, the marketing

system, the Nation, and the world. To do this, one must first have identified

those socioeconomic factors that may influence, and be influenced by, these

technologies. There is a definite relationship between change in the socioeconomic climate and the development and adoption of new technologies.

Given socioeconomic conditions may encourage or discourage the development and/or adoption of new technologies, while widespread adoption of

technologies may, in turn, alleviate or exacerbate the conditions that influenced their development or adoption.

In order to identify all relevant socioeconomic factors, the Office of

Technology Assessment (OTA) staff generated a preliminary list from a

review of literature dealing with elements that may be expected to influence

our future way of life. Two mail surveys were then conducted to identify those

factors most likely to influence food marketing technologies (see appendix B

for methodology). The processing and packaging survey included energy,

pollution, health, and the supply and demand for food; the survey on distribution included energy, pollution, regulations, consumer attitudes, and the demand and supply for food.

Respondents were asked to comment on them and add others they felt

should be included. Most respondents agreed with our list but added information and suggested additional factors. A summary of the socioeconomic factors most frequently mentioned is shown in table 2.

A working group was then formed of specialists in food processing,

packaging, and distribution; members represented labor, universities, Government, and consumer groups. The initial list of factors was modified to include the ideas and comments of respondents to the survey and was made

available to the working group, which made additional comments on the list.

SCENARIOS FOR THE FUTURE

One objective of the group was to estimate

the possible time of development and adoption of the technologies. To this end, two

scenarios were presented.

Scenario 1 projects that past and current

socioeconomic trends will continue without

major shocks into the future. It assumes the

kind of environment one would expect if

things evolve much as they have in the past 25

years.

The cost of energy and raw materials will

remain about the same relative to other costs,

and supplies will remain at the same level.

Shortages will be transitory and will not

21
Table 2.—Socioeconomic Factors Influencing New Technologies

as Indicated in Questionnaire Responses

Socioeconomic factors Processing Distribution Total

Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 14 63

Pollution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 5 48

Demand fooda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 9 49

Supply fooda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 9 50

Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 — 44

ReguIations C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 12 17

Consumer attitudesC. . . . . . . . . . . . . . . . . . . . . . . . . 2 9 11

Raw materials shortages . . . . . . . . . . . . . . . . . . . . . 6 1 7

Prevent spoilage and waste . . . . . . . . . . . . . . . . . . . 4 2 6

Changing life patterns, eating, lifestyles . . . . . . . . 4 7

Nutrition education.. . . . . . . . . . . . . . . . . . . . . . . . . 3 1 4

aThese socioeconomic factors werein background materials sent in both letters.

bThis socioeconomic factor was in background material sent with processing letteronly.

CThese socioeconomic factors were in background material sent with the distribution letter All other faCtOrS supplied by

respondents. In some instances, respondents did not evaluate ourlist ofsocioeconomic factors oraddanyoftheir own.

cause major disruptions in the economy. The

demand for food will continue at the same

rate and prices will not rise drastically. The

food supply will remain stable, with new

sources adding to conventional production to

keep pace with demand. Increased awareness of the relationship between nutrition

and health will influence eating habits, which

will be reflected in concern about food additives. Regulations will remain essentially unchanged. Lifestyle trends and demographic

factors will not undergo drastic changes from

current trends. Inflation will continue at 5

percent per year, median family income will

rise to $25,000 by the year 2000, and consum-”

ers will enjoy increased disposable income.

Scenario 2 depicts changes in current

trends that can be expected to have more influence on the development and adoptionof

technologies to the year 2000 than those in

scenario 1 above.

Energy and raw materials prices will rise,

as will our dependence on foreign imports,

and supplies will be subject to periodic

disruption for political economic, and other

reasons. Foreign demand for food will increase, causing domestic food prices to increase. Alternative food forms and sources

will be needed to augment food supply. In

view of this, consumers, although concerned

about health and food safety, will be willing

to accept small risks and to use processed

and fabricated foods. Regulations covering

the testing and approval of food ingredients,

including additives, will change. Food ingredients will be judged on benefits as well as

risks. Some lifestyle factors will change, particularly in the area of central food preparation facilities. Inflation will increase at a rate

of 7 percent per year, median family income

will reach $21,000 by the year 20()(), and consumers will have less disposable income for

discretionary use.

Participants in this study felt that scenario

2 was a more accurate forecast of future

trends and that it would likely lead to the

adoption of more new technologies than

would scenario 1.

For a more comprehensive discussion of

these two scenarios, the reader may refer to

appendix C on procedures for the working

group.

The remainder of this chapter addresses

the socioeconomic factors identified as a

result of OTA’s selection process. Just as the

status of the technologies presented in this

report should be updated periodically, so

these factors should be reexamined from time

to time. This will allow Congress to be alerted

to continuations of and deviations from the

status of these factors as presented here.

22
ENERGY AND OTHER RAW MATERIALS

The total food system consumes an estimated 17 percent of the total U.S. energy supply. The marketing sector consumes about 8

percent, the production sector 3 percent, and

consumption at home the remaining 6 percent, 1 An increase in the price of energy has a

domino effect through the economy—for instance, an increase in the price of energy will

cause an increase in the price of steel that

will be reflected in the price of canned goods

that will in turn be passed on to the consumer.

The cost of energy will be a key factor

shaping the development and adoption of food

marketing technologies. It is felt that energy

costs will continue to rise relatively faster

than other costs, and this can be expected to

act as an incentive to develop and adopt

energy-saving processes throughout the food

processing and distribution system as food

moves through the marketing channels to the

consumer. Many technologies are presently

available that have been and will continue to

be adopted and used in processing as the

price of energy increases. However, in the

long run new technologies will have to be

developed and used to conserve energy until

and unless new sources of energy are available. Packaging is second only to labor as a

contributor to food cost, and therefore energy

savings as an economic and technical factor

must be an important element in assessing a

packaging technology.

Because of the interrelationships among

socioeconomic factors, trends and regula-

‘According to Energy Consumption in the Food System, processing accounted for 4.4 percent, wholesaling

0.5 percent, retailing 0.8 percent, and transportation

2. I percent, for a total of almost 8 percent for the marketing system.

tions in one area may work for or against

potential energy savings in another. For instance, pollution abatement regulations may

be energy-consuming. The convenience foods

and individual packaging that consumers demand require more energy than unprocessed

foods and larger packages. Some studies suggest that central storage and cooking of foods

requires less energy than does home preparation.

,

Certain raw materials shortages may

cause future problems in food marketing,

especially in packaging. Plastic packaging

materials based on petroleum have increased

and will probably continue to increase in

price. Other materials that may be in short

supply include tin, aluminum, certain hardwoods (for pallets), and other raw materials.

To overcome these expected shortages will

require technologies to provide substitute or

alternate products at lower prices. Renewable resources may possibly be used to a

greater extent than at present. Another possibility is the development of technologies

that reduce the need for packaging,

Shortages of energy and to a lesser extent

of other raw materials would mean relatively

higher prices and would encourage the development of energy-saving technologies, However, the discovery and/or development of

alternate energy sources—e. g., solar, geothermal—could dampen the increase in energy costs and adversely affect the development of energy-saving technologies. The positive impact of energy may be felt more in the

processing and packaging areas than in distribution, as there appear to be more viable

energy-saving technologies available for

adoption in processing than in distribution.

23
POLLUTION

Society seems to agree that our environment should be protected from pollution, but

there is no consensus on the extent of pollution control needed or the price that should

be paid. Most respondents to the survey felt

that pollution control would bean important

factor in food processing and packaging but

less important in food distribution.

One way of offsetting the cost of pollution

control is to convert polluting wastes to useful

products. The consensus appears to be that

while technologies exist to convert normally

polluting waste to both animal and human

foods, even more will be developed.

Waste may also be converted to energy and

recycled back to the processing operations.

Research is needed to determine if hybrid

DEMAND

World population is expected to double

from today’s 4.2 billion by the year 2010, and”

demand for food may be expected to increase

accordingly. If the population increase is

coupled with rising world income, as has

been predicted, the demand would probably

increase at a proportionately faster rate.

Historically, rising incomes in developing and

developed countries have resulted in an increased demand for animal protein and other

foods requiring higher inputs of grain and

other feedstuffs than vegetable protein,

which can be consumed directly.

Domestic demand will reflect population

increase, changes in economic climate and

social values, and export policy coupled with

foreign demand for U.S. farm products. The

U.S. population is expected to reach 260 million by the year 2000, and total demand for

food will reflect this increase. Some changing

economic and social factors—older population with a large number of retired persons,

singles maintaining homes, and more working

women—have contributed to trends of less

time spent on home preparation of meals and

perhaps a change in types of food and packaging. However, these factors are not expected to affect total demand for food.

24

energy systems would make this feasible.

Because of the high initial cost of waste-converting technologies and the need for largevolume processing to make them economical,

economic incentives may be needed to pr~

mote transporting of wastes to central locations for processing.

New technologies or policies for economic

incentives may be needed as well for solid

waste management, including beverage containers and all other types of litter control,

recycling, and resource recovery operations.

Pollution abatement equipment on transportation vehicles does add to initial cost and

in some instances may add to operating costs,

but it is felt that food distribution would not

be materially affected by pollution abatement

requirements.

FOR FOOD

The U.S. policy on food and commodity exports through commercial channels and Government programs as the Food for Peace

(P.L. 480) program will determine the availability of U.S. food for export. Our agricultural trade has shown a positive net balance

of payments of about $12 billion for each year

from 1974 through 1976 that offset the $8.5-

to $1()-billion deficit in other sectors.z However, even though agricultural trade had a

positive net balance of $10.6 billion in 1977, it

was not able to offset huge deficits in oil and

other imports for that year.3 It is clear that

continued exports of agricultural products to

balance the purchase of oil and other imports

will exert pressure to raise domestic food

prices, especially in years when supplies are

limited. Increased demand for food as outlined in both scenarios will have a very positive effect on the development and adoption

of technologies in processing and distribution.

‘U.S. Department of Agriculture, Economic Research

Service, World Economic Conditions in Relation to Agricultural Trade, WEC12, August 1977.

3U. S. Department of Agriculture, Economics, Statistics, and Cooperatives Service, World Agricultural

Situation, WAS16, July 1978.
Projections by

culture (USDA)

agriculture will

SUPPLY

the U.S. Department of Agriindicate that conventional

be able to supply domestic

needs to the year 2000 and perhaps beyond.

This projection assumes average weather

conditions and technologies that will keep

productivity increases equal to past rates.

However, unfavorable weather, a drastic

energy shortage, or a leveling off of productivity rates could lower our expected food

supply and mean that either additional land

would have to be brought into cultivation by

1985 or new technologies would be needed.

A preliminary OTA staff study projects a

U.S. surplus of total grains by 1985. World

projections indicate a gradual tightening of

the supply demand balance from a net surplus in 1978 to a slight deficit by 1985.

It is possible under these projected conditions that food prices could increase and food

purchases will be more than the 16.8 percent

OF FOOD

of disposable income registered in 1976.’ If

conventional U.S. agriculture is not able to

supply domestic and foreign demand at some

acceptable price level, there will be an incentive to develop new unconventional food

sources that depend on new technologies.

One example might be the substitution of

vegetable for animal protein, since the increase in the world demand for beef has been

projected to increase 3 percent per year, with

supply increasing only 2.5 percent per year.

Supply conditions outlined in scenario 2 (conventional agriculture could not supply enough

food at reasonable prices) would encourage

the development and adoption of processing

and distribution technologies.

4This statistic is a better indication of change in the

cost of food purchases relative to disposable income

than it is an actual measure of individual family food

expenditures. Families with low incomes or those with

large numbers in the family would have to spend a

much larger share of disposable income for food than

this figure indicates.

FOOD SAFETY AND NUTRITION

Consumers are concerned about the relationship between food and health and are increasingly interested in having more and better information on the nutritional and safety

qualities of the foods they consume.

Consumers demand food that is free from

harmful additives and from organisms that

may cause illness. Some contend that additives may have an adverse effect on health;

others contend that additives play an important role in food safety by preventing spoilage

and preserving foods beyond their normal life

span. Although additional regulations pertaining to food additives should be based on a

risk/benefit analysis, determining risk and

benefit for many food additives may be extremely difficult. The consensus of those participating in this study was that concern

about additives could hinder development of

fabricated foods unless criteria and processes for evaluating additives were modified.

Some felt that more concern needs to be given

to the naturally occurring organisms causing

foodborne illnesses.

The other major concern in this area is the

effect of quantity and kinds of food consumed

on nutrition, Obesity caused by overconsumption of calories is one of the most serious

health problems in the United States, more so

than malnutrition or underconsumption of

needed nutrients.

Concern about nutrition will likely increase

in the years ahead. It would be in the best interest of consumers to increase and improve

their habits, knowledge, and attitudes about

food and its use through educational programs. This information should be provided

in a form that they can incorporate into their

daily lives and that clearly conveys the bene25
fits and risks of consuming certain types of

food.

The average American has been consuming steadily more fat and less carbohydrates.5

Although total per capita consumption of

sucrose is not much above that for the late

1920’s, the per capita consumption of all

sweeteners (natural and artificial) has increased, and there is concern about the large

quantities of refined carbohydrates consumed by children and teenagers in soft

drinks and snacks.’

‘Since 1910, the per capita consumption of fat has increased from 4.5 ounces per day to 5.5, while per

capita consumption of carbohydrates has decreased

from 17,5 ounces per day to 13,4. However, there has

been a small decrease in the consumption of saturated

fat from 3.7 ounces per day to 3,3.

‘Willis A. Gortner, “Nutrition in the United States,

1900 to 1974, ” Cancer Research, Vol. 35, November

1975,

A major concern in nutrition is the formulation of fabricated foods. From a technical standpoint, processed and fabricated

foods offer the possibility of better control

over nutritional intake. On the other hand,

lack of fiber in our diet and excessive consumption of refined carbohydrates by certain

age groups has been blamed on increased intake of fabricated drinks and foods. One fear

is that increased consumption of fabricated

foods may mean decreased intake of vitamins

and needed trace minerals. Nutrition education may influence the kinds of food consumed

in the future and indirectly, therefore, the

technologies needed to produce them.

Workshop participants gener*ally felt that

health concerns would have a net positive impact on technological development, particularly in the processing and packaging sector,

and that the impacts would be stronger in the

processing than the distribution sector.

REGULATIONS

It has been shown many times over that

regulations can act to encourage or deter the

development and adoption of technologies,

and the marketing system is no exception. For

example, the recent regulatory controversy

surrounding the use of saccharin has spurred

research into new alternative sweeteners;

bills introduced in State legislatures requiring prices on all items in a retail store have

rendered the future of the electronic checkout/Universal Product Code system uncertain

at best.

It is alleged that many current transportation regulations discourage the adoption of

technologies that would promote efficiency

and save energy in the transporting of food.

These regulations are administered by a number of Federal and State agencies and cover

routes, rates, and equipment size and weight.

The Department of Transportation has stated

that “Very substantial improvements in fuel

economy and overall transportation efficiency can be achieved by moderate increases in

truck size and weight by the introduction of a

simplified single nationwide size and weight

code, ” which does not exist today.

26

Other regulations affecting technological

development are those on returnable bottles

and on building materials and construction.

Conflicting regulations by the Occupational

Safety and Health Administration and USDA

have been cited as detrimental to the full use

of new construction technologies and maximum in-plant efficiency.

Regulations have also been a factor in

hindering development of many processing

technologies. Regulations are interrelated

with health concerns, which in turn affect

such technologies as fabrication and irradiation of foods. A recent statement by the Food

and Drug Administration (FDA) points out

that as the technology of fabrication advances and as more fabricated foods resembling traditional foods reach the market,

there will be a greater concern over finding

ways to assure the nutritional quality of

food.’

7

Stephen H. McNamara, “Nutrition Regulations by

FDA in the Brave New World of Fabricated Foods, ”

speech delivered to the Food and Drug Institute Food

Update 1977, Apr. 27, 1977.
Regulations in the processing area will nologies, while in the distribution sector the

have an overall negative impact onthedevel- impact of new regulations will be positive

opment and adoption of new marketing tech- relative to technological development.

CHANGING LIFESTYLES

Data on changes in household and family

characteristics give a measure of changing

lifestyles, From 1970 to 1977, the number of

households increased 17 percent to a total of

74.1 million. Households composed of persons

living alone or with nonrelatives increased 49

percent, the greatest increase of any category of households. Persons living alone increased 43 percent, one factor in reducing

average household size from an estimated

3.14 persons in 1970 to 2.86 persons in 1977.

The most rapidly growing segment of persons

living alone is in the 12 to 24 years old age

group, and the most rapidly expanding age

group is from 18 to 44 years old.a

More wives are working, therefore demanding more convenience foods and increasing the amount of food consumed outside the home. q Two-income families are better able to afford these two more expensive

types of food.

A recent USDA survey found that persons

over 50 eat out less frequently than those

under 50 and that the younger group uses

fast-food outlets more frequently .10

It is difficult to assess the overall effect of

changing lifestyles on technology because

while demographic statistics are measurable

8Department of Commerce, Bureau of the Census,

Population Characteristics, Households and Family by

Type: March 1977, Series P-20, No. 313, September

1977.

‘One recent study estimates a lo-percent annual

growth rate in away-from-home eating establishments

between 1976 and 1981, which compares to a 13-percent annual growth rate between 1971 and 1976. See

William C. Hale, “Rationalization of the U.S. Food Service Market and Opportunities for Supply Industries, ”

paper presented to American Paper Institute, Tissue

Division, Oct. 17, 1977,

‘OAlden D. Manchester, Eating Out, National Food

Situation, Economic Research Service, USDA,

September 1977.

and trends may be extrapolated, attitudes

and beliefs are varied and often conflicting

and of short duration. They are perhaps the

hardest to predict with any degree of

accuracy.

Consumers may want more convenience

foods but may not like food additives or

higher costs (although some convenience

foods cost less than their home-prepared

counterparts).]’ Some want home gourmet

cooking, yet many consumers prefer to eat out

at fast-food outlets. Reacting to fads of unpredictable duration and dealing with what appear to be contradictory trends are among

the problems faced by food processors and

distributors.

There is no doubt that consumers are better educated and more concerned; they also

appear to be more willing to join others in

group actions such as cooperative buying

clubs and cooperatively owned stores. Since

retail stores are consumers’ direct contact

with the food marketing system, they must

have consumer acceptance of or be able to

overcome resistance to new retail technologies. Consumers may be more willing to try

new foods, but they are also more willing to

express their opinions of products and

services.

There is little doubt that under certain conditions changing lifestyles will affect the

development and adoption of technology in

the years ahead. Changing lifestyles will

probably have a small but positive effect on

the development and adoption of food marketing technologies, especially under scenario 1

and particularly in the processing and

packaging sectors under both scenarios. This

1lLarry G. Traub, Convenience Foods-1975, Cost Update, Family Economic Review, USDA, Agricultural

Research Service.

27
may reflect, in part, the visible changes in

processing and packaging that have taken

INDUSTRY

Structure as used here refers to the size of

firms, market shares, and the way firms in an

industry are linked together.

It is difficult to characterize the food industry as a whole, since it encompasses

everything from giant to small firms. The four

largest food processors had about 8 percent

of sales in 1975, and the eight largest had

about 13 percent. In 1976, the four largest

chainstores had about 19 percent of the

chainstore and independent grocery store

sales (excluding convenience stores), and the

eight largest about 27 percent. The trend over

the years has been toward fewer and larger

firms, and consumers and Government have

expressed concern about the dominant market share of the large food chains in some geographical areas. This trend may become even

stronger if ‘‘superstores, retail foodstores

that also sell a large volume of non-food

items, are successful.

While the number of wholesalers has remained steady, considerable change has

place to produce

now available.

STRUCTURE

the many convenience foods

taken place in the nature of wholesaling since

1960. Most large chains operate their own

warehouse facilities and have integrated the

wholesaling and retailing functions. In some

areas, however, some chainstores have found

it advantageous to discontinue their wholesale operations and have nonchain wholesalers supply their operations. Wholesalers

have affiliated with their customers either in

voluntary arrangements or as cooperatives,

and wholesalers and distributors are becoming fewer and larger.

Participants in this study felt that industry

structure would have a net positive impact on

the adoption of technologies (although less on

the distribution technologies under scenario

2). Since many technologies in this area require large capital investments and large

volumes to operate economically, smaller

firms may find it difficult to make such investments and compete effectively with the

large firms.

OTHER INSTITUTIONS

Individual concerns may be expressed

through acts that over time become institutionalized.

One such institution is organized labor,

whose principal concern is with the adoption

of technologies that threaten to reduce the

number of jobs available or to change job

status. The degree of concern and possible

opposition depends on the severity of job loss

or relocation, the union’s ability to gain support for its view, or the relative strength of

the unions versus the industry involved. This

may or may not, therefore, act as a deterrent

to the development and adoption of certain

technologies. In addition, union contracts act

as a major impetus to wage increases, which

tend to rise as prices increase; this can be expected to impact on the marketing of food as

well as on other segments of the economy.

Other institutions that may influence technologies are those that come about through

the organization of individual concerns—e.g.,

consumer groups—that may themselves exert

influence on other groups or may influence

local, State, and Federal institutions to work

in their behalf. There is no doubt that such

groups can have an effect, directly or indirectly, on the types of technologies that may

be developed or introduced into the marketing system and the extent to which they are

accepted and used.

28
FOOD WASTE

Approximately one-fifth of all food pro~

duced in the United States is never consumed .

12 It is wasted. This waste occurs

throughout the production and marketing

chain and may result from poor methods of

harvesting, damage during transportation, inefficient utilization in processing, or spoilage.

Spoilage leading not to total waste but to

deterioration in quality may be caused by

poor methods of preservation, rough handling, improper storage and temperature controls, or damage from insects, disease, and

rodents. Significant amounts of food may be

wasted at point of service in schools and

12U. S. Congress, General Accounting Office, Food

Waste: An Opportunity to Improve Resource Use,

CED-77-1 18, September 1977,

other institutions, restaurants, and in the

home.

Reducing this wastage should be of concern to all those involved in setting policy in

the food sector, and interest in this area

should stimulate new technologies in harvesting, waste conversion, and reduction of spoilage in the marketing charnels.

Increasing the amount and quality of food

that ultimately reaches the consumer in proportion to the amount produced can have the

beneficial effect of decreasing the energy

used in both processing and transportation,

reducing pollution through conversion of

now-polluting wastes, and increasing the

nutrient intake and therefore raising the

nutritional status of Americans.

29
Chapter IV

PROCESSING AND PACKAGING

TECHNOLOGIES FOR

ASSESSMENT
Chapter IV

PROCESSING AND PACKAGING

TECHNOLOGIES FOR ASSESSMENT

The processing and packaging technologies that the Office of Technology Assessment (OTA) considers of highest priority for assessment are listed

(in priority order) in table 3. The list emphasizes those technologies with a

strong probability of early occurrence and significant expected impacts .

Given highest priority were those where the probability of adoption is considered high and that would be expected to have considerable impact if

adopted. Technologies where probability of occurrence by 1985 is considered

high but with moderate impacts or technologies where impacts are expected

to be high but probability of adoption is considered low were given lower

priority.

OTA staff ranked the technologies based on the information developed

in the workshop and by collateral staff work. Detailed workshop discussions

provided much of the information on impacts and issues for each technology

and brought out additional points on development and adoption that aided in

placing a general priority order for intended technology assessments on each

of the technologies. (See appendix D.)

Technologies in this chapter have been divided into the following

classifications: preservation, new and improved equipment and processing

techniques, new and modified food products, new sources of ingredients,

and packaging.

Processing is one of the series of operations performed on a product

that aids preservation, makes it more convenient to use, produces a new food

form, produces an ingredient for use in further processing, or produces a

more palatable food. The number of plants and employees engaged in food

processing is shown in table 4 under five broad classifications for 1963 and

1972. These data show the total size of the food processing industry and that

the plants are becoming fewer and increasing in size, since the total quantity

of foods processed has increased. Data for 1975-76 show that the top 100

food processors had food sales of almost $16 billion. ’ Total industry shipments of food and beverages, including imports, totaled about $193 billion.

Almost 4.4 percent of U.S. energy output is used in manufacturing food

and kindred products, with about one-half of this consumed in the production

of processing inputs. (The estimate may be conservative, as energy consumed on many capital inputs could not be estimated.)2

“’The Top 100 Food Companies, ” Food Processingr December 1977.

2Energy Consumption in the Food System, prepared for the Federal Energy Administration by Booz,

Allen, and Hamilton, Report No. 13392-007-001, December 1975.

33
Table 3.—Processing and Packaging Technoiogies

With High Priority for Assessment

Table 4~ .—Number of Plants and Employees

for Food Processing

Technologies with high priority of adoption

and high impact

1) Fabricated foods (p. 42)

2) Retort pouch (p. 46)

3) Recyclable and returnable containers (p. 47)

Technologies with high priority of adoption

and moderate impact

1) Aseptic processing and packaging (p. 35)

2) Development of new sweeteners (p. 43)

3) Conversion of waste to human food and animal

feed (p. 44)

4) Central cutting and packaging of meat (p. 37)

Technologies with low probability of adoption

and high impact

1) More efficient water utilization (p. 38)

2) Irradiation (p. 36)

Number Employees*

Type plant 1963 1972 1963 1972

Dairy products. . . . 7,885 4,590 257” 189

Meat packing. . . . . 5,300 4,437 300 308

Bakery . . . . . . . . . . 5,366 3,633 280 235

Canning & freezing 3,969 2,557 245 233

Grainmill products 3,555 3,080 113 111

Total . . . . . . . . 26,075 18,297 1,195 1,076

“ Number of employees In thousands

SOL’RCE Olan D Forker and James L Pearson, The Food and Fiber Market

System — Its Magnitude and Contrlbutlon, ‘ speech presented at a workshop on

Coord(nat[on of Market Research, May 9 ;977, Washington, D C

PRESERVATION

One major aim of processing is to extend

the storage life of foods through preservation

techniques. Some methods preserve food in a

state near the fresh form, while others produce drastic changes in shape, taste, and

other characteristics, Preservation may

change the form of the food very little, as in

freezing, or completely, as in making cheese.

Regardless of the end purpose of processing,

preservation is a part of any process where

the product is to be stored.

Preservation is not limited to the processing function; even fruits and vegetables to be

sold fresh are handled by processing equip

ment designed to minimize bruises. In same

cases special washes and controlled-environment storage are used to aid preservation.

The principal techniques to extend shelf

life and retard spoilage are those that act to

remove or destroy potentially harmful micr~

biological organisms or suppress the activity

of micro-organisms. Adverse changes in foods

[spoilage) are caused by micro-organism or

enzymatic activity, chemical reaction, or

such physical or physiochemical changes as

drying or crystallization. Microbial spoilage

is the easiest to control, enzymatic conversions are more difficult to prevent, and chemical reactions are almost impossible to com34

pletely suppress. Techniques fall into three

categories: removal, destruction, or suppression.

Removal may be accomplished by filtration

when the product is water-soluble, and in certain instances by centrifuging, Such techniques generally must be combined with

other methods in order to be effective,

The most widely used and effective technique for destruction of micro-organisms is

heating, the only negative result of which is

that beyond certain temperatures the quality

of the product may be affected. Radiation is

another method, although it may, at high

levels, cause undesirable chemical reactions.

Other than destruction through heating,

suppression of microorganic activity is the

most prevalent method of preserving and increasing the shelf life of foods and food products. Techniques for suppression include

cooling (refrigeration), freezing, and reducing

water content. Freeze-drying, a method gaining acceptance but with economic disadvantages still to be overcome, combines the latter

two techniques. Suppression by additive is a

method used extensively in food processing,

The additive generally changes the native

characteristics of the food or food product—

for instance, jellying, curing, and pickling by
adding sugar or salt; fermentation; stabilization by adding alcohol or acid, In addition,

such chemical or biological substances as

preservatives or antibiotics may be added to

a product to act specifically against microorganisms.

Modifications to and combinations of these

preservation techniques are constantly being

developed, and several specific processes,

such as freeze-drying, that offer potential for

greater use, are discussed in this chapter.

Aseptic Processing and Packaging

Aseptic processing brings together a pasteurized or sterilized product with a sterile

package in a sterile environment, The process

may be classified into three technologies: 1)

ultra-high {temperature (UHT) pasteurization

of liquids, combined with aseptic packaging,

2) aseptic canning of particulate foods such

as fruits and vegetables currently frozen or

canned, and 3) aseptic bulk storage of products.

Milk is the most common liquid sterilized

by UHT processing and combined with aseptic packaging. The product will keep for

several months without refrigeration and is

currently available and used in many countries where refrigeration is at a premium.

After opening, the product has to be refrigerated. It is being commercially marketed in

Canada and test-marketed in the United

States. Recent reports indicate that acceptance of the product in Canada has not been

as good as expected, with flavor being the

major problem. In addition to taste, the total

energy use of this system must be assessed in

relation to that used by other available

systems.

Technologies are being developed that will

permit heat sterilization of particulate foods

so they can be aseptically canned. However,

these technologies are not yet commercially

developed. Presumably the products would

be superior in taste and nutrition to conventionally retorted foods. Currently, only puddings and other nonparticulate foods are

aseptically canned.

Aseptic bulk storage has been used for

holding vegetables at field locations and in

plants for further processing,

also been stored and shipped

Products have

in aseptic rail

tank cars. This method shows promise for

overcoming some of the difficulties associated with products that must be harvested

and processed in a short time, and it will have

its greatest application in high-acid foods.

This discussion focuses primarily on the

UHT pasteurization of milk in aseptic packages. The technology is currently in use and

offers some concrete possibilities for an improved milk processing and distribution system, provided the taste of the product is made

acceptable to U.S. consumers.

If widely adopted, the system would probably have a great impact on the production,

processing, and distribution of milk. The impact is considered moderate, however, in that

it concerns only one product and would not

substantially affect the entire marketing

system.

A smaller dairy herd would be needed for a

given level of demand, since the long shelf life

would permit carrying milk produced in the

flush season over into succeeding months,

when seasonal declines in production take

place. Interregional production might be

affected—for example, more milk might be

produced in Wisconsin and less in Texas than

at present. This also raises the possibility

that producing and processing firms would

become more concentrated and that smaller

miik producers and distributors would be at a

competitive disadvantage.

Distribution charnels would also be affected, since UHT milk could be handled in

regular warehouse channels rather thari as a

vendor item (such items are delivered frequently and on a regular basis to individual

stores). This would have implications for

labor contracts and potential shifts in labor

concentration from drivers to warehouse

workers or other occupations.

Consumers spent about $12.1 billion for

fluid milk and cream in 1976. Because of the

size of the industry, the fact that some cream

is currently aseptically packaged, and the

severity of market disruptions likely to occur,

the first assessment of aseptic packaging

should be on fluid milk and cream.

35
When technologies are developed that permit aseptic processing and packaging of solid

foods, the impacts of these would need to be

assessed relative to other technologies such

as the retort pouch.

Bulk storage and transportation of fruits

and vegetables would impact primarily on the

processing and transportation system. The

processing of fresh produce is now constrained by the period of harvest, and aseptic

bulk storage would permit better and more

flexible scheduling of processing operations,

better utilization of facilities, possible decentralization of final stage processing, reduction in processing and transportation costs,

and better utilization of the processing labor

force.3

Bulk storage would cause relocation in

labor, would require an upgrading of the rail

transport system, and could result in better

utilization of energy in transportation.

Irradiated Foods

Irradiation involves the exposure of foods

to certain ionizing radiations—namely, either

gamma rays or electrons. Irradiation is sterilization without heat and avoids many of the

problems encountered with the use of heat.

Foods sterilized by irradiation can be stored

at room temperature indefinitely.

Irradiation of foods offers considerable

potential for the preservation of products

where refrigeration and other preservation

methods are limited. Currently, food irradiation is approved in many Western European

countries for extending the shelf life of certain perishable products, for controlling

ripening of fruit, and for inhibiting sprouting

of potatoes, and has been approved in this

country for limited use to control sprouting of

potatoes in storage and to eliminate insects

from wheat. Irradiation significantly reduces

the levels of nitrate and nitrites required to

maintain color in cured meats. Currently, a

variety of shelf-stable meat and poultry products superior to thermally canned products

has been developed and could be made avail3“Purdue and Bishopric Share IFT’s Industrial

Award, ” Food Technology, June 1976,

able to consumers when the Food and Drug

Administration (FDA) approval is received.

There are two irradiation procedures for

purposes of preservation: 1) low-dose irradiation used for pasteurization or in combination

with another technology to prolong shelf life;

or 2) high-dose irradiation to produce a shelfstable product. The probability that shelfstable foods produced through high-dose irradiation will be used extensively in the near

future appears remote. Should it occur, the

military would probably be the first user.

While there is considerable potential in

this process, several obstacles must be overcome before this will become significant. Irradiation is defined as a food additive, therefore bringing it within FDA’s jurisdiction, and

each irradiated item must be proven wholesome. Irradiation may also cause undesirable

chemical changes in foods. A potential obstacle to overcome is the public’s possible apprehension about radiation. Although real progress has been made in the irradiation of food,

the technology does not appear ready as a

major method of preservation until the wholesomeness and safety questions have been

resolved.

This technology has a low probability of occurrence but will have considerable impact if

adopted. The implications for the food

marketing system and the safety issues of

concern to consumers place this technology

high on the list of technologies expected to

have strong but negative impacts.

Lowdose irradiation has the best chance

of near-term adoption. The shelf life of products could be extended with the possibility of

reducing loss in the distribution of food. Lowdose irradiation in combination with other

methods of preservation, such as refrigeration, may offer the greatest chance for success.

High-dose irradiation produces shelfstable products and would impact on the total

marketing system. Consumer concern over

the safety of the product from the irradiation

process is an issue. If the process becomes

economical and irradiation becomes a major

method of food preservation, firms processing canned, dried, and frozen foods would be

affected.

36
Freeze-Drying

Freeze-drying is contact drying which

takes place at such a low vapor pressure that

the temperature of the water drops below the

freezing point. Freeze-dried products shrink

very little and retain their original shape and

much of their flavor.

For purposes of discussion, freeze-drying is

divided into two technologies: freeze-drying

combined with compression, and new methods of freeze-drying. Freeze-drying combined

with compression will probably not be widely

adopted by 1985, but it ranks about in the

middle of all technologies based on impacts,

with the negative about equal to the positive.

When freeze-dried foods are compressed, the

reduction in volume is from 4 to 2o times, saving space in storage, shipment, and display.

This process is currently in limited use. A

big disadvantage has been its high cost;

another is the large amount of energy the

process uses. This is one reason for the

search for new methods of freeze-drying.

Currently, a method for gaining the volumereduction advantages of compression without

the need to use conventional freeze-dried

starting materials is being evaluated, These

methods have changed, but there have been

no dramatic technologies to change the basic

cost picture. Because of the high quality of

the product and the potential for saving in

transportation and marketing costs throughout the system, research is needed to find

new methods that will lower the cost,

The major issue surrounding this technology is whether the process will become

economically feasible. There are no known

health hazards associated with the product.

The technology is capital-intensive and, as

with many such technologies, could increase

concentration in the industry.

NEW AND IMPROVED EQUIPMENT

AND PROCESSING TECHNIQUES

These technologies replace a present technology with little or no resulting change in the

product but with a saving of inputs such as

energy, labor, or water; a reduction in pollution; or an increase in output with less waste

from the same quantity of raw material.

Technologies that enable greater line speed

in processing or reduce the degree of heat or

time required in canning would be examples.

Caustic peeling of fruits and vegetables

reduces water consumption and waste in

processing. Redesigning the washing equipment in poultry processing plants reduces

water consumption and loads on the processing systems. New visual or electronic technologies for checking quality of food products

fall in this classification.

(which includes beef, pork, veal, lamb, and

mutton). Red meat accounts for 25 percent of

the consumer food dollar. Any technology

that would reduce meat marketing costs

could have a significant effect on consumer

income.4

Central cutting of beef involves cutting the

carcass into smaller units before the beef is

moved to retail outlets. An estimated twothirds of the beef entering supermarkets in

1974 were broken down from the carcass.s

This included beef precut at the packing

plant, at wholesale centers, and at retail

chain warehouses. There are different combinations of procedures and technologies.

Boxed beef—where the packer breaks the

carcass into primal cuts, vacuum-packs them,

Central Cutting and Packaging of Meat

In 1977, expenditures for beef were 2.1

percent of disposable consumer income and

4.5 percent for expenditures on all red meat

4U. S. Department of Agriculture, Economics, Statistics, and Cooperatives Service, Livestock and Meat

Situation, LMS-219, Washington, D, C., February 1978.

5John W, Allen, “A Look at Trends in the Meat Industry, ” 1975. Paper presented at the Supermarket Institute Convention Workshop, May 6, 1975.

37
-—..—..—.

and ships them to the retailer in boxes—is

about one-fourth of the movement to retail

stores. Other combinations of technologies in

systems generally involve retail store facilities or local wholesalers,

Central cutting and boxing of beef is felt to

be economically feasible, and it is possible

that opposition from labor unions has kept it

from more widespread use. A recent U.S. Department of Agriculture (USDA] publication

supports the contention that it is more economical to cut beef into retail cuts at central

locations. The report, however, points out

that present “boxed beef” is not the most efficient method and that in fact in some situations the more traditional methods of cutting

the carcass at retail maybe more efficient.’

In view of the many differing systems and

combinations of technologies involved in central cutting of beef, each major system should

be assessed separately.

The health and economic impacts may be

quite different between systems. Dr. Robert

Angelotti, formerly of USDA, indicates that

research is under way in the Department to

determine the degree of contamination in

beef cut in primals and vacuum-packed at

central locations. Preliminary findings indicate that, “. . . vacuum-packaging of beef

draws a purge of the body fluids which collect in the bottom of the bag and support a

very different kind of microbial flora from

that which is supported when meat is dryhung in a refrigerator. Because the product

has a 60- to 90-day shelf life in distribution,

the organisms grow in the bottom of that bag

and contaminate the muscle fibers which are

separated, creating internal contamination

which would not have happened if the meat

had been hung dry.”*

Appropriate questions may not have been

asked during the development of this technology concerning product contamination as a

result of this practice. The problem is not one

of central cutting but of the type of packaging

and the length of time the meat is held. It is

6L,A. Deuwer and T.L. Crawford, Alternative Beef

Handling Systems, Economic Research Service, USDA

ERS-661, report from AER, Vol. 29, No. 3, June 1977.

*Working Group Proceedings on Emerging Food

Marketing Technologies, Oct. 4, 1977, p.237.

critical to assess potential changes in the

safety of the meat in relation to any change in

the procedure for cutting and packing.

Central cutting of beef may impact on other

areas as well. The number of meatcutters

needed could be reduced, or relocation of

workers might result as more meat is cut at

central locations. Central cutting of beef into

retail cuts raises the potential of loss at retail

if the demand from day to day is not as expected. Once packaged as retail cuts, the

meat must be sold within a limited time,

although this could be up to 7 days if the meat

is handled in a sanitary manner and stored at

the proper temperature. Frozen retail cuts

would eliminate this problem but world add

t. the cost and in most instances meet with

consumer resistance. The effect on energy

consumption of a shift to frozen beef would be

an important consideration.

More Efficient Utilization of Water

in Processing

This is an area of technological need

rather than of specific technologies. These

technologies could reduce the amount of

energy used in processing plants and the

pollution from them. The probability of successfully developing these technologies is

low, although specific technologies have been

developed to reduce water consumption in

poultry processing plants and in fruit and

vegetable processing and packaging operations.

The positive impacts of these technologies

would be on conservation of water and energy, resources expected to be scarce in the

future; thus the impact of such technologies,

should they be adopted, is considered high,

since processing of most food products consumes vast quantities of water. Water-conserving technologies are not expected to raise

many negative issues, but technologies that

recycle water raise the possibility of contamination and associated health issues.

One needs to define the processes where

water consumption is high and then determine what, if any, action is needed to encourage development of water-saving technologies.

38
Analytical Instrumentation

and Processes for Detecting

Ingredients in Foods

A technological process or series of processes that will identify ingredients in food

plays an important role in food processing

and safety. It need not be restricted LO a

single ingredient and is obviously needed to

detect toxic substances in food. This technology could complement the conversion of

waste to food, where a major copncern is the

safety of these foods and the kinds of residues

that might be present.

Instrumentation of the type that will

speedily and accurately detect ingredients in

feed could have a positive effect in monitoring

the processing and fabrication of certain

foods because it would be capable of identifying not only toxic substances but also moisture, fat, and ai protein content.

Instruments capable of monitoring processing lines would provide a means of checking fabricated foods for possible toxic substances or contaminants and ingredient con

tent. They would, therefore, be a positive influence on the development of, and possibly

remove much of the concern about, the ‘ ‘unknowns” in ersatz or fabricated foods.

The adoption of this instrumentation will

add impetus to the existing policy dilemma of

acceptable to!erance levels of certain additives, toxic substances, and carcinogens in

food.

Microwave Ovens and

Special Packaging

More than a quarter of the homes in the

United States are expected to have microwave units by 1980. Available data projects

over 6 million units in almost 10 percent of

the homes in 1977. This trend could accelerate, since microwave cooking has been

shown to save up to 70 percent of the energy

in home cooking of some foods.

Microwave cooking in the home is compatible with convenience foods and fits in with

the changes in lifestyles already under way

such as the desire to spend less time in home

preparation of foods,

Rapid expansion m the home use of microwave energy impacts on a number of areas,

raises issues unique to home use of microwave energy, and reiates to other issues that

are part of changing lifestyle.

Improvements have been made in design

and production procedures of these units to

prevent leakage of radiation. The issue is not

completely dead, howeverf and consumers

may resist buying microwave appliances or

raise new issues associated with safety.

The rapid increase in home use of microwave ovens has spurred the development of

new food formulations and packaging specially designed for microwave cooking, such as

new paper trays and Ceramic containers spe~-

cially designed for micrcwave or conventional oven use. Allthough it was developed as

an answer to the speedy preparation of convenience foods, microwave cooking may in

turn encourage the consumption of more convenience foods. This could mean more packaging and a consequent increase in energy

use. Also, the effect of increased consumption of highly processed foods on nutrition

and health should be considered.

If microwave units substitute for rather

than supplement conventional ranges, there

will be an impact on stove manufacturers.

Many microwave units are built in foreign

ccuntries and many electronic parts for ‘J. S,

makes are foreign products, This may contribute to an unfavorable balance of payments at a time when there is a deficit. Microwave units use less energy, therefore energv

use may decrease, and there may be possible

savings in home wiring compared to conventional ranges due to the decrease in energy

needs.

Aquaculture

Aquiculture as used here refers primarily

to the systematic cultivation of animal life in

a water environment (in a broader sense it

could also include plants). Catfish farming in

the South is one example of aquiculture;

crawfish, salmon, trout, and other fish are

also produced this way, Recent experiments

and pilot projects show promise for farming

shrimp and other species.

39
Economics may discourage widespread expansion in the United States through 1985,

although catfish and other species have been

well accepted. Aquiculture could, however,

make a positive contribution to the food supply and nutrition status were it to become

more widespread. (One problem has been

consumer acceptance of many species of fish

and fish products made by aquiculture

methods.)

Development of aquiculture is expected to

evolve slowly, and the impacts on resource

adjustments should be minimal. Technologies

are needed to lower processing costs and

more efficiently utilize the marine animals

produced. Marine products are subject to

contamination and spoilage, and new methods are needed in processing, preservation,

and storage to minimize spoilage.

In some locations, toxic substances such as

mercury have accumulated in fish at levels in

excess of State or Federal levels established

to protect human health. When this occurs,

consumption of the contaminated fish is

banned in the affected area, with an adverse

economic impact on those directly involved.

In aquiculture, the economic effects of such

contamination would be more widespread

and severe because of the large amounts of

capital invested in the growing operations

and processing facilities.

Solar Energy in Processing

The concept of solar energy as a technology in food processing includes dehydrating

food with solar energy as well as utilizing

solar energy to supply heat and power for

processing operations. The U.S. Department

of Energy (DOE), (formerly the Energy Research and Development Administration), is

supporting a number of projects on the feasibility of solar energy in industrial heat processes, including heating water for washing

food cans. Other studies are investigating the

feasibility of using solar energy in industrial

drying and dehydration, including prunes,

soybeans, and onions.7

7U.S. Energy Research and Development Administration, Solar Energy for Agricultural and Industrial Process Heat, Division of Solar Energy, ERDA 77-72, Washington, D. C., June 1977.

Unless a technology is developed that applies solely to food processing, specific impacts on food processing would be those associated with all processing plants, such as

choice of location and level of energy requirements. a

That is, conversion to solar

energy in food processing would impact on

energy suppliers in much the same way as

conversion to solar energy in any large industry if the power from solar converters

were supplied from central powerplants. If

technology were developed that permits onsite generation of solar power, however,

large firms would probably be able to convert

before smaller firms and thus gain the competitive advantage. Large processing plants

might also be more able to locate in areas

with high probability of clear, sunny days.

Initial Preparation of Fruits and

Vegetables in the Field

Much packing of fruits and vegetables is

already done in the field. The original concept

was to reduce the amount of waste produce

shipped and to reduce work and pollution at

the receiving site.

One facet of this technology that concerns

loss prevention involves packing in bins that

could be moved untouched through the system to retail outlets. Technologies for improved packing methods, better shipping containers, and controlled-atmosphere shipping

should be considered. Aseptic bulk storage

and transportation of processed tomatoes is

an existing system that has potential for

greater use. Waste is left at the production

site, and the product is held and transported

to a central point for further processing.

According to participants in the working

group, these technologies have a high probability of adoption. The impacts will probably

be positive. However, more information is required to determine which technologies may

be the best under given circumstances, considering waste, cost, consumer preference,

and other impact areas. For instance, bulk

handling may be best for local and inter-

‘A comprehensive discussion of solar energy is found

in Volume I, Application of Solar Technology to Today’s

Energy Needs, Washington, D. C.: U.S. Congress, Office

of Technology Assessment, June 1978.

40
mediate distances, while some produce

should be shipped in consumer packs with extensive secondary packaging. (See chapter II,

Technologies to Reduce Food Loss. )

Mechanical Deboning of Beef

While poultry has been mechanically

deboned for several years, approval for

mechanically deboned beef (the bone and

meat are pulverized together and the meat

than separated from the bone particles) was

withdrawn after objection by consumer

groups. They did not appear to oppose the

ccncept of mechanical deboning but wanted

the label on the end product to clearly indicate that it contained mechanically deboned meat. The consumer groups were also

concerned that meat deboned mechanically

was more prone to bacterial contamination

and would contain a small amount of pulverized bone. Consumers worried about the lack

of information on the effect on health of increased intake of calcium from these bone

particles.

USDA has proposed a new regulation requiring that the product be labeled as

“mechanically deboned [type of meat) product , ‘ ‘ which wou!d require that there be not

more than 20 percent of a meat-and-bone

mixture in the product and placing certain

other restrictions on use of the product.

There were objections from the industry and

others to this new proposal, which was then

revised by USDA, Consumer spokesmen have

questioned the research data attesting to the

safety of the product, and industry groups

have objected to the proposed name. Nevertheless, the regulations became effective in

July 1978.

This particular technology and the opposition to its adoption underscore the need to include consumer concerns in the regulatory

process and to accurately identify where the

benefits will occur or where the disadvantages will be felt.

Mechanical deboning of beef will provide

more edible beef or less waste from a carcass. The impact on producers is not clear;

more edible products from a carcass make it

more valuable, but better utilization of this

technology would increase supply and depress prices unless new products were developed that would increase demand,

Major issues or concerns are product quality and the effects of long-term ingestion of

pulverized bone. The labeling of mechanically

deboned meat called for by consumers is a

specific example of a labeling issue common

to many ingredients derived from byproducts

and waste.

This technology exists and is used today.

The regulatory issue of ingredient labeling

and the implications of this product on food

safety, health, and nutritional status are

serious concerns, as is its economics versus

alternative deboning technologies.

Hot-Boning of Beef

Hot-boning of beef involves cutting the carcass into primals and removing the bones

before the meat is chilled. This technology is

considered to have a low probability of widespread adoption with relatively high negative

impacts.

Advantages claimed for the technology are

reduced energy costs for cooling, less space

needed for storage, and less waste to ship.

However, hot meat is claimed to be more difficult to cut than cold meat, and the change is

resisted by the meatcutters, although this

allegation has not been documented. In addition to energy and transportation aspects,

health and safety, because of the possibility

of contamination of the beef during hot-boning and associated procedures, are important

societal issues.

Moisture Reduction Processes

Technologies exist that can dehydrate

foods or reduce their moisture content (producing intermediate moisture foods) through

one or a combination of treatments. The aim

of these technologies is to produce a shelfstable product.

New dehydrated foods are being produced

through new applications or modifications of

the drying processes. Vacuum foam-dried

milk is one example. Another is continuous

explosion puffing, a new system developed

for processing fruits and vegetables which

41
could substantially reduce preparation time

and save energy.

The aim in producing intermediate-moisture foods is to reduce the water activity so

the product will be shelf-stable yet have a

moisture content higher than dehydrated

products. A number of technologies are available that will produce intermediate-moisture

foods SUCh as fruitcake. The most common

method decreases the water content and then

infuses the product with soluble salt and

sugars This changes the flavor and texture

of the product, and consumers may consider

some products to be of inferior quality.

Other possible techniques include reducing

water activity and then applying a mild heat

treatment. ‘i’he immediate impact of this process could be to reduce energy use throughout

tlie food marketing system, but these possibilities have yet t. be explored commercially.

If more foods are made shelf-stable

through moisture reduction processes, this

would imply some change in consumption

habits, For consumers it would mean less

need for freezer or refrigeration capacity

with a corresponding saving in energy. If

foods infused with salts or sugars become a

significant part of consumers’ diets, iheir impact on health and nutrition must be considered.

Dehydrated or partially dehydrated foods

mean a saving in transportation and also in

storage space. Energy needed for storage

would be less than for frozen or refrigerated

foods,

NEW AND MODIFIED FOOD PRODUCTS

These products genera!ly have been designed, engineered, or formulated from various ingredients including additives. They are

made by structuring, texturing, shaping, or

blending ingredients and in most instances

use a combination of technologies. They may

be made to resemble traditional items, they

may be new forms of snack foods, diet foods,

or other products, or they may be a new substance used as one ingredient in an otherwise

traditional food product, such as non-caloric

sweeteners.

The nutritional value of new and modified

foods and ingredients depends on their formulation and may be nutritionally equal to or

quite different from the food for which they

substitute.

Fabricated Foods

The marketing of engineered or fabricated

foods is widespread and will increase. Sales

of engineered foods were more than $6 billion

in 1972 and are expected to exceed $11 billion by 1980.9 These are important technologies with important policy implications; for

instance, vegetable protein, a major ingredient in engineered foods, has a high probability of increased use as a meat extender

and to a lesser degree as a substitute for

meat by the year 2000.

Fabricated foods include many dairy substitutes such as coffee whiteners, toppings,

whey-soy blends, imitation cheese, and imitation milk drink. Meat substitutes include fabricated ham and sausage and steaks engineered from flaked meat and textured soy.

(Soy protein is the major ingredient in fabricated meat and soybean oil in dairy products. ) Other fabricated foods include substitutes for eggs and citrus products.

Fabricated foods fall into two categories,

analogs and ingredients, which should be discussed separately. Analogs are those foods

g]n 1 g76, fabricated dairy substitutes such aS coffee

whiteners and toppings had sales of $1 billion. Fabricated snack foods such as chips had $2.5 billion, fabricated cookies and candy had $1 .’7 billion, vegetable protein had $35o million, and fabricated beverages had

$212 million.

42
fabricated to

taste, texture,

resemble a specific food in

and color. They include complete substitutes foil meat 1, synthetic drinks,

and such substitute dairy produsts as cheese,

coffee whiteners, etc. Ingredients refer to extenders, fillers and emulsifiers intended, for

example, to replace part of the ground beef in

a hamhurger with soy or to extend natural

chocolate with a substitute These definitions

are not mutually exclusive: in some instances,

textured soy might totally replace ground

beef and become an analog,

Although the level of use will determine the

degree arid severity of impacts these products wi!l have on lhe marketing system, several general advantages of fabricated foods

are the possibility of lower focal costs, extended food supply in times of shortage, better control of nutrition, better utilization of

products, and reduction in energy use.

Many impact and issue areas are common

to a large number of fabricated products,

while other products raise issues unique to

themselves. In general, fabricated foods raise

issues of food safety, consumer acceptance,

nutrition, and labeling: and specific fabricated foods raise suc]i issues as resource use

and effect on the agricultural marketing

system.

Food safety is an issues with many fabricated foods because they use a number of ingredients and additives for which different

standards and regulations exist on which

there is frequent disagreement. Some segments of the food system feel that the standards are restrictive and discourage the development of new foods, while others fee! consumers are not adequately protected from the

effects of these ingredients and additives.

The nutrition issue depends to a great extent on the specific foods, their intended use,

and how they are formulated. For example,

vegetable protein extenders that substitute

for only a fraction of protein intake are of less

concern than a meat analog that would substitute for all or a major part of protein intake

and would not raise the same nutrition issues.

The FDA has proposed different nutrient

standards for analogs and meat extenders.

At issue also is the proportion of our intake

that might eventually be from fabricated

foods and tbe effect on nutrient content of our

total diet. On the other hand, fabricated foods

may be formulated to supply special dietary

needs or fortified to improve inadequate diets

of selected population groups.

Tastes change slowly, and for fabricated

foods to gain cofisumer acceptance they are

manufactured to resemble the food for which

they substitute. How should these foods be

labeled to properly identify them and yet not

present acceptance barriers’? This is a labeling issue in food service operations, where

consumers may not know they are eating a

hamburger extended with soy protein or

meatloaf containing a vegetable protein extender. The latter is already in use.

Extensive use of fabricated foods affects

agricultural resource use. The increased consumption of margarine, for example, has decreased the demand for butterfat, affected

the dairy industry, and necessitated new policy decisions. The substitution of soy for

animal protein can be expected to raise similar issues.

Two fabricated products that will raise

many of the issues cited above and that are

highest on the list for assessment include soy

protein as both analog and extender for meat

products and imitation cheese fabricated

from vegetable oil and other ingredients,

New Sweeteners

Since a major health and nutrition concern

in the United States today is obesity arid increased sugar consumption, there is strong

incentive (economic and nutritional) to develop and produce new low-caloric sweeteners

for use in food processing and the production

of diet foods.

Some low-caloric sweeteners exist, and it

is felt that the search for others will continue.

Xylitol, an extremely potent sweetening agent

made from the rhine of grapefruit, has fairly

specialized uses; others would have wider applications. New corn sweeteners have been

developed that, although they produce the

same sweetness level with fewer calories

than other sugars, do contain calories in some

uses.

43
The only legal non-caloric sweetener on the

market today is saccharin. The recent controversy over the use of this substance may

have sparked some of the current interest in

developing new sweeteners. Currently, saccharin labeling regulations require that foods

containing this substance carry a warning of

its possible hazards. This restriction will be

carried for 18 months, at which time the safety question will be reevaluated. The outcome

of this review may well determine the future

use of other such sweeteners.

There is preliminary evidence that xylitol

is a carcinogen. It is different from other

sweeteners, such as cyclamates and saccharin, in that it is a naturally occurring

sweetener. A closely related compound, xylulose, is produced in the body during normal

metabolism; and there is a potential, through

one simple chemical reaction, for the formation of xylitol from xylulose in small amounts.

This issue of carcinogenicity, mainly related

to the zero-tolerance levels established by the

Delaney amendment to the Food, Drug, and

Cosmetic Act, raises the very important policy question concerning the use of massive

doses in animal testing for carcinogens.

The safety of any newly developed non-caloric sweetener will be a major issue, particularly concerning the type and length of

tests undertaken before and after approval.

An assessment of a new sweetener should go

beyond the health issue, however, and assess

the markets likely to be penetrated, the effect

on total intake of different sugars, and the

consequences to the processing industries.

The cost of particular forms, whether liquid

or solid; the sweetness; and other functional

characteristics determine market use. Corn

sweeteners have captured significant portions of the cane and beet sugar markets,

with repercussions to domestic and foreign

producers; and new sweeteners are expected

to cause similar impacts and raise similar

policy issues concerning support prices and

import quotas.

NEW SOURCES OF INGREDIENTS

New technologies have resulted in new

sources of ingredients for use in food processing. New methods of crushing combined with

centrifuging now permit production of edible

protein from cotton seeds. Certain membrane

processes allow for the separation of edible

protein from whey. Solvent extraction and

texturizing give a variety of soy protein products. Processes using enzymes produce highfructose corn syrups and other corn sweeteners. Single-cell organisms produce protein

from a variety of processing wastes and other

sources.

Conversion of Waste to Food and Feed

Research and development should continue

on a wide range of processes to convert waste

to edible products or feed and to better utilize

agricultural production.

The first problem is defining waste. What

is considered waste under one set of condi44

tions may be considered a food under other

circumstances. For example, whey is a waste

if there is insufficient volume to justify the

fixed costs required to purchase equipment

that will convert it to edible protein. Additional economically feasible processes could

produce useful products from wastes such as

fruit and vegetable pulp and peelings and animal byproducts, which would reduce food

losses in the marketing system.

Because of the different course materials

and different technologies, there could be

many different issues, However, in a discussion of waste conversion, three issue areas

emerge: 1) getting approval as food products,

2) labeling for consumers, and 3) consumer

acceptance.

Under the regulatory procedures in effect

today, approval will be difficult to secure for

foods generated from many wastes. The scientific base regarding the effects of toxin
concentration in waste recycling is not very

well known. The degree of difficulty depends

in part on the source material; utilizing waste

from a food product would not be expected to

generate as many problems as converting a

traditional nonfood waste to a food. Possible

wastes mentioned for conversion to food or

feed include vegetable pulp and peel, blood

from animal slaughtering, waste from seafood processing, and trash fish. * Vegetable

wastes would probably have fewer problems

in product approval than many other wastes

but could have problems due to possible residues on the pulp or peel.

Labeling the products presents another

area of concern to consumers. The possibility

of using a plasma fraction from blood collected during animal slaughtering as a functional ingredient or binding agent is a case in

point, Labeling the ingredient as blood would

probably discourage consumer acceptance.

Should the product be labeled as to specific

origin or just by the final ingredient name?

This issue will be common to many of the food

products produced from waste materials.

Consumers may reject many of these foods

or food products, even when the foods have

been approved, because of custom, taste,

fear, or a number of other reasons. A factual,

straightforward consumer educational program prior to the introduction of these new

foods would give consumers a more rational

*Trash fish are any of various sea fishes that have no

market value as human food but may be processed for

oil or meal for domestic animals.

basis for accepting or rejecting these products.

This entire area offers possibilities in the

years ahead for providing more food and for

alleviating pollution; however, there are

many problems and many issues.

Processing Using Single-Cell

Organisms

Agricultural waste can pollute, and because of this considerable research has been

conducted on using single-cell organisms to

convert these wastes to protein for humans

and animals. For example, certain yeasts

have converted byproducts from papermills

to a food protein.

There is a greater chance of adoption if

waste is converted to animal feed rather than

directly to edible products for humans. The

major problem is that it would be easier to

secure approval if these products are used in

animal feeds. Even so, the probability of

adoption by 1985 is low.

A very positive impact would come from

providing additional food from waste products. The negative impacts would be the same

as those for converting any waste to food: the

possible health hazard presented and the

problem of labeling so that consumers would

know the source and yet not reject the food,

Also conversion of petroleum substrates to

protein by certain single-cell organisms has

produced concentrations of nucleic acids,

which can cause adverse reaction when fed

to humans.

PACKAGING

Packaging materials may be developed in

conjunction with and be an integral part of a

new processing technology, or the attributes

of a new package or material may lead to the

development of new products. In some instances, packaging innovations may simply be

a new way of packaging a traditional

product.

Packaging represented 13 percent of the

almost $123.5 billion marketing bill in 1977.10

In order of use, food packaging is in the form

of paperboard packages, followed by metal

cans, flexible packaging, and foil containers.

1oU. S. Department of Agriculture, Developments in

Marketing Spreads for Food Outlook, ERS Report No.

398, March 1978.

45
Changing lifestyles have contributed greatly

to the increase in packaging and packaging

costs (more working women, the increase in

one- and two-person households, and the

growth of special activities such as camping].

Modern packaging materials, innovative

designs, and sophisticated packaging machines have played an important part in the

success of the food marketing system. For instance, new packaging technologies such as

the oxygen scavenger packaging material, ”

can reduce the need for food additives or preservatives. However, there is considerable

criticism of the packaging cost component of

food marketing (13 percent, second only to

labor.’ as a contributor to marketing costs).

Changing conditions, such as increasing

energy costs and the need for recycling of

resources in limited supply, are expected to

influence the types and extent of future food

packaging. These developments could include

commercial adoption of the retortable pouch

and recyclable or returnable containers in

food.

Retortable Pouch

The reportable pouch technology, while still

being developed, has current applications

and has received limited approval for use

from the relevant regulatory agencies. Further adoption of this technology can be expected te have strong impacts and far-reaching consequences throughout the marketing

system, particularly in the areas of energy,

food storage, transportation, labor, and retailing. For this reason, the reportable pouch

technology ranks as a top priority for assessment.

The pouch is a multilayer (plastic laminate

with a middle layer of aluminum foil), adhesively bonded bag that will withstand thermoprocessing temperatures. It combines many

advantages of the metal can and the plastic

boil-in-the-bag. Use of retortable pouch

“This is a laminate consisting of a polyester outer

layer, an adhesive layer, aluminum foil, a Surlyn” *

sheet, a layer of palladium as a catalyst, and an inner

layer of SurlynL? Oxygen travels through the inner

Surlyn ” layer and reacts with hydrogen in the presence of the catalyst to form H20, which is trapped between the two SurlynT’ layers. (* Surlyn? registered

trademark by E.I. du Pent de Nemours & Co. )

materials produced by three firms have

recently been approved by the FDA; and

[JSDA, which has jurisdiction over the integrity of the pouch system, has approved

retortable pouches made from these materials. The weight limit for the pouches approved for use is currently set at 16 ounces.

When relevant test data are available, USDA

will give consideration to removing the weight

restriction or increasing its limit. The quality

of food processed by this method is said to be

superior to that of foods retorted in conventional cans, and taste tests indicate that it

may approach that of frozen foods.

There have been problems in sealing the

pouches, and the ability of the pouch to retain

its integrity in commercial applications has

not been tested in the United States. Thus, the

reason for limited approval by USDA. Problems have also been encountered with slow

filling times compared to cans. With growing

use and application, however, technical innovations are expected to overcome such problems as these. The technology is still in its infancy, and many questions cannot be answered with hard data at this time.

An extension of retort pouch technology is

the steam table “tray pack, ” which uses a

metal tray instead of a pouch and which uses

the same container for processing, transporting, storing, and reheating the food. Food

prepared in this way generally consists of a

complete meal. The size and shape are designed to fit on an institutional steam table,

and institutions are expected to be the first

major market for the tray pack. The shape

saves energy in processing and produces a

superior product. In addition, serving food

directly from the tray pack further reduces

the need for labor and energy that would normally be used for cleaning steam table trays.

Data on energy savings in the manufacture

of the retortable pouch over that used for

metal cans, glass jars, and certain frozen

food containers are preliminary and do not

yet answer the question of energy consumption for each total system. While the reportable pouch appears to offer savings in energy

over containers for frozen and canned products, these savings can only be confirmed by

an analysis of the different systems that are

or might be used commercially. Energy sav46
ings are possible in processing because the

system uses a shorter cooking time at lower

temperatures.

Savings may be projected in the area of

transportation owing to the !mproved product-to-package weight ratio; savings in weight

may be as much as 50 percent for the pouch

versus the can. Although comparative tests

have shown pouches to be as durable as cans,

questions will continue to be raised regarding

the handling of this package unti! experience

has been obtained under actual use conditions. Initially, an outer package is being used

to safeguard against breaks due to flexing

and abrasion. Eventually, it may be possible

to move the pouch through the marketing

system without an individual cover for eacli

pouch. Thought should also be given to the

fact that, if not individually packaged in an

outer carton, the reportable pouch would

probably prove more difficult to price-mark

and display in retail stores.

In its early stage of development, the reportable pouch technology will become a viable

one for packaging food and will probably

compete at first with frozen rather than

canned food. If inroads into the $17 billion

frozen-food market and ultimately into the

$20 billion canned-food market are as significant as they are expected to be, there are

substantial implications for these two industries. Producers of metal cans (and industries

producing the raw materials) would be affected in terms of loss of revenue, displacement or relocation of labor, and possibly considerable loss of jobs.

The availability and prices of the petrochemicals needed to produce the plastics

used for the pouch may also bear on the adoption and success of this technology.

Environmental impacts of this technology

may be considerable in both a negative and a

positive sense. If methods are not found that

permit the pouches to be recycled, the impact

would be negative compared to that of metal

cans, bottles, and other recyclable containers

(which result in savings in raw materials and

energy). However, retortable pouches can be

used as fuel, and even without recycling most

of the energy initially expended in their

manufacture could be reclaimed, at the same

time minimizing solid waste problems.

Recyclable and Returnable

Containers1 2

Technologies for recyclable containers. returnable cans and bottles, and other refill

able containers have a high probability of being an important part of our future and that

the impacts of adoption will be widespread.

These technologies have developed because

of socioeconomic pressure, and the pressure

will in all events continue to build for new

solutions through technology to the problems

of conserving natural resources and reducing

the expense of keeping our environment free

from pollution caused by discard ’xl containers.

A discussion of these technologies falls into

three categories: recyclable beverage containers, the returning of all food containers,

and the general concept of recycling applied

to all products.

Recycling of beverage containers Elas

received the most attention to date. Four

States have passed laws requiring deposits

on all beverage containers, anti the major

aluminum producers have initiated systems

for buying back aluminum cans. Localities

have set up collection points for cans, bottles,

and other recyclable products. There have

been mixed results in all these enterprisesfor instance, reduced pollution and litter versus inconvenience of traveling to the collection site—yet the public seems intercsted in

the concept of recycling even if the initial

specific technologies or systems may not have

met with their approval,

Returning containers to the processor for

reuse is another concept relative to this technology. Reverting to a returnable packaging

system is not a panacea for sanitary problems; indeed, some new problems may be created by this system. The beverage or food

residue in returnable containers readily support the growth of insects and other undesirable vermin, or harmful microorganisrns,

which contribute to unsanitary conditions in

“The OTA hlateria]s Group has been studying some

of the issues .aised in this swtion, a~~ is preparing +

repOrt on “M~terials and ~ner~~ From Municip~l

J4’aste” which is ex~ecte~ !O be publisbed in the latter

part of 1978,

47
a store selling food products. The issue of

food safety and sanitation needs to be

assessed.

Returnables may add to the cost of distribution and handling products. One study

estimates it would cost 2 cents more per

quart to deliver milk in returnable bottles.

Whether the total cost of the delivered product would be greater for other products is not

clear. If cost did increase, this would undoubtedly be passed onto the consumer. Part

of this cost increase is because of the high initial cost for converting production lines in

bottling plants to handle returnables. Estimates of this cost have run into billions of

dollars. Larger companies would be better

able to afford the expense of this conversion

and thus could put the smaller firms at a competitive disadvantage. An assessment should

evaluate policies for overcoming these kinds

of capital problems resulting from the adoption of technologies.

If recycling becomes an important system,

new forms of delivery may result to alleviate

the inconvenience of, and dissatisfaction

with, returnables and recyclable; for instance, a syrup or powder that could be

mixed with carbonated water at home (both

technologies are available).

Most soft drinks are vendor-delivered, and

returnables would deter a consolidated delivery system, since by law empty bottles cannot

be carried in the same truck with food products. This may provide the incentive to bottle

beverages in larger units, which would run

counter to the recent trend for smaller bottles

and cans.

Recycling of all glass food containers has

been proposed in the Oregon legislature for

two legislative sessions. This is an extension

of the recycling concept beyond beverage

containers and may foretell a trend towards

eventually recycling many food containers

and packaging materials.

Several large projects for reclaiming and

utilizing materials from garbage have been

initiated. These are high-technology plants

for separating recyclable metal, glass, and

other materials and then burning the remainder to produce heat. There have been

both successes and failures with these projects. An alternative would be to have consumers separate material before the refuse

enters the recycling system. This is a system

that has been in limited use since the early

1970’s. There may not be one system applicable for every situation, but people may

have to choose whether they wish to participate by paying for a centrally located or industry-based system with taxes or fees or

whether they would prefer to lower the cost

by participating directly.

Carton-Can

The carton-can is a square container with

a flexible inner bag. The inner bag may be

foil, plastic, or a combination. Advantages

claimed are that its square shape saves space

and material in shipping, it can be incinerated, and some versions are retortable. It is

being used in Europe for processed foods but

is still considered experimental. The probability of widespread adoption in the United

States is considered very low, and impacts

are difficult to judge primarily because of insufficient information on cost, where the

carton-can is likely to be used, and whether

food safety issues are involved.

This technology is important only insofar

as it may be a part of an alternative packaging system that could affect materials and

energy use and the transportation system.

48
Chapter V

DISTRIBUTION TECHNOLOGIES

FOR ASSESSMENT
Chapter V

DISTRIBUTION TECHNOLOGIES

FOR ASSESSMENT

Consumers have become accustomed to having most foods they desire

available any time of the year and throughout the United States. To provide

this availability requires specialized production areas and elaborate transportation, storage, and distribution facilities. ’ Trucks, trains, barges, and in

some instances airplanes for highly perishable fresh produce move food

products from producer to processor, wholesaler, retailer, and in some instances on to the consumer. Those food distribution technologies the Office

of Technology Assessment (OTA) considers of highest priority are listed in

table 5. The list emphasizes those with a probability of early occurrence and

significant expected impacts.

Table 5. —Distribution Technologies With High Priority for Assessment

Technologies with high probability of adoption and high impact

1) Technologies to improve food sanitation in transportation (p. 54)

2) Electronic checkouts in retail stores (p. 57)

3) Computer systems that improve retail store management (p. 59)

4) Technologies to reduce food loss (p. 61)

5) Electronic food shopping systems (p. 59)

Technologies with high probability of adoption and moderate impact

1) Improvement in traiIer design and use (p. 56)

Technologies with low probability of adoption and moderate impact

1) Development of raiIroad cars or containers for better quality preservation (p. 55)

2) Technologies to enhance warehouse automation (p. 5 2 )

3) Technologies for delivery of complete meals to home (p. 60)

As in the previous chapter, those technologies where the probability of

adoption is considered high and expected to have considerable impact if

adopted are rated the highest; technologies where the probability of occurrence by 1985 is considered high with moderate impacts and technologies

whose impacts are expected to be high but probability of adoption is considered low are rated lower.

Other technologies discussed in this section are considered of lower priority because of insufficient data on economic feasibility or impacts. Thes e

priorities may change in the future as conditions arise that may influence

their development or adoption.

The technologies discussed in this chapter are divided into: 1) wholesaling, 2) transportation, 3) retaiIing and food service, and 4) those technologies

applicable to two or more of the above.

‘The 1972 census reported 39,137 wholesale g!zcery establishments. 194,246 grocery stores, and 73,006

food stores not class I fled as grocery stm es In acfditlon. there were 253,136 eating places for away fromhome food consumption.

51
WHOLESALING

Wholesalers receive food products from

producers or processors/manufacturers, temporarily store them, and then distribute them

to retail stores or other food outlets. Food

retailers have integrated extensively into

wholesaling and to some extent wholesalers

into retailing, but regardless of ownership arrangements, the basic functions must be performed. z

General line wholesalers, those who carry

a full line of groceries, and specialty whol~

salers, those who carry a special line of items

such as frozen food and meat products, share

the market. Specialty wholesalers represent

about 90 percent of all wholesalers and account for about 60 percent of wholesale

grocery sales.3

According to a survey by the Food Marketing Institute (FMI), in 1976 the typical wholesaler in their survey serviced 273 retail

stores and operated a single distribution

center. In addition to food distribution, the

wholesaler provided such services as engineering, store design, product movement

data, and accounting. Almost 87 percent of

the wholesalers surveyed depended on manual selection and picking operations, 3 percent operated fully computerized centers,

and the remaining 10 percent used belts and

conveyors in a manual operationo

4

Technologies To Enhance Warehouse

Automation

 Automating warehouse operations allows

for faster handling of larger volumes of merchandise with less labor. Productivity in

wholesaling could be improved by standardization in shipping containers, which would

2

1ntegrated wholesale facilities (owned by the retailer) offer the possibility of better utilization of certain

technologies between wholesaling and other distribution functions.

3U.S, Department of Agriculture, Economic Research

Service, The Food and Fiber System—How It Works,

Agriculture Information Bulletin 383, Washington,

D, C., March 1975.

4

Timothy Hammonds, “Food Marketing Industry

Speaks 1977, ” speech at Food Marketing Institute Convention, 1977.

allow greater modularization and would

make technology easier to apply to the sorting, assembling, and shipping of orders.

Mechanical systems exist whose handling

capability starts at 300,000 cases per week, a

tremendous volume that in many instances

would be feasible only through the consolidation of volume from several firms or as a

public warehouse.

This concept has a low probability of adoption, but if adopted, it would cause negative

impacts. The major issues would probably

arise from the impact of consolidation on industry structure and conduct. Consolidation

of physical operations could result in consolidation of other management functions.

Consolidation of this type suggests a lessening

of competition at the wholesale level. In addition, the possibility of consolidated warehouses building and operating stores might

act to the detriment of small, independently

owned stores without access to the financing

of the consolidated groups; and the competitive relationship between smaller suppliers

and the larger consolidated warehouses may

be affected.

Other issues are the effect on geographic

distribution and possible legal problems with

State laws and regulations.

Warehouse Consolidation of Items

Normally Supplied by Vendors

Vendors supply such items as beverages,

bread, snacks, tobacco, and candy directly to

stores. In many instances, the quantity delivered at each stop is small and the cost very

high.

It would be possible to lower delivery costs

if these vendor products were consolidated

and delivered along with other grocery items.

Other advantages could include better control of shelf space by store managers and

elimination of the commission charge on

many items, Continued increases in the cost

of gasoline could push delivery costs higher,

increasing even more the importance of delivery cost-reduction benefits.

52
One deterrent to consolidation might come

from labor, as many labor contracts include a

commission on deliveries. Many store operators feel that the drivers perform services

beyond actual delivery of products by maintaining the displays in an attractive manner.

Store operators may not be willing to forego

this kind of service.

This technology could work to the disadvantage of the smaller stores, who may not

have daily deliveries from the warehouse, so

that products that have to be delivered fresh

almost every day (such as bakery items) could

not be included in regular grocery deliveries.

Computer-Controlled Automation

i n Warehouses

Experience to date has shown that slower

moving items are the first to be automated in

warehouses; the fast moving items are handled in bulk with a forklift. Order picking,

about 30 percent of the warehouse function,

is currently automated; and some inbound

functions that account for approximately 20

percent of the system are being automated.

Since only the slower moving items are being

automated, it has been estimated that “the

most sophisticated system we have today is

probably less than 15 percent of the warehouse operation. But it’s growing . . . it’s coming .

To date, many of the “automated” warehouse systems have not been cost-effective.

However, the development of computers,

scanning capability, and other supporting

mechanization would probably result in the

development of “industrial robotism, ” en5Gerald Peck, OTA workshop, Nov. 12, 1977.

abling robot units to do many of the warehousing tasks. (Industrial robots are already

widely used in the automobile industry for

welding and other relatively complicated

operations.)

Computer-controlled automation is part of

the large concept of warehouse automation,

raises the same basic policy issues, and

should be assessed in concert with other

automation systems. Labor would likely be

displaced; firms with available capital would

be the first to automate, possibly to the disadvantage of smaller firms. Competition in the

warehousing industry could become a policy

issue; however, such automation is expected

to evolve gradually.

Electronic Interface Between

the Retail Store and Warehouse

This technology would result from computer-aided store management and computerization by warehouses or other suppliers. One

such technology permits a retail terminal to

place orders directly to a warehouse computer. Eventually the ordering could be

accomplished by a store computer, which

keeps track of inventories without human intervention. An extension of this technology

would permit communication between the

warehouse and the manufacturer-processor

computers.

Electronic interface should improve efficiency in ordering by reducing store inventories and minimizing the risk of running

short of supplies. The effect on competitive

relationships among firms in warehousing

and distribution would have to be assessed.

One issue would be possible discriminatory

pricing against firms that could not use the

electronic-ordering system.

TRANSPORTATION

The food transportation system has served percent in 1974. The figures do not include

us reasonably’ well in the past. Intercity rail air and water transportation or intracity

and truck transportation was 8 percent of the distribution, which would significantly inmarketing bill for domestically produced agri- crease the transportation component of the

cultural products in l977, an increase from 7 marketing bill.

53
The system, however, is currently being

criticized for not being as efficient as it

should be. Critics charge that it is overburdened by regulations that discourage the

adoption of technologies which would promote efficiency and save energy. These regulations are administered by a number of

Federal and State agencies; they regulate

routes, rates, and equipment size and weight.

Other factors also contribute to railroad

and motor carrier inefficiencies. For example, an estimated 20 percent of railcars are

idle much of the time. Concurrently there

have been spot shortages of railcars for hauling agricultural products. Inferior record

systems that cannot locate idle cars in time

and/or lack of priorities in freight car

assignments are cited as reasons for this

problem,

Trucks travel the highways empty because

of poor scheduling and/or regulations that

prevent them from picking up loads on backhauls (return trips). Another part of the

transportation problem is one that also

hampers other sectors of the distribution system—lack of standardization in containers

and associated equipment.

In addition to the issue of efficiency, sanitation is a major factor in our food transportation system. Inadequate cleaning of railcars and trucks has led to food spoilage and

waste that could be eliminated by the introduction of certain technologies or the use

of existing ones.

Technologies To Improve Food

Sanitation in Transportation

The subject of maintaining adequate levels

of sanitation in food as it moves through the

food marketing system emerges from this

study as one of the top priority areas for

assessment. Adulteration and spoilage of

food, as has been pointed out, occurs at all

steps; however, the problem is of particular

concern from the point of view of transportation, specifically of the rail system. Applicable technologies exist to correct this problem, although additional development of technologies may be needed.

The basic problem is that much of the Nation’s food, which moves by rail, is held in unsanitary conditions during transportation.

Boxcars may be infested with rodents and insects and may contain microbiological and

chemical contamination. There are documented cases of pets dying from pet foods

whose ingredients were contaminated with

toxic substances during shipment. Food ingredients are frequently rejected by the processor because they have become contaminated during shipment. Users frequently reject railcars or must decontaminate them

before use.

Several factors contribute to the problem.

The railroads do not have the technology for a.

national commodity tracking system capable

of identifying toxic substances or other contaminants that are transported in boxcars,

nor of tracking contaminated boxcars to prevent their selection and use for the transportation of edible food products. Currently railroad boxcar classification procedures do not

assure the selection of “food quality” boxcars for food transportation. Railroad inspectors determining classifications almost never,

if ever, have academic training in food

science and are generally not qualified to

determine the suitability of a freight car for

the transportation of food or food ingredients

destined for human consumption.

Beyond the boxcar classification problems,

a technological breakthrough in freight car

cleaning techniques is needed. The principal

boxcar cleaning technology of most railroads

continues to be basically unsophisticated; unfortunately, it is best described as still in the

“garden hose and straw boom era. ” If the

railroad industry is to have quality assurance

in its freight car fleet, it must develop

industry-wide techniques to clean freight

cars that have been used for the transportation of bulk commodities, corrosives, or toxins

or to detect insects, vermin, or other contaminants having a deleterious effect on

freight quality.

An overriding problem is that railroads do

not have sufficient capital to refurbish or

renew the freight car fleet. Part of the problem may have been that neither public offi.

cials, the railroads, shippers, nor the public

54
have shown sufficient concern. The fact that

no loss of human life has been traced to contamination by toxic substances in railcars

does not minimize the problem.

One solution to this problem would be to

have a fleet of “dedicated cars. ” The best

cars in the fleet would be designated to handle food only; a fine would be levied if a

dedicated car were not returned to the

assigned pool. A repair fee could be assessed

against a railroad that allowed a car to be

misloaded, which would permanently downgrade it to a non-food use. This system, when

tried, has not worked very well because the

railroads do not enforce the assessment

penalties.

Examples of possible technologies are suggested for three specific areas:

1. Freight cars, designed specifically for

food products, that will be more resistant to contamination and infestation.

2. Equipment and procedures for decontaminating freight cars. This would include inspectors trained and operating

with specific guidelines.

3. Freight cars specifically designated for

food use, with a system that will keep

track of the cars and schedule them in

an efficient manner. There should be an

effective enforcing system to maintain

the integrity of the system.

Technologies that improve sanitation in

food distribution should lessen the chance of

food contamination and reduce the concern

over possible illness from this contamination.

The cost resulting from lack of sanitation in

railroad cars is considerable. In addition to

the chance the food will become contaminated, there is an economic cost of preventing

it under the present system, When a full car

is rejected, it must be returned to the shipper

and the load reconditioned, restricted to an

inferior use, or perhaps completely destroyed. There is the cost of the return as well

as extra handling of cars. If the shipper finds

a car unsatisfactory, time is lost in securing

additional cars, or the shipper bears the cost

of decontaminating and preparing the car.

New technologies should reduce this economic loss.

A major policy issue will be the funding of

these technologies. The railroads appear unable to secure the needed capital to initiate

and maintain the system needed. Serious attention should be given to the desirability of

policies that will be needed to help railroads

finance these needed improvements.

Cooperation will be needed among the railroads and between railroads and ingredient

suppliers and users. There is a need to determine whether this should be through regulation, voluntary cooperation, or some type of

incentive arrangement.

Development of Containers or Railroad

Cars for Better Quality Preservation

Technologies are needed to develop railroad cars for quality preservation of foods in

the marketing system, Certain technologies

may be applicable to trucks as well. Developments might include special controlledatmosphere containers, specially designed

cars using ambient air for cooling perishable

products, solar-powered car~, or a central

refrigeration unit for several cars that draws

power from the train axle. These technologies

will upgrade equipment primarily for cooling

fruits and vegetables in railcars and trucks.

Besides improving the quality of both longand short-haul shipments, these technologies

are viewed as a means of moving food products through marketing channels with

greater labor productivity and lower costs.

The food service industry is interested in the

container concept for deliveries to units,

which would allow for better scheduling of

delivery vehicles to keep them off the road

during peak traffic hours. (These containers

would probably be smaller than truck-size. )

The various technologies mentioned above

should be assessed to determine economic

feasibility, energy consumption, and the effect on food quality or safety. The only major

policy issue expected to result from the potential adoption of these technologies will likely

come from labor. Containerized shipments

could affect the entire marketing system as

different delivery methods, equipment, and

labor requirements would likely surface.

55
Improvements in Trailer Design

and Use

Adoption of technologies to improve truck

trailer design and use should result in improved efficiency and lower transportation

costs. Specific improvements include greater

truck widths, increased capacity, and multiple trailers hauled by a single cab.

Increasing the normal truck width by a few

inches would allow standard 48-inch pallets

to be positioned side by side. This standard

pallet size is already compatible with freight

car loading but is impossible in nearly all existing trucks. These loading problems contribute to much space being wasted. The possibility also exists of reducing the size of the

pallets instead of enlarging the trucks. The

empty space left in freight cars would be

more than compensated for by the increased

efficiency in truck loads.

The adoption of these technologies depends

in large part on changes in the regulations

that control most aspects of the transportation industry. These regulations are currently

not uniform among States; varying bridge and

axle loads pose the major hurdles, and many

States have restrictions limiting loads to

single trailers.

If policies are set to encourage the development of more uniform standards and regulations, certain adverse impacts may be expected, such as an increase in the number

and severity of accidents as truck weight and

size increase. The cost of maintaining roads

capable of handling increased tonnage would

increase, and the distribution of these costs

among Federal, State, and local agencies

would have to be decided.

Adoption of these technologies would

reduce the number of truckdrivers needed,

and labor can be expected to oppose this

change. This would probably affect only

drivers; loading and unloading rates should

not be affected. However, further information would be needed to pinpoint these technologies’ justification relative to savings in

fuel, increased labor efficiency, the negative

impacts on highway safety and increased

maintenance cost, alternative funding

methods, and the expected impact on and opposition of labor organizations representing

truckdrivers.

Intermodal Terminals Constructed

in Main Food Distribution Centers

The intermodal terminal would be a large

facility designed to receive unit trains of produce or manufactured goods, truck lots, and

shipments by water. To be successful, the

operation would require some type of standardized or containerized shipments allowing

for easy intermodal transfer. The purpose

would be to handle large quantities in an efficient manner, eliminating much of the delay

of intracity or area delivery.

This concept would probably be a replacement for rather than an addition to our present delivery system, and adoption is much

further in the future than many of the other

distribution technologies. (The Agricultural

Research Service has some preliminary work

on a similar concept for a site in New Jersey. )

Terminals would impact on all facets of

commercial food distribution and possibly

even on international trade. The expected use

of containers on ships, trains, and trucks

would impact on the number of workers

needed. In the absence of specific technologies and because the concept is unlikely to

be adopted for some time, this technology is

not highly ranked.

RETAILING AND FOOD SERVICE

Grocery stores account for more than 90 fewer and larger stores and more convenpercent of all retail food sales for at-home ience foodstores. Although the size, type, and

consumption. The remaining 10 percent in- vocation of stores have changed, until very

eludes other foodstores such as meat mar- recently there were few technological

kets, retail bakeries, and produce and dairy changes in retail operation.

product stores. Recent trends are toward

56
Adoption of the self-service concept substituted customer labor for that of the store

employee. Shelves are still loaded by hand,

and the price of each item is marked individually, although in some instances dairy, cured

meats, poultry, and other products may be individually price-marked at central processing

plants. In meat stores, cashiers still ring up

each item, but automated checkout systems

using the Universal Product Code (UPC) have

been introduced on a limited scale. Although

the UPC system eliminates the need for price

marking, most items are still individually

priced to overcome consumer objections.

According to the FMI, a survey of their

members in 1976 showed average weekly

sales of $72,425 and an average of over 9,000

items per store. FMI also reported that for

the first time in 5 years, there was a general

increase in real sales per square foot, per

transaction, and per man-hour. Profit margins remain low, however, and if retail stores

are to increase their productivity and profits

to any extent, new technologies will have to

be adopted,

The most recent publicized technology is

electronic seaming at checkout and its possible use in conjunction with electronic funds

transfer. Technologies for improving productivity in stocking shelves are being developed,

but their success depends in part on standardization of containers and packages

throughout the distribution system. Until

there is more industry standardization on

such items as packaging shape and size, improvements in retail store productivity will be

somewhat limited.

Food service comprises both public and institutional feeding. Public organizations include commercial cafeterias, catering, and

all other eating places serving the general

public. Institutions include schools of all

types, airlines and other transportation systems, penal institutions, and other non-public

eating places.

The Economics, Statistics, and Cooperatives Service of U.S. Department of Agriculture (USDA) reports that in 1977, of the $180

billion spent by consumers on domestically

produced foods, $55.8 billion was spent on

food consumed outside the home. Of that

about $44.1 billion

commercial eating

(79 percent) was spent in

places and $11.7 billion

(21 percent) was-accounted for by institutions.

Fast-food service is expected to be the

fastest growing segment of the food service

industry over the next 5 years, with an annual growth rate averaging 15 percent. Since

most of these outlets are of the drive-in type,

however, any restriction of gasoline supplies

could dampen this prediction.

The fast-food service industry has readily

adopted new technologies such as centralized

controlled onsite cooking. This has allowed

the use of relatively unskilled labor instead of

trained chefs and yet has maintained acceptable food service. Preparing food in central

plants and limiting menus have minimized the

space and labor needed onsite and contributed to the labor productivity increases of

these operations.

Electronic Checkout in Retail Stores

The electronic checkout system is a technology currently in use. Although approximately 300 U.S. stores presently have electronic checkouts with the capability of

reading the UPC, there will be continued expansion of this new technology in retail

grocery stores.

There are two basic checkout systems with

many variations. The system using the UPC

and seamers has received the most publicity

and generated the most opposition. A scanner

reads the product identification, weight, etc.

from the UPC printed on the product and

transmits this information to a central computer where prices are stored. The computer

does all computations and relays this information back to the checkout unit in the

store, which usually displays the price on a

screen and prints it on the customer’s receipt

tape. Advantages claimed for the system are

speedier checkout, no necessity to price-mark

individual items, readily available information on inventory, and sale information on all

items.

The other system is an electronic cash

register which may be self-contained or tied

in with a central computer. Items would be in57
dividually marked and entered manually into

the system. If connected to a central computer, this system would have the same capability of inventory control and price and quantity transactions as the system with scanners.

The UPC scanner system theoretically

would allow greater savings than the electronic cash register because it would eliminate individual pricing and increase productivity of checkers. Both systems have potential for improved merchandising decisions

resulting from better inventory control, improved labor scheduling, less need for

storage, more thorough analysis of sales, increased product movement, and better use of

shelf space.

Most public opposition to the UPC scanner

system has centered on the elimination of individually priced products. Opponents claim

that elimination of prices deprives customers

of information they need to make rational

purchase decisions. Bills have been introduced in more than 30 State legislatures to

require the price to be marked on every item,

while allowing for exceptions regarding size

and type of store. However, the passage of

bills requiring price-marking could prevent a

test to a system just being introduced. Also,

not all consumers react the same to these

systems. Some might prefer the UPC scanner

system even without price marking, and these

laws would restrict the choices available to

them.

Underlying much of this consumer opposition is doubt about the benefits of the UPC

scanner system over other systems and just

where the positive and negative impacts

would fall. Part of the problem is that consumer groups felt left out of the planning and

introduction of the systems and felt instead

that a system was being pushed on them.

Also, industry disagreements and uncertainty

over benefits and costs may have contributed

to consumer unrest. However, consumer confidence may grow if the system reduces

checkout errors and stems the increase in

food prices.

There are a number of issues to be considered:

The first is determining what the economic

impacts are, what particular components of

the system generate savings, how much of the

savings are cash savings resulting from increased productivity of labor versus the

secondary savings from better management

of inventory, pricing policies, etc. How much

additional savings result from using the UPC

scanners versus the electronic cash register

system.

Second, the effect on consumer purchase

decisions from the elimination of individual

prices versus having a printed tape identifying ‘prices and products needs assessing.G

There may be other alternatives to solving the

pricing problem, such as providing consumers with the means for price-marking or

better shelf price-marking. Eliminating the

need for individual pricing opens up possibilities for automated or semiautomated

stocking of supermarket shelves.

A third is the effect on industry structure

and performance. The cost of installing a UPC

scanner system now may run as high as

$ 2O O,OOO per store. This will probably

decrease with volume production but still requires a tremendous amount of capital. It

could become more difficult for smaller firms

to compete, especially in the short run when

larger firms have the capital to experiment

and are the first to adopt the innovation. The

electronic checkout system could accelerate

the trend toward fewer and larger stores

and fewer companies. This raises the issue of

increased concentration in retailing and the

impacts on competition and consumer prices.

There may be a sociological impact as we

move toward larger units that could become

more impersonal and further alienate consumers. Also, if the adoption of the electronic

checkout involves laws requiring individual

price-marking, the growth of high-volume,

low-price discount or warehouse-type foodstores could be adversely affected.

Adoption of the UPC scanner system could

impact on small suppliers who might have difficulty meeting a requirement that all products have a UPC marking.

‘For a study on the effect of removing individual

prices, see Gilbert D. Harrell, Michael D. Hutt, and

John W. Allen, Universal Product Code: Price RemovaJ

and Consumer Behavior in Supermarkets, Michigan

State University Business Studies, 1976.

58
. —

Fourth, labor would be adversely affected

if there were increased productivity as expected. The latest census data show more

than 1.7 million employees in foodstores, and

many of these positions could be affected by

widespread use of the electronic checkout.

Checkers and stockers would lose positions,

and the magnitude of these job losses needs to

be determined. It may be possible to alleviate

the impacts during a transition period by

eliminating positions only through attrition or

retraining these persons for other jobs.

Finally, electronic checkout suggests the

possibility of increased use of electronic

funds transfer, which raises the associated

issues of invasion of privacy and liability for

losses and errors in the system.

Computer Systems To Improve

RetaiI Store Management

A retail storewide computer system that

uses data derived from an automated checkout system and controls physical facilities for

heating, lighting, refrigeration, scheduling of

labor, and interfaces electronically with sup

pliers will likely be adopted by 1985 and can

be expected to have implications throughout

the marketing system. (Electronic interface

between wholesalers and retail stores is discussed as a separate technology in the wholesaling section of this chapter. Seep. 53.)

Adoption of such a computer system would

be expected to greatly increase the efficiency

of retail stores, including managing inventory

to decrease retail storage needs, minimizing

transportation, more efficiently utilizing shelf

space, and improving labor scheduling and

management. Labor would be affected in that

it may involve more night shifts, split shifts,

relocation, or job loss.

Would the savings generated by this efficiency be passed on to consumers, or would

the computer technology be used by stores to

increase their profit margin?

What would be the consequences of reduced energy consumption in retail stores?

Energy is becoming an increasingly larger

share of the retail operation. Computer-controlled lighting, refrigeration, and other

power savers should reduce costs. Scheduling of power use during offpeak hours has implications for the generating capacity of

power companies. The impacts should be

positive, but if consumption were to be reduced below the long-range planning demand

curves, the power companies could have excess generating capacity and would have to

increase rates.

Electronic Food Shopping Systems

Three electronic food shopping technologies are considered: warehouse-to-door

systems involving ordering by telephone;

automated minimarkets; and mobile aut~

mated markets. These technologies are applicable primarily to large metropolitan areas

and to meet special distribution needs in

rural areas. They are not as likely to be

adopted by 1985 as the electronic checkout

system, but their gradual evolution would

have very significant impacts on the marketing system.

Increased recognition of the cost of driving

to stores and the increase in high-density

metropolitan living might contribute to the increase in these retailing innovations,

A number of warehouse-to-home ordering

systems have been tried, with both successes

and failures. Possible advantages include

savings in time to the consumer, savings in

transportation costs, and a possible increase

in safety to the elderly and others. Whether

this system would provide these services at

less cost than conventional supermarkets is

not known. The warehouse operators must do

the picking that supermarket customers do

for themselves, but there is the possibility

that labor-saving innovations would lower

costs.

The automated minimarket is basically a

convenience store with most, if not all, of the

items dispensed automatically. The warehouse-to-home and minimarket systems imply

a system of payment based on some type of

credit, probably related to electronic funds

transfer (EFT), which in the case of the automated minimarket could be card-activated.

The minimarket concept, therefore, is dependent on the development and use of EFT

technology.

59
Mobile automated markets would move

products into certain areas on a scheduled

basis. Tests of this system have indicated

high-cost operations, but cost would probably

decrease if the operation were large-scale.

The principal advantage of all three systems is that food would be made available in

areas where services are at a minimum. In

some metropolitan areas, for instance, supermarkets have closed, restricting food outlets

to small chains or individually owned stores.

One disadvantage is a restriction in the

choices available to consumers and in their

ability to examine produce before purchase.

The question is whether consumers would be

better off with limited choices under these

automated systems than with a gradual

decline in the present system.

All three systems should be judged against

other possibilities, such as industry-cooperative stores in the inner city or direct marketing by farmers in the rural areas. Growth in

types and size of retail foodstores has in the

past depended on population density, income,

and specific preferences and tastes.

Technologies for Delivery

of Complete Meals to the Home

The delivery of complete meals to the home 

is a possible extension of electronic food

shopping and could be the result of changing

lifestyles already under way. Special groups,

such as the elderly or handicapped, may look

toward the benefits of home delivery of complete meals rather than the purchase of separate ingredients or commodities.

The concept has been tried with several I

variations for feeding elderly or incapacitated persons and children in special programs. The School Lunch Program in many instances is a special application of meal

delivery. Much of the institutional feeding is

catering on a meals concept.

The meals concept could result in poorer or

better nutrition depending on the type of pro-,

gram or the meals themselves. Nutrition

would be poor if the meals contained less

fresh fruits and vegetables, consisted of

highly processed or fabricated foods, and lost

nutrients in storage and preparation. This

concept, however, affords the opportunity to

provide highly nutritious meals that could be

tailored to supply the special nutritional

needs of targeted groups. Specific programs

would have to be assessed to determine the

effect on nutrition and health.

Meals delivered to homes could have an

adverse effect on the social life of the aged

and handicapped, especially if going out for

meals were a major social activity. This

would be especially important if the delivery

concept were the only practicable alternative. Conversely, there should be an evaluation of the benefits to recipients and to

society of letting these people remain in their

homes rather than being cared for in an institution.

Home delivery of meals could impact on the

traditional marketing channels if a significant amount of food were delivered in this

manner. The growth of the fast-food industry

has affected the traditional way in which

foods are distributed. These technologies do

not have a high probability of occurrence by

1985, but the impact of such a shift would be

substantial, and developments in this technology should be closely monitored.

Ordering Systems and Equipment

To Minimize Intermediate Order

Breakdown Before Shipping

to Retail Stores

Intermediate breakdown involves subdividing bulk shipments received from a manufacturer or processor into smaller lots for delivery to individual retail stores. Adoption of

new ordering systems and equipment technologies would allow the processor-manufacturer to package items and move them on pallets directly to the retail store. This system is

currently being used in Europe for very large

“warehouse” retail stores, and a reasonable

assumption is that use in the United States

would also depend on the development of

such large, limited-item stores.

 Widespread adoption of this marketing

concept will be slow because of the historic

development of our food distribution system.

60
The major advantages could not be realized

within the major part of our existing system.

If the development of large retail stores is

assumed, the impact of adopting such a

system would be considerable because a major shift to larger and more concentrated

marketing units would be required. Such

units might be Government-controlled or a

private system of units large enough to obtain

the economic benefits of the special packaging systems. Government-controlled stores

should be examined from the standpoint of

available services and product choices and of

responsiveness to consumer wants and

needs. A system of privately owned stores

should be assessed with regard to a possible

increase in industry competition.

TECHNOLOGIES INVOLVING THE TOTAL DISTRIBUTION SYSTEM

The two technologies discussed in this section—technologies to reduce food loss and

standardization in retail packages and wholesale containers—are both extremely important to the marketing system. The concepts

underlying both of these technologies, however, by their nature do not fall neatly into the

three other distribution categories; rather,

they impact with equal emphasis in all three.

For this reason, we have separated them

from the other categories.

Technologies To Reduce Food Loss

These technologies include those that

reduce waste in packaging and transportation throughout the system and reduce losses

that occur from pilferage and general lack of

security control. Loss-prevention technologies will become increasingly important as

worldwide pressure increases for more food.

Loss occurs in field waste from mechanical

harvesting, at the processing dock, in shipment to grocery stores, and in the retail

stores. Another type of loss is the waste from

not utilizing undersized or misshapen products that are nutritionally equivalent to produce graded higher. Consumers should have

the choice of a nutritious product at a lower

cost or perhaps of a food processed from

waste.

There are divergent views on how waste

reduction could be accomplished. In California some produce has been harvested,

packed in wooden bins, and transported

directly to the store for display. This eliminates intermediate order breakdown and the

damage and waste that inevitably results,

and customers are given an attractive product at a lower price. This marketing method

might not be adaptable to long-haul shipment,

where the emphasis needs to be on shipping

containers and transportation methods that

reduce damage in transit and storage. Much

of the loss in retail stores is a result of internal bruising that starts with picking and

transportation and continues to the retail

shelf.

Technologies are needed to harvest and

move more produce through the food system

with less waste. However, in marketing certain fruits and vegetables the extent of loss

and where the loss occurs must be determined first.

Alternative methods of harvesting and

transporting should be assessed under differing production, storage, transportation, and

retailing conditions. For example, field packing, transporting, and retail display of produce in bulk bins may be feasible under certain conditions but would impact the entire

marketing system. The bins would have to be

returned, salvaged for other uses, or destroyed. Displaying loose produce would

cause changes in retailing methods, including

pricing and packaging.

Gleaning produce left in the field by mechanical harvesters is one way of reducing

field waste. However, securing dependable

labor at a price that makes this technology

economical may not be possible.

Another concern is utilizing produce that

does not meet grade standards because of

size or minor blemishes. Although this pro61
duce may be equally nutritious, consumers

may not readily accept “second-best” produce or produce not in familiar packages.

Since the cost of transporting lower grade

produce may equal that of moving higher

grade produce, the sale of lower grades might

be discouraged.

Waste in food preparation and on the

plate, both in the home and in food service

operations, should be assessed. An assessment of the value of open dating on food

packaging to help prevent waste would be a

starting point in reducing waste in the home

through using the date in inventory control on

home shelves.

Pilferage loss occurs primarily in retail

outlets and to some extent in truck and rail

shipments. Supermarkets have claimed losses

from pilferage as the reason they have closed

stores in inner city areas. The different marketing alternatives discussed under electronic food shopping systems could possibly

be an answer to the problem. Better designed

railcars and trucks with more reliable locking

systems would be a deterrent to theft in food

shipments. Technologies that would reduce

pilferage losses in stores and other segments

of the marketing system are needed.

Standardization in Retail Packages,

Cases and Pallets

The concept of standardized packages has

been advocated as a means for improving efficiency in handling products moving through

the food marketing system by reducing the

number of different sizes and shapes, improving modularity, and making palletizing more

efficient.

A determination of the extent of the benefits that would accrue from this system is

needed. Standardization would result incest

savings in packaging due to the need for less

inventory and a possible saving in materials.

However, standardization of retail packages

might restrict the choice of available merchandise by presenting problems for manufacturers whose products might not conveniently fit those sizes. New technologies in

handling food products might also negate

some of the benefits.

The problem is complex, involving many

segments of the food marketing industry. Unless new incentives or initiatives are forthcoming, technologies for standardization do

not have a high probability of adoption by

1985, and the issue is likely to remain dormant.

62
APPENDIXES
— .——

APPENDIX A

THE FOOD MARKETING SYSTEM

DEFINITION OF THE MARKETING SYSTEM

Food marketing is defined as the activities

that take place within the food system between the farm gate and the consumer. This

includes processing, wholesaling, retailing,

food service, and transportation functions

and excludes all functions performed by producers on the farm. Figure A-1 shows the major components of the domestic food system in

the United States, The marketing components

of the total food system are identified separately.

In certain instances, lines between production and marketing are somewhat blurred.

When marketing functions are vertically

linked and controlled by producers with facilities located on farms, they would by definition be excluded from what normally would

be considered the marketing system, An

example would be egg producers who clean,

size, grade, and pack eggs on the farm and

then sell to wholesalers, retailers, or directly

to consumers. Direct marketing covers producers who perform the necessary processing and packaging functions, if any, and retail

the product. Farmers who sell their own produce at a roadside stand or “pick your own

produce” operators would be included in this

definition and would, therefore, not be a part

of the marketing system as defined.1

‘H,R, Linstrom, Farmer to Consumer Marketing, U.S.

Department of Agriculture, Economics, Statistics, and

The definition used here for a marketing

system is suited for this report because it is

general enough to include most marketing

functions yet does put manageable boundaries on the areas being considered.

The marketing system performs the services necessary to move food from the producer to the consumer. Most products are

processed, packaged, stored, and transported as they move through the marketing

channels. The extent and type of these operations depend on the nature of the product and

its location relative to the consumer. In addition to farm production, energy, labor, and

other inputs are utilized by firms to perform

marketing functions. Finally, there must be a

flow of information to facilitate the orderly

exchange of goods and services among firms

in the marketing system.

Private firms generally perform the marketing function, but other institutions such as

local, State, and Federal governments usually

provide inspection and grading services.

Private and governmental agencies may also

undertake research to increase efficiency at

the individual firm level and in the system.

Cooperatives Service, Report No. ESCS-01, February

1978.

MEASURES OF THE SIZE

OF THE FOOD MARKETING SYSTEM

The food marketing system is large. Esti- duced food, the marketing bill was $123.5 bilmates for 1977 show that out of the $180 bil- lion (see figure A-2). This is more than twice

lion consumers spent on domestically pro- the farm value of the food. Processing at

65
I 6

66
Figure A-2.— Farm Value, Marketing Bill,

and Consumer Expenditures for Food, 1977

(billions of dollars)*

Farm value 56.5

1’ I

I

Marketing bill 123.5

Processing 35.8

Wholesaling 18.5

Retailing 32.1

Public eating places 27.2

Transportation 9.9

Consumer expenditures 180.0

At home 124.2

Away from home 55.8

Public eating places (44.1)

Institutions (1 1.7)

)

“ Domest(c farm food only

SOURCE U S Department of Agriculture, Economics, Sta!lstlcs, and Cooperatives Sew Ice, Agricultural Economic Report 398, Washington, D C., March 1978.

— . —

$35.8 billion accounted for the largest

amount, followed by retailing at $32.1 billion.

Sales of domestically produced foods were 25

percent of the total consumer expenditures

(excluding energy and service) of $73o billion

in 1973. Stated another way, foodstores and

away-from-home eating accounted for $2.50

of every $10 worth of consumer expenditures.

Components of the marketing bill as broken

out by the U.S. Department of Agriculture

(USDA) include transportation, packaging,

labor, profits, etc., and are shown as a percent of the total marketing bill in figure A-3.

Labor costs are the largest at 47 percent, and

packaging is second at about 13 percent of

marketing costs.

Census data for 1967 and 1972, the latest

available, show the size of the marketing system and changes that are taking place. These

data are not comparable to USDA data on the

marketing bill because they include food and

kindred products rather than just data for

domestically produced food. In 1972, there

were 588,000 food marketing establishments

with $356 billion in sales and 5.7 million

employees (table A-l). The decrease in the

number of establishments occurred primarily

with processors and food retail stores, with

only a slight decrease in the number of wholesale grocers.

67
Figure A.3.—Components of Bill for Marketing Farm Foods, 1976*

Corporate Profits” Other A

Packat

SOURCE: U.S. Departrnmt of Agriculture, Economic Research Service, Agricultural Outlook, AO.26, Washington, DC,, October 1977.

Table A.1 .—Establishments, Sales, and Employees for Food Marketing Firms, 1967 and 1972

Kind of business Establishments Sales Employees

and year (number) (thousands of $) (thousands)

Processors

1967 . . . . . . . . . . . . . . .

1972 . . . . . . . . . . . . . . .

Wholesale grocersa

1967 . . . . . . . . . . . . . . .

1972 . . . . . . . . . . . . . . .

All foodstoresb

1967 . . . . . . . . . . . . . . .

1972 . . . . . . . . . . . . . . .

Eating placesb

1967 . . . . . . . . . . . . . . .

1972 . . . . . . . . . . . . . . .

Total—1967. , . . . . .

Total—1972. . . . . . .

37,521

28,184

40,055

39,137

294,243

267,352

236,563

253,136

$83,975

115,060

74,391

109,815

70,252

100,719

18,897

30,385

1,650

1,085

534

585

1,444

1,722

1,737

2,317

608,382

587,809

$247,515

$355,979

5,365

5,709

aprocessors of food and kindred products from U.S. Bureau of Census, Census of Manufactures, 1972. Sub series, General

Summary MC 72(1)-1, Washington, D.C.

bus. Department of Agriculture, Market Structure of the Food /ndustries, Economic Research Service, fvIRR No. 971,

September 1972.

68
APPENDIX B

PROCEDURES FOLLOWED

IN THE PLANNING ASSESSMENT

Specific procedures followed in preparing

the planning assessment are listed below.

The sequence is chronological.

I. Individuals familiar with the writing of

futurists were consulted for references that

project what the future may be through the

year 2OOO and beyond. From the futurists’

general views of the future, a preliminary set

of socioeconomic factors likely to influence

the technologies that might emerge or be

needed to fill certain gaps in marketing technology was generated. This basic set of factors was the foundation on which the rest of

the planning assessment was built.

2. Studies on present and emerging technologies in food marketing were reviewed.

This review gave the status of currently used

technologies, those available but in limited

use, and those in the development stage.

3. Two letters were sent to selected individuals. One letter covered technologies in

processing and packaging; the other, technologies in transportation, wholesaling, and retailing. The first part of each letter included

an explanation of the project and general instructions for the respondents. A list of socioeconomic factors considered important in

shaping emerging technologies, along with a

list of technologies, was given in the second

part. Respondents were asked to select from

the technologies on the list, and from those

they suggested the five most important emerging technologies and the reasons for their

selection.

4. A preliminary paper drew on data obtained in the literature review plus an analysis of information on the returns from the

mailing. The socioeconomic factors were expanded by adding details from research reports and other sources. These factors were

used to develop two scenarios for the future.

5. A workshop of specialists was given the

preliminary paper to study. The working

group, convened in a structured setting with

the paper as background material, added indepth discussions on the technologies with

special emphasis on the issues they raised,

the urgency of these issues, and the need for

assessment.

6. The planning assessment report utilized

the panel data along with all other information to make a priority listing of technologies

for assessment. Issues raised by the priorities

were listed and discussed.

MAIL SURVEY

Steps I and 2 for completing this assess- objectives: to provide a broad coverage that

ment were outlined in the introduction chap would identify emerging technologies across

ter of this report. The third step was to send a the marketing system and provide informaletter to specialists in food processing and tion on stage of development and expected

distribution. The mail survey had two major issues.

69
A letter covering processing and packaging

was sent to 127 individuals and one covering

food distribution to 94 (see appendix C).

These letters were sent to selected food technologists, economists, extension personnel

and others in schools and universities, industry and trade associations, Government

representatives, consultants, and writers for

trade publications.

The processing and packaging letter contained a list of socioeconomic factors expected to influence the development of processing and packaging technologies, and the

distribution letter included those socioeconomic factors expected to influence wholesaling, retailing, and transportation technologies. Each letter also contained a partial list

of technologies that were in limited use or in

the developmental stage.

Respondents were asked to comment on the

relevance of the socioeconomic factors and

add to the list any others they considered appropriate. They were to comment on the list

of technologies, add to the list, and then

based on their evaluation of the socioeconomic factors, to select in priority order the

five technologies they expected to raise the

most substantive policy issues.

Replies were received from 38 percent of

those receiving letters. The percentage of

response was higher for those receiving the

processing and packaging letter than for

those receiving the distribution letter (see

table B-l).

Table B-l .—Number of Responses to Letter

by Type of Respondent

Processing Distribution

letter letter

Total letters mailed . . . . 121 94

Respondents

Total responses . . . . . 58 23

University . . . . . . . . 25 7

industry. . . . . . . . . . 15 9

Government . . . . . . 13 3

Consultants, writers 5 4

The mail survey provided information for

the workshop sessions. Twenty-six processing and packaging technologies and 16 distribution technologies were identified for consideration in the workshop. A background

paper containing the two lists was given to

participants prior to their attendance at the

workshop.

WORKSHOP

The purpose of the workshop sessions was

to provide information that would help place

in priority order those marketing technologies

expected to raise policy issues needing concongressional attention. Twenty-one specialists

in various fields participated in the workshop.

After a general orientation session, participants were divided into two subgroups.

One subgroup of 11 concentrated on technologies in processing and packaging, and the

other subgroup of 10 discussed distribution

technologies. The participants represented

industry, labor, research, trade, consumer,

and Government organizations. They were

assigned to either distribution or processing

subgroups, depending on their knowledge or

70

interest. A list of these participants can be

found at the beginning of this report.

The two subgroups followed the same procedures and used the same materials, except

that each group had the list of technologies

appropriate for its area of work. The workshop consisted of an evening session (Session

1), one full day with Session 2 in the morning

and Sessions 3 and 4 in the afternoon, and a

concluding session (Session 5) the next

morning.

Session 1: Orientation. This session covered workshop objectives and procedures.

Session 2: Priorities based on probability of

adoption. The processing and packaging subgroup and the distribution subgroup met in
. . .

separate sessions. The first hour was spent in

discussing the technologies and socioeconomic factors and adding technologies working group members felt should be given consideration. The objective for both groups was

to place a priority order on the technologies

based on the probability of occurrence and

adoption by 1985. In this priority ordering the

subgroups did not consider impacts. Probability of adoption was estimated for each technology under two scenarios, each with different assumptions about the socioeconomic

factors. Scenario 1 basically projected a set

of socioeconomic factors that would not deviate from established trends. Scenario 2 indicated that energy would increase relative to

most other costs and that the supply and

price of other raw materials would be subject

to disruption. Supply and demand conditions

would cause an increase in domestic food

prices, Consumers would turn toward a meal

rather than a commodity concept. Worksheet

A (appendix C) provided the means for converting the impact of each scenario to the

probability of development and adoption of

the technologies. Time limited the exercise to

estimating the probability of adoption only to

1985.

Session 3: Priorities based on impact. The

two subgroups met separately to determine a

priority rating for technologies based on expected impacts, entirely separate from probability of adoption. A technology might have a

low probability of adoption but could have

severe and widespread impacts if adopted.

Probability of adoption and impacts are both

important criteria to consider in ranking

technologies for priority assessment. The objective was to study the impacts and issues

for each technology and then score the impacts on Worksheet B (appendix C). These

scores were used to rank the technologies

based on impacts and issues.

Session 4: Integration of results from Sessions 2 and 3, All members of the workshop

met together in this session, before which

OTA staff had evaluated Worksheets A and B

and selected the technologies with the highest

probability of adoption and those with the

highest expected impacts for processing and

distribution. In Session 4, impacts and issues

for the highest priority processing and packaging technologies were discussed in detail.

Worksheet C (appendix C) served as a guide

for discussing the impacts and issues across

the marketing system.

Session 5: Continuation, Discussion was

concluded on the processing and packaging

technologies. Most of the session was devoted

to discussing the impacts and issues for the

distribution technologies with a high probability of adoption and those expected to have

widespread impacts. Both Sessions 4 and 5

were designed to maximize the synergism of

the specialists as they interacted.

Some workshop members voiced concern

over trying to determine a priority ordering of

technologies with such a small number of

workshop participants. However, the fact

that they had access to the mail survey

results and were selected for their individual

knowledge covering most if not all marketing

areas should compensate for the small number in the workshop.

The OTA staff utilized all the material

from the workshop for a final priority list of

technologies for assessment.

71
PROCESSING LETTER

The Off ice of Technology Assessment (OTA) is a scientific advisory arm of

the Congress. Created by Congress in 1972 , OTA is one reflection of this

Nation's maturing realization of the need for new institutional approache s

to assure that our national public policy is based to the fullest possibl e

extent on a clear understanding of the potential consequences, beneficia l

or adverse , of the use of technology .

We believe that consumers, industry , and society as a whole will benefit

from looking ahead and identifying possible issues associated with emergin g

technologies before they become crises. Being ahead of the issues shoul d

provide the necessary time and understanding between Congress and affecte d

parties for developing sound and equitable solutions.

In the food area , OTA is attempting to identify and analyze emergin g

technological and policy issues for the Congress. You are one of a selec t

group asked to help in this effort.

As an initial step , we need your help to identify processing and packagin g

technologies. Your response should include existing, emerging, or neede d

technologies. Others will be asked to respond to other areas of foo d

marketing , including wholesaling> retailing, and transportation. We ar e

primarily interested in technologies that exist but have not been adopte d

or those most likely to be developed and adopted under the socioeconomi c

and institutional conditions expected to exist during the remainder of this

century .

To provide a framework for your thinking on emerging technologies, we hav e

identified a number of socioeconomic factors that should influence th e

development of technologies in food processing and packaging or that woul d

be affected by the adoption of new technologies (see attachment). I n

72
developing this preliminary list of factors, we reviewed a number o f

publications by futurists speculating on the future by the year 2000 an d

beyond. We isolated a number of common factors that may shape the kinds of

technologies emerging in food processing and packaging. As work progresses,

factors may be added to or deleted from this basic list.

These socioeconomic factors should be viewed as important influences in th e

development of new technologies or adoption of existing technologies.

For example , one study estimates that manufacturing of food and kindre d

products accounts for about 4 percent of the total U.S. energy consumption .

An increase in the cost of energy would probably result in increased mone y

for research and development on technologies to save energy in processin g

and packaging. Similarl yj changes in the other factors would be expecte d

to influence processing and packaging technology .

With this brief explanation of conditions that will probably affect th e

adoption of technologies up to the year 2000 , we are asking your help i n

the following ways:

1. Look at the socioeconomic factors we have included plus those you may

wish to add , and give us your evaluation of the potential for eac h

factor to promote or deter the development of technologies in processin g

and packaging .

2. A list of technologies is enclosed to stimulate your thinking. In th e

context of the problems indicated by your evaluation of the socioeconomi c

factors , criticize our list of technologies and then add to our list

technologies that are currently developed but not widely adopted o r

those which will be needed to fill deficiencies in marketing technolog y

in the years ahead . In the latter case , feel free to contribut e

technologies which may appear "far out” or "blue sk y

tl but whic h

conceivably could be part of food marketing in the year 2000 .

3. From the technologies on our list combined with those you added ,

select the five technologies you consider should raise the most

substantive policy issues for Congress. Briefly give the reason s

for your selections.

4. Make any additional comments, suggestions, or explanations YOU fee l

are in order . The areas of food production, nutrition, and consump -

tion are being given similar attention by others in OTA’S food program

and the studies will be closely coordinated .
—-

At this time we are primarily interested in brief responses to be sure w e

have explored the major avenues where marketing technologies may emerge

and to get an indication of the priority ordering of these technologies.

Responses will be analyzed and incorporated in a preliminary paper whic h

will serve as the starting point for further input and analyses by a pane l

of experts. Your response within 30 days will be most valuable to ou r

analysis . If you have any questions, please call one of us at 202-225 -

5949.

We thank you for your cooperation .

Michael J. Phillip s

Marketing Projects Leade r

Food Program

Sincerely ,

William W. Gallimor e

Staff Economist

Food Program

74
DISTRIBUTION LETTER

The Office of Technology Assessment (OTA) is a scientific advisory arm of

the Congress . Created by Congress in 1972 , OTA is one reflection of this

Nation's maturing rea1ization o f the need for new institutional approaches

to assure that our national public policy is based to the fullest possibl e

extent on a clear understanding of the potential consequences, beneficia l

or adverse , of the use of technology .

We believe that consumers, industry, and society as a whole will benefit

from looking ahead and identifying possible issues associated with emergin g

technologies before they become crises. Being ahead of the issues shoul d

provid e the necessary time and understanding between Congress and affecte d

parties for developing sound and equitable solutions.

In the food area, OTA is attempting to identify and analyze emergin g

technological and policy issues for the Congress. You are one of a selec t

group being asked to help in this effort.

As an initial step, we need your help to identify technologies in foo d

distribution , including wholesaling , retailing, and transportation. You r

response should include existing, or needed technologies. Others will b e

asked to respond to other sectors of food marketing, including processin g

and packaging . We are primarily interested in technologies that exist bu t

have not been adopted or those most likely to be developed and adopte d

under the socioeconomic and institutional conditions expected to exist

during the remainder of this century .

To provide a framework for your thinking on emerging technologies, we hav e

identified a number of socioeconomic factors that should influence th e

development of technologies in wholesaling, transportation, and retailin g

or that would be affected by the adoption of new technologies (see attachment).

75
In developing this preliminary list of factors, we reviewed a number o f

publications by futurists speculating on the future by the year 2000 an d

beyond . We isolated a number of common factors that may shape the kinds of

technologies emerging in wholesaling, retailing, and transportation. A s

our work progresses, factors may be added to or deleted from this basi c

list .

These socioeconomic factors should be viewed as important influences i n

the development of new technologies or the adoption of existing technologies.

For example , one study estimates that wholesaling, retailing, and transporting of food and kindred products accounts for about 6.6 percent o f

the total U.S. energy consumption . An increase in the cost of energ y

would probably result in increased money for research and development o n

technologies that would save energy in these marketing areas. Similarly ,

changes in the other factors would be expected to influence wholesaling ,

retailing , and transportation technology .

With this brief explanation of conditions that will probably affect th e

adoption of technologies up to the year 2000 , we are asking your help i n

the following ways:

1. Look at the socioeconomic factors we have included plus those you may

wish to add, and give us your evaluation of the potential for eac h

factor to promote or deter the development of technologies in retail -

ing, wholesaling, and transportation .

2. A list of technologies is enclosed to stimulate your thinking . In th e

context of the problems indicated by your evaluation of the socioeconomi c

factors , criticize our list of technologies and then add to our list

technologies that are currently developed but not widely adopted o r

those which will be needed to fill deficiencies in marketing tech -

nology in the years ahead . In the latter case , feel free to contribut e

technologies which may appear “far out” or “blue sk y

tl but which con -

ceivably could be part of food marketing in the year 2000 .

3* From the technologies on our list combined with those you added ,

select the five technologies you consider should raise the most

substantive policy issues for Congress. Briefly give the reasons fo r

your selections.

4. Make any additional comments, suggestions, or explanations you fee l

are in order . The areas of food production, nutrition, and consump -

tion are being given similar attention by others in OT A

I

S food program ,

and the studies will be closely coordinated .
—

At this time we are primarily interested in brief responses to be sure we

have explored the major avenues -where marketing technologies may emerge and

to get an indication of the priority ordering of these technologies.

Responses will be analyzed and incorporated in a preliminary paper whic h

will serve as the starting point for further input and analyses by a pane l

of experts. Your response within 30 days will be most valuable to ou r

analysis . If you have any questions, please call one of us at 202-225 -

5949.

We thank you for your cooperation.

Michael J. Phillips

Marketing Projects Leader

Food Program

Sincerely ,

William W. Gallimore

Staff Economist

Food Program
AGENDA, OBJECTIVES,

FOR THE

OBJECTIVES

The objectives of the working group will be

to:

1. Identify those technologies with the

highest probability of development and

adoption.

2. Identify those technologies most likely to

ORGANIZATION AND

For the initial session on October 12, the

working group will meet together. For part of

the session on October 13, the working group

will be divided into two sections, one on processing and packaging and the other on food

distribution, including wholesaling, retailing,

food service, and transportation.

October 12,1977

6 to 7pm. Orientation meeting, with a brief

explanation of the Office of Technology

Assessment and presentation of the objectives and procedures for the working group.

October 13, 1977

Session 2: 8 to 11 a.m. The processing and

packaging, and distribution subgroups will

meet in separate sessions. Each group will be

given a list of technologies for their assigned

area of work and spend approximately an

hour discussing the technologies and socioeconomic factors, clarifying questions, and

adding information. The positive or negative

effect of a selected number of socioeconomic

78

3.

APPENDIX C

AND PROCEDURES

WORKING GROUP

raise substantive policy issues for Congress.

Identify, in detail, the severity of impacts, The groups most affected by the

impacts, and the issues arising from

these impacts.

METHODOLOGY

factors on the technologies will be evaluated

under two different scenarios. The group will

then give their estimate of the probability of

development and adoption of each technology

by 1985 and the year 2000 for each scenario.

This information will be used to select the

technologies with the highest probability of

emerging by 1985 and 2000.

Materials supplied: a) background paper,

b) Worksheet A, and c) two scenarios of soci~

economic factors.

Session 3: 12:30 to 2:30 p.m. The two subgroups, meeting separately, will make a cursory study of the impacts and issues for each

technology. There will be group discussion

and interaction, then the subgroups will use

Worksheet B to score the technologies based

on the expected positive and negative impacts

and issues the technologies are expected to

raise.

Materials supplied: a) background paper,

and b) Worksheet B.

Session 4: 3 to 6 p.m. The working groups

will meet together and will consider those
technologies from processing and distribution

which have been selected as the most likely to

emerge based on previous work by the subgroups. The group will discuss in detail the

expected impacts and issues for each technology. Worksheet C will serve as a guide for

this discussion.

Materials supplied: a) background paper,

b) priority list of technologies based on probability of emergence, and c) Worksheet C.

October 14, 1977

Session 5: 8:30 a.m. to 12:30 p.m. The working group will be given two lists of technologies, one on processing and packaging and

the other on distribution. These will be the

technologies ranked by the subgroups as having the greatest impacts and raising the most

substantive issues. Some of these technologies may have been discussed in the previous session if they were also the ones with a

high probability of emergence. Using Worksheet C, the group will discuss the impacts

and issues for each technology.

Materials supplied: a) background paper,

b) list of technologies ranked by expected

issues, and c) Worksheet C.

Attachment to Worksheet A: Scenario 1

This scenario projects socioeconomic factors that would show no major shocks either

economically or socially and is the kind of

socioeconomic environment expected if

things continue to evolve much as they have

in the past 25 years.

Energy and Raw Materials. The cost of

energy will remain about the same relative to

other costs. New sources of domestic oil will

be discovered, and other energy sources will

be developed. Our dependence on foreign oil

will be decreased slightly, and imports of oil

will not continue to grow as in the past. Shortages of other raw materials will be transitory

in nature and will not cause major disruptions in the economy.

Demand for Food Domestic and foreign demand will not cause an unusual rise in food

prices. There will be a continual demand for

convenience foods in this country. Demand

.

for beef, poultry, and other meats will increase less rapidly than in the past but will

probably increase,

Supply of Food, The supply of food from

traditional agriculture will be adequate,

although there will be new products introduced in response to changes in price of food

from traditional sources. These new products

or ingredients will still be from traditional

sources, augmented to a small degree from

unconventional sources.

Health Concerns. There will be an increased awareness of the relationship between nutrition and health, and this concern

is expected to influence eating patterns. The

major concern will be over food additives,

and this will be reflected in careful consideration of processed foods and foods

fabricated from new ingredients.

Regulations. Regulations regarding the

testing and approval of food ingredients will

remain essentially as they are now. The

Delaney amendment will be the guide for approving new additives. Regulations regarding

transportation will remain essentially the

same, although there will be changes that will

allow for increased efficiency. Efforts will

continue to curb pollution of the environment.

Changing Lifestyles.

●

o

●

●

●

●

Older persons will make up a larger percent of the population.

People will retire at an earlier age.

The proportion of working wives will remain the same as at present.

people will have more leisure time.

Away-from-home eating will continue to

increase.

The family will remain the basic social

unit, but - there will be fewer meals

prepared in the home, and the family

will eat together less often.

Economics.

● Real median family income (yearly):

1975: $14,000

1985: 20,000

2000: 25,000

79
● Inflation rate: 5 percent per year.

● Consumers will have more disposable income and more income for discretionary

use.

Industry Structure. Structure refers to size

and number of firms, market shares, and

coordination among firms in an industry. The

current trend toward fewer and larger firms

in the food industry will continue.

Other Institutions. Labor’s influence regarding the development and adoption of

technologies increases.

Attachment to Worksheet A:’ Scenario 2

Changes depicted for the socioeconomic

factors in this scenario would be expected to

have more influence on the development and

adoption of technologies up to the year 2000

than those in Scenario 1.

Energy and Raw Materials. The cost of

energy will increase substantially relative to

other costs. Additionally, the supply of

foreign oil and other strategic raw materials

will be subject to periodic disruption for

political, economic, and other reasons. Our

dependence on imports of oil will increase,

and the need to export agricultural materials

to help decrease the deficit in our balance of

payments will increase.

Demand for Food. Foreign demand for food

will increase, causing domestic food prices to

increase to the extent that alternative food

forms and sources will be needed to augment

the supply. The demand for convenience

foods will continue in the face of rising

prices. The per capita consumption of beef

and pork will decline slightly.

Supply of Food. New sources of food from

nontraditional sources will be developed.

Traditional agriculture will be the main

source but will not be sufficient to keep prices

at acceptable levels. Methods will be sought

to better utilize available food supplies.

Health Concerns. Consumers are concerned over nutrition and food safetv but are

willing to accept

processed foods

new ingredients.

80

small risks and to use more

and foods fabricated from

Regulations. Regulations regarding the

testing and approval of food ingredients, including additives, will change. Food ingredients will be judged on the basis of benefits

as well as injurious effects. Regulations

regarding transportation will be changed so

that maximum efficiencies may be achieved.

Efforts to curb pollution will be slowed, and

lower standards will be accepted.

Changing Lifestyles.

●

●

●

●

●

Older persons will make up a larger

percentage of the population.

Retirement age remains the same as at

present.

The proport

crease.

In addition

on of working wives will into the traditional eating

establishments, central facilities will be

located in neighborhoods where meals

may be eaten or taken home.

Families will prepare and serve their

meals on an individual basis, either by

buying them at central preparation facilities or as convenience foods from retail

outlets.

Economics.

●

●

●

Real median family income (yearly):

1975: $14,000

1985: 18,000

2000: 21,000

Inflation rate: 7 percent per year.

Consumers will have a lower percentage

of their disposable income for discretionary use.

Industry Structure. Food industry structure will be under close scrutiny by the Federal Government, resulting in less concentration,

Other Institutions. Labor’s influence regarding development and adoption of technologies lessens.
———————

Attachment to Worksheet B:

Explanation of Criteria for

Determining Impact Scores

Short-Term Economic Effects. Short term

would be up to 5 years after adoption of the

technology. Refers to the net effect on employment, cost to the industry and to consumers,

and other effects of a transitory nature. If

both beneficial and harmful effects are occurring equally and at the same time, they

should balance out. However, the negative

impact may receive the greater weight, since,

for example, the simple balancing of jobs lost

and gained ignores the problems of dislocation.

Long-Term Economic Effects. Long term

would include effects after 5 years from

adoption and refers to the extent to which the

technology will result in a net increase or

decrease in the total quantity of economic

goods and services produced in the long term.

A favorable impact would generally reflect a

more efficient utilization of resources, increased productivity of labor, or increased

productivity of capital. An unfavorable

economic impact would mean the contrary.

Effect on Quality of Life. Quality of life includes equity of income distribution, social

mobility, diversity of opportunity and freedom of choice, the propensity of various

groups to be cooperative or disruptive, and

the general morale of society as a whole. Also

included are improvements or declines in certain aspects of the standard of living such as

convenience, variety, quality, etc. These are

related to income and employment but are

considered separately for assessment.

Effect on Quality of the Environment. Refers to externalities, or public and private

disservices resulting from economic activities. Pollution, urban congestion, and worker

safety are the major categories. For example,

if the technology increases the amount of pollution or congestion generated by production

and/or consumption of the goods or services,

it gets a negative score, or, conversely, a

positive score if the opposite is true.

Effect on Nutrition and Food Safety. The

direction and degree of impact on food safety

by adoption of the technology. The score

should reflect a judgment of the net effect.

Nutrition refers to whether the nutritional

quality of the food is increased or decreased,

while safety indicates whether a technology

would increase or decrease the safety of

food.

Effect on Conservation of Resources, This

measures the net effect of the technology on

resources, especially energy and others in

critical supply. This would include efficient

use of nonrenewable resources plus substituting renewable for nonrenewable resources, such as packaging material from cellulose instead of petroleum products.

Worksheet C: Guide for Assessing

the Impacts and Issues From Adoption

of Technologies

The following guide is presented in matrix

form to show the possible impact of a technology adopted in one sector of food marketing

over the whole system and extending to other

primary segments of society and secondary

or more long-term effects that should be considered. The major purpose of the guide is to

assure that as many issues and impacts as

possible will be covered in the time allowed.

Additional impacts and issues may emerge

and be added to those listed as the technologies are discussed.

The guide sheet may be used initially to

check the important impact areas. The group

discussion will then bring out the exact

nature of the impacts and the possible issues.

81
d

5 Probability of Occurance by 2000

Other

Institutions Development Adoption Development Adoption

Changing

Life

Styles

Industry

Structure

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Technology No. ————

WORKSHEET

Processing

, F

C—IMPACTS AND ISSUES OF NEW FOOD MARKETING TECHNOLOGIES

FOOD MARKETING SEGMENTS

-— Retailing Consumers

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,

Packaging I Wholesaling Food Service Transportation

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APPENDIX

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US. GOYERNMENT PRINTING OfFICE : 1978 044%7