Dakota pasta growers

Essay by senor79 April 2004

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Question 1

What are the defining economic characteristics of the durum wheat milling and pasta production industry? What are the industries standout features?


Economic characteristics of Durum wheat milling and pasta production:

1. According to the case, durum wheat quality criteria continually evolve in response to market pressure and consumer preference. Increasing demand for specific durum wheat quality attributes for different end products requires development of more rapid objective means to grade and classify wheat parcels on the basis of processing potential.

2. Durum wheat prices rose because of increased demand for pasta. In addition, the increase in milling capacity in the late 1990's had helped increase demand for durum wheat, which increased durum prices. As durum prices rose and pasta demand began to plateau, pasta manufacturers found it difficult to pass along higher input costs, and their margins began to decline, driving down profitability. Therefore, it is likely that durum milling capacity would be greater then pasta demand.

3. On a per capita basis, pasta consumption has increased from roughly 7 pounds of pasta in 1984 to 14 pounds in 1994. The increase in consumption is primarily attributable to the fact that pasta is a tasty, relatively inexpensive food that is easy and quick to prepare and can be included in many types of dishes, including salads and main entrees. Products such as boxed pasta dinners and frozen pasta entrees have supported consumers' demands for quick meals to prepare at home.

Industries stand out features:

Increasing competitions in the pasta industry are making it more important that processors produce pasta products with quality that is consistent over time. Customers are becoming more discriminating in their quality requirements, and variability in product quality is becoming less acceptable, particularly for premium products.

The future challenge will be to implement durum...