Factory Gate Pricing (FGP) Definition Essay Example | Topics and Well Written Essays - 2250 words

Factory Gate Pricing (FGP) Definition - Essay Example This essay stresses that since the business of groceries involves a variety of different skills at each level of the supply chain, FGPs can make value addition transparent and encourage channel members to specialize in the greater consumer benefit. Agriculturists should not have to worry about transport and logistics, and should focus on productivity and food safety instead. Recent incidences of mad cow disease and bid flu have put new premiums on growing technology. Concerns about chemical pollution also need dedicated attention. Farmers should have attractive FGPs for quality produce that meets specifications at affordable rates. Processing uses a completely different set of technologies. Processors need FGPs which encourage proper investments in dressing meat, removing harmful microbes and extending shelf-life. Processors may also contribute to visual appeal of grocery products through preservation techniques which retain original forms and qualities. Transportation and logistics are specialized areas of operational excellence which other members of the chain need not duplicate. Equitable and transparent FGPs will benefit all stakeholders involved with groceries. This paper declares that partners in the grocery supply chain who lack core competencies in Information Technology may face potential exclusion with the introduction of FGP. Participants and traders who do not have sophisticated product costing systems in place may lose many revenue opportunities by understating their FGPs. This is especially the case with agriculturists who may not have very detailed and accurate accounting systems. FGPs do exist in the grocery business already, but there is little transparency of how these price levels are fixed. They are also unrelated to value addition, and are influenced instead by negotiating leverage. This rarely operates in