Consumer Location

The location of consumers is a major factor affecting the location of processing of many agricultural commodities, particularly commodities with high value-added (lesson 6). For example, let’s consider milk production.

• Eastern United States: Much of the milk produced by dairy farms in the eastern part of the United States goes into making fresh products  - fresh milk, cream, yogurt etc. These soft dairy products (products that cannot be stored) are sold in the large urban markets of Boston, New York, Philadelphia and Washington, DC.
• Wisconsin: In contrast, in Wisconsin, much of the milk produced goes into making hard dairy products, particularly cheese. Cheese and other hard dairy products can be stored. With around 14 percent of the nation’s milk production, Wisconsin accounts for more than 25 percent of the nation’s cheese production. With the exception of the Chicago area, Wisconsin is located relatively far away from the major centers of population, so it makes sense to use milk to produce dairy products that can be stored and transported long distances. Cheese is ideal for this purpose.
• Western United States: A lot of the milk produced on the large dairy farms in the western United States also goes into producing hard products such as cheese and butter. Less than 30 percent of the total supply of milk in the United States is consumed as fresh milk or cream; the remainder is processed into a range of products such as butter, cheese, frozen dairy products and milk powders.

Ice cream is often made close to where consumers are located so that the supply can respond to local changes in demand – the consumption of ice cream is highly seasonal, with most of the consumption occurring in the summer.

• California, with a population of 38 million, is the leading producer.
• Production is also significant in states located close to centers of population in the east and Midwest.
• However, Texas, with its population of almost 27 million and is not a major dairying state, is the fourth largest producer of ice cream.

So in this case, the location of production is not only affected by where consumers are but by the characteristics of consumption. Many processed food products share this feature – regional food preferences are often important in influencing the location of food processing.