AGRICULTURE AND AGRI-BUSINESS

7/30/2019 AGRICULTURE AND AGRI-BUSINESS

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AGRICULTURE

AND AGRIBUSINESS

CHAPTER 1

1 Agriculture is technology-orientedindustry that includes production,agriscience, and agribusiness.


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DEFINITION

Sum total of all operations involved in the manufactureand distribution of farm supplies; production operationson the farm; and the storage, processing, and distributionof the resulting farm commodities and items. It is alsodefined as any profit-motivated enterprise that involves

providing agricultural supplies and/or the processing,marketing, transporting, and distributing of agriculturalmaterials and consumer products.John Davis & RayGodberg

the coordinating science of supplying agricultural

production inputs and subsequently producing,processing, and distributing food and fiber.

- Ewell Roy

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DEFINITION

Merriam-Webster Collegiate Dictionary- an industryengaged in the producing operations of a farm, the

manufacture and distribution of farm equipment and

supplies, and the processing, storage, and

distribution of farm commodities.

Australian Department of Agriculture, Fisheries and

Forestry (DAFF) a chain of industries directly or

indirectly involved in the production, transformation,

or provision of food, fiber, chemical and

pharmaceutical substrates.

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LINKSINTHEAGRIBUSINESSCHAININCLUDE:

Primary production of raw materials (commodities)

Tertiary transformation of commodities into value-

added products

Supply of inputs to the primary and tertiary sectors

Wholesale and retail provision of processed and

unprocessed foods, fibers, and related products to

consumer

Provision of educational, financial, and technical

services to all sectors

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IS AGRIBUSINESSTHE SAMEAS

AGRICULTURAL ECONOMICS?

Agricultural Economics refers to the monetary and physical

factors that affect the profitability of agribusiness.

Specific areas of study in agricultural economics include:

community and rural development international trade

food safety and nutrition production economics

risk and uncertainty

analysis of markets and competition

natural resource and environmental economics

consumer behaviour and household economics

agribusiness economics and management

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AGRIBUSINESS AFFECTS US DAILY

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INGREDIENTS

tomato

meat

mustard

pickle

cheese (milk being

produced and processed)

onion

lettuce

sesame seeds

ketchup (vinegar; tomatoes

or banana; condiments) mayonnaise (eggs;

vegetable oil, lemon juice;

salt; condiments)

bun (wheat)


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THE BIG PICTURE OF AGRIBUSINESS

ROLE

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AGRIBUSINESS

AGRICULTURAL

INDUSTRY

OUTPUTCOMPANIES

INPUTSSUPPLIES


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Figure 1-1

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FEED

SEED

FINANCE/ CREDIT

TRANSPORTATION

FERTILIZERS

ANIMAL HEALTH

FERTILIZERS

WHOLESALER

ENERGY

CONTAINERS

CHEMICALS

INSURANCE

RESEARCH

SCIENCE

ENGINEERING

EDUCATION

MANY OTHERS

AGRICULTURAL BUSINESS

AGRIBUSINESS INPUT SUPPLIES

DAIRYLIVESTOCK

POULTRY

ATERNATIVEANIMALS

CROPS

FORESTRY

NURSERY

FRUITS &VEGETABLES

ALTERNATIVECROPS

MANY OTHERS

PRODUCTIONAGRICULTURIST(FARMERS)

IMPORTS

Small Animal Care

AGRIBUSINESS OUTPUT COMPANIES

MARKETING

TRANSPORTATION

PROCESSED FOODS

TRANSPORTATION

NONPROCESSEDFOODS

BEVERAGES

TEXTILES

WOOD & PAPER

WHOLESALER &RETAILER

FOOD BROKERSGROCERIES

FAST FOOD &OTHER RESTAU

Processing

Exports

Agri by-products,

oil, meal, bran,distillers driedgrain


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HISTORY: FARMING &AGRICULTURE

BEFOREAGRIBUSINESS

Life before farming

and agriculture

Early agricultural

development

Bronze Age

(around 3000 B.C.)

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Hunts wild animals and insects and gathersvegetables

-had little knowledge on planting some seeds but hadproblems with growing it

- began to raise crops and domesticate animals- invented the sickle

-bronze tools and plows made for easier and faster farming

- Nile River was used by Egyptians to irrigate crops

- the wheel was discovered, making the transport of cropspossible

- world population rose from 3M before the invention ofagriculture to nearly 100M


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BEFOREAGRIBUSINESS

Iron Age

(around 3000 B.C.)

Middle Ages (from A.D. 400to A.D. 1500)

-1613 (Virginia colonistJohn Rolfe)

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-iron hand tools and plows were prepared, some of whichare similar to those used today

- money was developed because of the need to trade excesscrops

- leaving land fallow gave the soil a chance to rebuild andstore moisture

-crop rotation, new harness for plowing, and selectivebreeding for livestock

- oxen were the main draft animals

-shipped tobacco to England

- export markets for rice and indigo, as well as tobacco(development of American agriculture)

- shipped furs, timbers, and grain to England and southernEurope


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BEFOREAGRIBUSINESS

17th and 18th Century

Agricultural and

Industrial Revolution

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-organic fertilizer was first developed by putting dead fish into theground along with corn seed

- rice, theworlds

most popular grain, was 1st

grown in UnitedStates

- George Washington created one of the first experimental farms

- Thomas Jefferson experimented with seeds and livestock,invented farm implements, and was active in establishing a localagricultural society.

-Henry Ford developed the automobile- crop rotation was promoted by Charles Townsend

- advances in livestock breeding was achieved by RobertBakewell

- the 1st workable seed drill was invented by Jethro Tull

- a stationary grain threshing machine was developed to separategrain from waste

- John Deere designed a better, one-piece, steel plow

- bared wire was invented to keep livestock away from cropland- the 1st gasoline tractor was built in 1892

- seed and plant genetics were being developed by GregorMendell


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BEFOREAGRIBUSINESS

Era afterAmericanRevolution

1st half of 20thCentury

Latter Part of20th Century

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-surveying of land was used to separate property

- cotton gin was invented by Eli Whitney in 1793

- Edward Jenner discovered vaccines to prevent diseases

- 1st one piece, cast-iron plow was invented in 1819 by Jethro Wood

- interchangeable parts were developed so that people could fix theirequipment

-vaccine was developed for hog cholera

- Federal Land Banks were established to give credit to farmers

- Hybrid plant seed was developed for better-quality, higher-producingcrops

-artificial insemination was more widely used in the livestock

industry

- productivity increased due to new technology

- farmers began to use electric fences

- disc plows were widely used

- chemical fertilizers and pesticides were wildly used

- future trading was used to control risk

- computers became popular as agricultural management tools


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BIOTECHNOLOGY

now part of our lives, with advances in gene splicing,cloning and gene mapping.

*Agribusiness now includes:

Farm machinery dealerships

veterinary supply companies

Commodity brokers

livestock supply companies

Artificial breeding services

animal feed companies

Agricultural chemical companiesbiotechnology firms

Research consulting firms

export companies

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FARM MACHINERY AND EQUIPMENT

Historical Development of Modern Farm Equipment

The development of modern farm equipment began before tractors made

their impact. One of the first agricultural machines that had a significant

impact on farming was the cotton gin, invented in 1784 by Eli Whitney. Three

years later the cast-iron plow was patented by Jethro Wood. This plow

worked very well in Eastern soils but not the hard soils of the Midwest. In1837, John Deere, founder of John Deere Tractor Company, made the first

successful steel plow from a saw blade, and by 1846 he was building 1, 000

steel plows per year. The steel did not wear out as fast as the cast iron, and

the soil did not stick to the new plow as it did with the old one, so farmers

were very happy with.

Until about 1850 production agriculture changed very little from family

to family. Most farm jobs, including sowing, tilling and harvesting, were

performed using human muscle power. Agriculture practices were handed

down from father to son and from mother to daughter.14


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FROM MANPOWERTO HORSEPOWER

At the end of the century, only 50% of Americans

lived on farms and the transaction from manpower

to horsepower was nearly complete. Production

agriculturists were still largely self-sufficient, but

they had raised their productivity to a level where

they could afford to purchase some horse-drawnfarm equipment and a few inputs produced off the

farm.

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THE STEAM ERA

Although steam power had its major impact on the

industrial sector of the economy, it also played a major role

on the farm between 1850 and 1900, which is generallycalled the Steam Era. It is estimated that over 70, 000

steam engines were produce for farm use. The first steam

engines were stationary. The second phase produced a

portable steam engine, which was pulled to the fields for

specific jobs such as powering wheat threshing machines

or sawmills. The third types of farm steam engines were

called tractionengines and were much more useful as a

source of farm power. They pulled themselves as well as

large equipment. The first steam traction engine for farmuse was made in 1869 by J.I. Case Company.

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CONTINUATION

The steam traction engine ushered in a new era in

agriculture by providing an alternate mobile source

of power on the farm. However, steam engines had

numerous problems, and it was obvious that they

were not the ideal source of power that farmersneeded. The engines were extremely heavy, bulky,

dangerous, expensive, and adaptable to very few

chores.

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Internal Combustion Engine

Fuel used - A wide variety of fuels were used in the early

internal combustion engines. Some of the major types were gun

powder, turpentine, coal dust, and kerosene, which werecommonly called as coil oil. Even though early tractors were

called gasoline tractors, the major source of fuel was kerosene.

Most early tractors were made with a small tank for gasoline

and a large one for kerosene. The farmers started the engine

with gasoline and then switched to kerosene since it wascheaper and more efficient to use.

Farm Tractors - The record was not clear as to when the first

tractor was made and who made it. However, historian R.B.

Gray reports that the Charter Gas Engine Company built sixgasoline tractors in 1889 and that in 1890 George Taylor

applies for a patent on a walking-type motor plow.

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EFFECTOFTHE SHIFTFROM ANIMAL

POWERTO TRACTOR POWER

Decreased Demand for Animal Feed. A large portion of the landthat had been used to produce animal feed was shifted to food

production. It is estimated that if horses were still the major source

of power on the farm, they would consume the output of

approximately 25% of grain acreage. This would be a major drain

on food production capabilities. The conversion to mechanicalpower not only increased farmers productivity but also increased

the amount of food available for human consumption by lessening

the amount of feed output needed by work animals.

Reduce Labor Time and Cost. In 1936, the Iowa State University

Experiment Station reported that production agriculturists withrubber-tired, two-plow tractors were producing 100 acres of corn

with 51 days of fieldwork. The same operation with horses required

141 days.19


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Market Structure

a. Full-line Companies

b. Long-line Companies

c. Short-line Companies

Size of the Farm Machinery and Equipment Market

Diversification of Farm machinery and Equipment

Companies Foreign Trade

Exports

Imports

Trends in the Farm Machinery and EquipmentIndustry

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AGRICULTURE AND AGRI-BUSINESS

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