Introduction to Agribusiness Management

Chapter1

Introduction to Agribusiness Management Management is the sole responsibility for

decision making, and most likely will always be this.

Managers use economic principles, budgets, record summaries, investment analyses, financial statements.

Electronic innovations will most likely alter the types of information available to the manager.

Types of Farming Operations

Low Volume, High Value Producers – Can’t expand so they produce higher valued products. Promotion and marketing become critical.

High Volume, Low Margin Producers – generic feed and food grain producers, oil seed. Expand their production to increase profitability.

Specialty Product and Service Providers – specialize in one or two skills and become the best at performing those services.

Part-time (Hobby) Operators – One half of operations, produce 15 percent of total ag sales

The Information Age

In the past decision making principles and budgeting tools have been underutilized. Data collection, analysis and interpretation will be rapidly changing in coming years. GPS IPPM

The amount of information will be overwhelming in the next few decades, then decisions will need to be made on what information to look at and what not.

Financial Management

Outside capital will be needed to finance large-scale operations. Funds are starting to come from national markets due to the vertical integrations of rural banks.

Credit is becoming available from non-traditional sources such as input suppliers and processors.

Ag producers will continually have to compete for access to capital with non-farm businesses. This competition necessitates more detailed documentation of financial performance and credit needs and more conformity to GAAP.

Controlling assets is becoming more important than owning them.

Human Resources

Working with other people will become a more important factor in the success of the operation.

Will have to offer competitive wages, benefits and working conditions

Producing to meet consumer demands

Old CW – produce homogeneous products New CW – to offer more highly specialized

and processed food products to the consumer. Buyers are beginning to implement stricter product standards for producers.

Producing to meet consumer demands

Examples: animals size, leanness, why? Improved measuring devices and data processing will make it easier to pay differentials. In crop production protein and oil content of grain and forages will make pricing differentials possible.

The niche market will also become important.

Foreign markets will become more important as trade barriers fall.

Environmental and health concerns

Food Quality, Food Safety and the present condition of our soil water and air will continue to see high priority from the non-farm population.

New technology

Why do farmers adopt? What is involved in that decision making process?