Chapter 1-Intro of Agribusiness

Pre-Historic and Early Agriculture Development

Before Agriculture- No farming, Poor nutrition & health, learn to fish & cook

Bronze & Iron Age- Faster farming, Irrigate crops, Pop rise 3-100m, Development of money

Middle Ages-Crop rotation, Selective breeding, Development of
American Ag

Evolvement of Farming & Agribusiness in America

Agricultural & Industrial Revolutions- Organic fertilizer, Rice, first grown in US, Experimental farms, Surveying of land, Cotton gin invented, Vaccines discovered, Automobile developed, Mechanical reaper, Threshing machine

First half of 20th Century- Bureau of Forestry, CES, Federal Land Banks, SCS (1935), Dust Bowl/ Great Depression (1929-1939), Payment for Research & Education in Agriculture

Latter part of 20th Century- Rise in productivity, Use of artificial insemination, electric fences, chemicals, fertilizers & pesticides, Risk control, Use of computers as ag tools, Evolvement of Farming & Agribusiness in America

1700s: 90% of American is agrarian society

• A society whose economy relies heavily on
agricultural production
• Production (crops & animals) to processing
(canning), and preservation (dried, salted or
smoked).
• Provision of most farm inputs by farmers
• Animal manure as fertilizers
• Saving of crop seeds yearly
• Animals served as means of transportation
• Period of self-sufficiency at a cost.

• From the earliest developments of agriculture, a major
goal has been to:

attain sufficient foods to provide the energy and nutrients
needed for a healthy, active life.

Food production has adapted to

• changing demographics;
• consumer preferences;
• ideas about health, social, and economic conditions;
• environmental concerns; and
• advances in science and technology

Agriculture is now a technology-oriented industry that
includes:

• Production- growing and marketing of plants and
animals,
• Agriscience- application of science and technology
to agriculture, and
• Agribusiness- as defined

Productivity increases (20th Century)

• Gains in efficiency measuring productivity by the ratio of
outputs to inputs: 𝑈𝑛𝑖𝑡𝑠 𝑜𝑓 𝑂𝑢𝑡𝑝𝑢𝑡
𝑈𝑛𝑖𝑡𝑠 𝑜𝑓𝐼𝑛𝑝𝑢𝑡
• Specialization and Substitution of capital (K) for labor (L)
• Firms are highly specialized
• Focuses on a limited scope of products for greater
gains
• Farms are highly mechanized
• Very little remains on farm
• Inputs for production and outputs became the
responsibility of other firms
Development of Agribusiness Systems

Gains in efficiency

• New Technology (innovation- R&D): pesticides,
fertilizers, biotechnology, disease prevention and
control
• Factor endowment is commonly understood as the
amount of land, labor and entrepreneurship that a
country possesses and can exploit
for manufacturing.
• Comparative advantage over other nations leading
to producing at a lower opportunity cost meaning
a comparative advantage exists when the opportunity
cost of specialization is lower than that of other
nations.

US Food and Agribusiness Industry is the World’s Largest

• Accounts for $1 trillion 13% of GDP =C+I+G+(X-M)
• Gross Domestic Product
• C= Consumption
• I= Investment
• G= Government spending
• X= Export
• M= Import
• Employs approximately 23 million people (17%) of
nation’s workforce
Development in Agribusiness systems

Agricultural Supply Chain

A. Input Supply Sector-Supply inputs for agricultural
production

B. Production/Farm Sector
• The food production sector includes farmers, ranchers,
fishers, hired workers, their family members.

B. Production/Farm Sector- growing of food and fiber

Processing and Distribution Sector
• Largest contributor to Ag value added to US economy
(63%)

Emerging Trends & Challenges

1. Globalization=Borders are not barriers

2. Is biotechnology the key?
Biotechnology is the manipulation of a living
organism’s genetic endowment to produce beneficial
products:
-which includes traditional breeding
-genetic engineering techniques
▪ Proponents: better, healthier, cheaper food etc.
▪ Opponents: severe food allergies, environmental
damage etc.
Major issues are related to its definition, regulation of
products and consumer skepticism of products

3. Information technology=increased efficiency gains:
▪ e- agriculture- exchange information, ideas, and resources
for sustainable agriculture and rural development.
▪ Precision farming- a brand-new farming with the
complete integration of information technology and
agricultural production, the goal of which is not only for
achieving economic efficiency but also for social and
ecologic benefits
▪ GIS/GPS
4. Demand for food safety (free of harmful ingredients and
pathogens) by global consumers
a. How do we promote safety?
b. To whom will consumers look to ensure the safety of
food supply?
c. Can the food system be efficient if many different
agencies administer regulations that differ by country.