AREC Study Ch1 and Ch2

Agri Business

agriculture conducted on commercial principles, especially using advanced technology (all business activities)

Agri Food Value-Chain

the integrated series of processes and stakeholders involved in the production, processing, distribution, and consumption of food products (entire process of)

Industries/Sector 1

Input (things used by the production sector)

Industries/Sector 2

Production (farms and ranches)

Industries/Sector 3

Processing (transform raw commodities into ingredient products)

Industries/Sector 4

Manufacturing (ingredient product to consumable product)

Industries/Sector 5

Distribution (transport to retail markets)

Industries/Sector 6

Retail (where products sold)

Relationships in Industry/Sector 1: Vertical Integration

single business with multiple roles

Relationships in Industry/Sector 2: Horizontal Integration

similar firms combining to realize economies of scale

Economies of Scale

cost advantages a firm or business obtains from increasing the size/scale of their operation (results from specialization and indivisibility of the inputs)

What is the US GDP of Agribusiness

5.5 % of 2023 GDP (1.537 trillion and Farms 0.8% is 22 billion?)

GDP

value of all the goods and services produced in the U.S

Inflation

Decrease in purchasing power ($) driven by increases in price levels over time (rate of increase in prices over time)

Nominal Prices

The actual price for something at a particular point in time

Real Prices

Prices adjusted to take our inflation

Technical Efficiency

output per unit of input

Economic Efficiency

profit per unit of output (measure of management performance)

Management

The work of management is focused on using inputs to produce outputs (measure of management performance)

Profit

what's left over after a good/service is sold and all relevant expenses are paid

1st Function of Management- Planning

-all the activities that determine the future of a business

-Objective Put firm in best possible position • Relative to future business conditions • and customer demands

-Begins by: Developing Organization and Marketing Plan

1.) Define firm's purpose

2.) Statement of firm's objective

2nd Function of Management- Organizing

all the activities surrounding how a business is set up

-Development of organizational scheme (accomplishes purpose and objective efficiently and effectively)

-Selection of legal structure

o Sole proprietorship

o Partnership

o Cooperative or Corporation

3rd Function of Management- Controlling

activities associated with giving management feedback on performance and progress toward goals set in planning • Include measure, individual progress, and progress of dept. or business

4th Function of Management- Directing

Implementation of the previous three functions (how manager's time is spent) •

-Successful directing relies strongly on

o Good leadership skills to accomplish mission

-Wise managers manage their technological, financial, and physical resources, but are careful to lead their people

Value of agriculture sectors added to US GDP

Consumer annual expenditure shares by major components

US employment in the sectors of agriculture

technical efficiency

Quiz Question 1- Describe one way in which labor productivity in agriculture has increased over the last 100 years?

technological advancement/efficiency (ex: machines allow for faster harvest of crops)

The hravesting section of agribusiness prepares and seel sthings like feed, seed fertilizer, and credit to farmers

or answer is input/supply