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Agriculture and Agribusiness

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Title: Agriculture and Agribusiness


1
Agriculture and Agribusiness
  • Chapter 1

2
Objectives
  • Explain agribusiness
  • Describe the big picture of agribusiness.
  • Explain how agribusiness affects us daily.
  • Discuss farming and agriculture before
    agribusiness.
  • Discuss the beginning of agribusiness in America.
  • Describe the historical development of farm
    machinery and equipment.

3
Objectives cont.d
  • Describe the Steam Era.
  • Discuss the historical development of the
    internal combustion engine.
  • Discuss the historical development of farm
    tractors.
  • Discuss the success of American agribusiness.

4
What is Agribusiness?
  • According to Merriam-Websters Collegiate
    Dictionary, agribusiness is and industry engaged
    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.

5
What is Agribusiness?
  • As this definition implies, some people interpret
    the word narrowly to mean only very large
    businesses within the agricultural industry.
    However, John Davis and Ray Goldberg, in their
    early research on agribusiness, defined it as all
    operations involved in the manufacture and
    distribution of farm supplies production
    operations on the farm and the storage,
    processing, and distribution of the resulting
    commodities and items.

6
Links in the Agribusiness chain
  • Primary production of raw materials
    (commodities), such as unprocessed food, fiber,
    and substrates.
  • Tertiary transformation of commodities into
    value-added products where the value is derived
    from the process of transformation.
  • Supply of inputs to the primary and tertiary
    sectors.
  • Wholesale and retail provision of processed or
    unprocessed foods, fibers, and related products
    to consumers.
  • Provision of educational, financial, and
    technical services to all sectors.

7
  • Therefore, agribusiness encompasses all
    activities from the paddock to the consumer
    that contribute to the eventual production,
    processing (value addition), distribution, and
    retailing of food, fiber, and products based on
    food or fiber.

8
  • All these definitions agree that agribusiness
    includes all the activities that take place in
    the production, manufacturing, distribution, and
    wholesale and retail sales of agricultural
    commodities.
  • Modern agribusiness is a dynamic and growing
    industrial complex that provides Americans with
    the highest-quality, lowest-cost food supply in
    the world.

9
Is farming an Agribusiness?
  • If we include production agriculture,
    agriscience, and agribusiness under the umbrella
    of the agricultural industry, we must include
    production agriculture industry (farming) within
    the context of this book. We would be mistaken to
    think that farming is not a business.

10
  • A typical farmer or production agriculturalist
    manages interest, taxes, repair and replacement
    of equipment, fertilizers, wages, fuel,
    electricity, and many other items. As you can
    see, production agriculturalists must be
    financial and business managers or they will fail.

11
Is Agribusiness the same as Agriculture Economics?
  • Agricultural economics refers to the monetary and
    physical factors that affect the profitability of
    the agribusiness.
  • According to the American Agricultural Economics
    Association, Agricultural economics is the study
    of the economic forces that affect the food and
    fiber industry.

12
Specific areas of study in agricultural economics
include
  • Community and rural development
  • Food safety and nutrition
  • International trade
  • Natural resource and environmental econ.
  • Production economics
  • Risk and uncertainty
  • Consumer behavior and household econ.
  • Analysis of markets and competition
  • Agribusiness economics and management

13
  • Agricultural economists can be found at every
    level of business, government, and education
    around the globe.

14
The Big Picture of Agribusiness
15
  • Agribusiness companies provide input supplies to
    the production agriculturalist (farmer). The
    production agriculturalist produces food and
    fiber (cotton, wool, etc.), and the output is
    taken by agribusiness companies that process,
    market, and distribute the agricultural products.

16
  • Many services are needed in agriculture, such as
    transportation, storage, refrigeration, credit,
    finance, and insurance.
  • Agribusiness manufacturers furnish production
    agriculturalist with the supplies and equipment
    needed to produce, store and transport their
    crops.
  • Government agencies inspect and grade
    agricultural products for quality and safety.
  • Hundreds of agribusiness trade organizations,
    commodity organizations, committees, and
    conference educate, promote, advertise,
    coordinate, and lobby for their agricultural
    products.

17
  • Millions of people are employed in agribusiness
    throughout the world, and people throughout the
    world also depend on agribusiness for their food,
    clothing, and shelter. Lets take a look at
    Figure 1-3 (page 7).

18
Agribusiness affects us daily
  • Consider one of the best-selling fast-food items,
    the cheeseburger. To get an idea of how
    agribusiness affects our daily lives, imagine
    what is involved in assembling a cheeseburger
    with all the trimmings. (Figure 1-4, p. 8)
  • As you can see, agribusiness is an essential part
    of our daily lives and crucial to the economy of
    the United States.

19
Farming and Agriculture before Agribusiness
  • People have searched for ways to feed themselves
    since prehistoric time.
  • If people did not eat one day, they would hardly
    have enough energy to find food the next day.
  • Thus, nearly all their waking time was spent
    searching for food by hunting or gathering nuts
    and other naturally grown foods.

20
Lets think about life before Agriculture..
21
The Bronze Age (around 3000 B.C.)
  • During the Bronze Age, wooden implements were
    made sharper and more durable by using metal.
    This allowed people to cultivate larger areas of
    land faster. Agriculture spread throughout the
    world and became a way of life for most people.

22
Some of the developments during the Bronze age
included
  • Bronze tools and plows made for easier and faster
    farming.
  • The Nile river was used by Egyptians to irrigate
    crops.
  • The wheel was discovered, making the transport of
    crops possible.
  • World population rose from 3 million before the
    invention of agriculture to nearly 100 million.

23
The Iron Age
  • The year 1000 B.C. was the dawn of the Iron Age.
    The use of iron gave people the ability to
    produce even more crops. When people could not
    use all the crops themselves, they had to do
    something with them, and trade among people
    developed as a result.

24
Other developments of the Iron Age were
  • Iron hand tools and plows were created, some of
    which are similar to those used today.
  • Money was developed because of the need to trade
    excess crops.
  • Leaving land fallow face the soil a chance to
    rebuild and store moisture.

25
The Middle Ages(A.D. 400-1500)
  • The Middle Ages ranged from A.D. 400 to A.D.
    1500. The fall of the Roman Empire slowed the
    growth of agriculture. Farming was still a way of
    life, but only a few important developments
    occurred. These included crop rotation, a new
    harness for plowing, and selective breeding of
    livestock.

26
The Middle Ages cont.d
  • Farmers in the Middle Ages began to understand
    the importance of conserving soil moisture and
    nutrients. They accomplished this by dividing
    their fields and leaving parts bare during
    certain years. This innovation led to the
    development of fences to mark separate fields.
  • Near the end of the Middle Ages, Columbus
    discovered America, and people began to travel to
    the New World. Until this time, most
    agricultural developments had come from Europe
    and Asia. Now there was an opportunity to develop
    American agriculture.

27
  • Many developments in agriculture during the 17th
    and 18th centuries eventually led to the way we
    farm today. Some of the other important
    developments included
  • The practice of putting dead fish into the ground
    along with corn seed led to the development of
    organic fertilizer.
  • Rice, the worlds most popular grain, was first
    grown in the United States.
  • 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 local agricultural
    society.

28
  • After the American Revolution, more people moved
    to the United States, spreading out and using
    more land. People went west and developed new
    ways to produce food. Some new developments were
  • Surveying of land was used to separate property.
  • The cotton gin was invented by Eli Whitney in
    1793.
  • Edward Jenner discovered vaccines to prevent
    diseases.
  • The fist one-piece, cast-iron plow was invented
    in 1819 by Jethro Wood.
  • Interchangeable parts were developed so that
    people could fix their equipment.

29
The Agricultural and Industrial Revolution
  • During the 1840s and 1850s, the Industrial
    Revolution created much change and spurred the
    growth of production agriculture and
    agribusiness. During these important years of
    rapid evolution, many technological advances made
    a huge impact on the world and in the agriculture
    industry, including the steam engine, railroads,
    the sewing machine, and the powered loom for
    weaving cloth, among many others.

30
Cont.d
  • A by-product of the Industrial Revolution was
    large-scale movement from farms to the cities.
    The new and productive machinery required much
    manpower, leaving many farms vacant as the men
    worked in factories. This allowed those still
    farming for a living to increase production for
    those who no longer did so. This important era in
    agriculture marked the shift from animal power to
    mechanical power.

31
  • During the lath 19th century, it became evident
    that the Industrial Revolution had had a great
    impact on the way farmers would operate. The
    switch from animals to machines began with the
    development of the steam engine in England. It
    was first used for pumping water out of coal
    mines, and later to power sawmills, textile
    mills, and many other industrial machines.
  • Before 1830, it took nearly 56 hours of human
    labor to produce just one acre of wheat. Today,
    according to the USDA, with the modern farm
    machinery that has roots in the Industrial
    Revolution and the switch to mechanical power,
    less than two hours produce that same acre.

32
The Agricultural and Industrial Revolution also
brought us the following developments
  • Henry Ford developed the automobile.
  • Crop rotation was promoted by Charles Townsend.
  • Advances in livestock breeding were achieved by
    Robert Bakewell.
  • The first workable seed drill was invented by
    Jethro Tull
  • Cyrus McCormick invented a mechanical reaper to
    reduce hand labor in the harvest of grain.
  • A stationary grain threshing machine was
    developed to separate grain from waste.

33
  • John Deere designed a better one-piece, steel
    plow.
  • Barbed wire was invested to keep livestock away
    from crop land.
  • The first gasoline-powered tractor was built in
    1892.
  • Seed and plant genetics were developed by Gregor
    Mendel.

34
  • By the end of the 1800s, farming had become the
    worlds most important industry. Many things had
    been done to make agriculture a better, more
    rewarding way of life.

35
  • Around the year 1900, things began to improve
    for the American farmer. New machines made farm
    work much easier, and better transportation was
    developed, which meant that farmers were able to
    market their products to many more people. Farm
    prices were high, and farmers were making a good
    living. The extra money made allowed people to
    pay for the research and development of new ways
    to farm.

36
Some of these new developments were
  • The U.S. government established the Bureau of
    Forestry.
  • A vaccine was developed for hog cholera.
  • The Panama Canal opened for shipping.
  • The Smith-Hughes Act established vocational
    agriculture in high schools.
  • The U.S. government established the Cooperative
    Extension Service.

37
  • Federal Land Banks were established to give
    farmers credit.
  • Hybrid plant seed was developed for better
    quality, higher-producing crops.
  • Many agricultural scientists, such as George
    Washington Carver, were developing new products.

38
  • Bad times occurred after World War I, when
    farmers could not sell as much food overseas.
  • There were not as many soldiers in foreign
    countries, and thus there was not as much need
    for American-grown food overseas.
  • Farm prices began to drop, and many farmers were
    forced out of business.
  • A terrible drought in the mid-western states also
    caused farmers to go broke. Those days were
    called the Dust Bowl days.

39
  • As farmers made less and less money, the whole
    country began to lose money. In 1929, the stock
    marker crashed and the United States entered
    the Great Depression. Something had to be done to
    pull America out of this hole. Many agricultural
    developments helped get the United States back on
    track.

40
Some of these developments were
  • The U.S. government began to pay farmers for
    using soil conservation practices.
  • The Soil Conservation Service (SCS) was
    established in 1935 to keep the Dust Bowl from
    reoccurring.
  • The Future Farmers of America
  • (FFA) organization was started
  • in 1928.

41
  • Higher crop yields resulted from better
    management practices.
  • The U.S. government began to pay for more
    research and education in agriculture.
  • Antibiotics were first used to treat animals.
  • The Dairy Herd Improvement Association (DHIA) was
    organized to monitor dairy herds.
  • Groves of trees were planted along the edges of
    farmsteads to prevent wind erosion.

42
  • The United States came out of the Depression
    after which World War II (1941-1945) caused an
    increase in farm prices. This trend got people
    stated on developing more advanced farming
    methods. Many advances were made in the areas of
    production, marketing, and agricultural
    mechanics.
  • Artificial insemination was more widely used in
    the livestock industry.
  • Use of new technology increased productivity.
  • Farmers began to use electric fences.

43
  • Disc plows came into widespread use.
  • Chemical fertilizers and pesticides were widely
    used.
  • Futures trading was used to control risk.
  • Computers became popular as agricultural
    management tools.

44
  • Biotechnology is now a vital part of agriculture
    as well, with advances in gene splicing, cloning,
    and gene mapping. All these advances allow
    farmers and scientists to work together to create
    the most desirable, profitable product possible.

45
  • The establishment of agribusiness performed
    functions that farmers had previously been
    required to do. Before, the farmer would handle
    all operations required to get the product from
    the farm to the table. Agribusiness enterprises
    also supply the equipment and machinery required
    for these jobs. Agribusinesses now include
  • Farm machinery dealerships
  • Commodity (futures) brokers
  • Artificial breeding services
  • Research consulting firms

46
Cont.d
  • Agricultural (ag) chemical companies
  • Veterinary supply companies
  • Livestock supply companies
  • Animal feed companies
  • Biotechnology firms
  • Export companies

47
Historical development of Modern farm equipment
  • The development of modern farm equipment began
    before tractors came on the scene. One of the
    first agricultural machines that had 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.

48
  • In 1837 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 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 it.

49
  • As late as 1800, it is estimated that almost 90
    percent of the U.S. population still lived on
    farms. These Americans were agriculturists so
    they could feed, clothe, and shelter their
    families. Even those who farmed only to feed
    their families had a difficult time producing
    enough to stay comfortable. Understandably, there
    was little to no surplus production left to
    exchange.

50
Beginning of Change
  • The 19th century brought the beginnings of
    change.
  • The century began with the Louisiana Purchase in
    1807 and the opening of the farmland west of the
    Allegheny Mountains.
  • The first cotton planter was patented in 1825,
    and a corn planter was developed three years
    later.

51
  • Between 1850 and 1880, the amount of land used
    for farming increased 82 percent, from 294
    million acres to 536 million acres, and the
    number of farms rose 167 percent to 4 million.

52
From manpower to horsepower
  • In contrast to the early 19th century, only 50
    percent of Americans lived on farms. In addition,
    production agriculturalists were not only
    self-sufficient, but had raised their
    productivity to allow for extra income to be used
    to purchase horse-drawn farm equipment and other
    tools. By the end of the 1800s, the transition
    from manpower to horsepower had been mostly
    completed.

53
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 generally called the Steam Era. It is
    estimated that more than 70,000 steam engines
    were produced for farm use. The steam traction
    engine ushered in a new era in agriculture by
    providing and alternate mobile source of power on
    the farm.

54
Internal Combustion Engine
  • 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 was commonly called coal oil.
  • Even though early tractors were called gasoline
    tractors, the major source of fuel was kerosene.
  • Most early tractors were made with small tank for
    gasoline and a large one for kerosene.

55
Cont.d
  • The farmers started the engine with gasoline and
    then switched to kerosene because it was cheaper
    and more efficient.

56
  • In 1899 there were more than 100 firms making
    internal combustion engines in the United States,
    not counting automobile engines, and by 1911 more
    than 500 companies were in operation. Small
    engines continued to be a popular source of power
    through the 1940s. Currently, these small engines
    are experiencing a comeback through restoration
    by private collectors.

57
Farm Tractors
  • The first gasoline-powered tractor
  • In 1892 John Froelich build what is sometime
    called the first successful gasoline-powered
    tractor. The Froelich tractor was the forerunner
    of the Waterloo Boy and the modern John Deere
    line of tractors. The term tractor was first
    coined in 1906 by a salesman for the Hart-Parr
    Tractor Company ( a predecessor of Oliver, White
    Farm Equipment Company and todays AGCO).
    Previously, they were called gasoline traction
    engines. Although tractors have been around for
    nearly 100 years, mules are still needed for
    certain jobs.

58
Effect of World War I on tractor production
  • Tractor production expanded rapidly in the early
    1900s. In 1910, 15 tractor companies sold 4,000
    tractors. The onset of World War I marked another
    turning point in the development of agriculture
    and cause a rapid increase in tractor production,
    and in 1920, 166 tractor companies sold more than
    200,000 tractors.
  • Spurred by higher income from feeding war ravaged
    Europe, U.S. production agriculturalists began
    the process of replacing their horse-drawn
    equipment with gasoline-powered tractors and the
    larger tillage implements that those tractors
    could pull.

59
Effect of the Depression years on tractor
production
  • After 1921, the number of tractor companies
    decreased about as fast as it had increased. This
    was due to the Depression of the 1920s. In 1921,
    186 companies sold only 68,000 tractors, and by
    1925 only 58 companies had survived, although the
    number of tractors sold increased. By 1935, 20
    companies had sold more than 1 million tractors,
    with 90 percent of sales coming from 9 major
    companies.

60
The nine major companies
  • International Harvester
  • John Deere
  • J.I. Case
  • Massey-Harris
  • Oliver
  • Minneapolis Moline
  • Allis Chalmers
  • Cleveland Tractor Company
  • Caterpillar Tractor Company

61
  • In 1918, International Harvester announced a
    power take-off (PTO) unit, which allowed the
    operator to control mounted and drawn equipment
    with the engine of the tractor.
  • In 1932, Allis Chalmers, in cooperation with
    Firestone Rubber Company, introduced pneumatic
    rubber-tired tractor, which completed the basic
    design of a light versatile tractor that could
    handle most farm jobs.
  • This essentially finalized the transition from
    horses and mules to tractors with internal
    combustion engines.

62
The shift from animal power to tractor power
affected American farmers in two major ways.
  • Decreased demand for animal feed a large
    portion of the land that had been used to produce
    animal feed was shifted to the production of
    food.
  • Reduced labor time and cost In 1936, the Iowa
    State University Experiment Station reported that
    production agriculturalists with rubber-tired,
    two plow tractors were producing 100 acres of
    corn with 51 days of field work. The same
    operation with horses required 141 days.

63
  • Machine power continued to change and improve.
    In 1931, Caterpillar Tractor Company developed a
    diesel-powered, crawler-type farm tractor. The
    crawler-type tractor did not fit most farm needs
    but the diesel engine had a major impact a few
    years later.

64
  • In 1941, liquefied petroleum (LP) gas tractors
    were introduced by the Minneapolis Moline
    Company. This made it possible for farmers to use
    clean-burning, low-cost butane and propane for
    fuels, especially in areas near these energy
    sources.

65
Modern Tractor Accessories
  • Today, hydraulic lifts, torque amplification,
    hydrostatic transmission, power steering,
    turbochargers, heated and air-conditioned cabs,
    and many other features provide and efficient and
    comfortable power unit for modern production
    agriculturalists.
  • The production agriculturalists of today,
    operating a 100-hp tractor, can do the work of
    more than 1,000 workers who are without machine
    or animal power. It is no wonder that the average
    American farmer produced enough for more than 131
    people.

66
Increased size and four-wheel drive
  • During the decades of the 1960s and 70s, major
    changes included the shift to diesel as the major
    fuel, and increase in horsepower and a shift to
    4-wheel drive power. Currently, more than 80
    percent of farm tractors use diesel, and most
    major tractor companies offer tractors with a hp
    rating of 200 or more. The major change in the
    70s was the shift to 4-wheel drive.

67
  • The major advantages of 4-wheel drive include
    the ability to use more power efficiently, better
    traction and flotation with less soil compaction,
    and increased safety. 4-wheel drive is now
    standard on extremely large models and optional
    on medium and small models.

68
Success in American Agribusiness
  • Due to the effectiveness and efficiency of
    agribusiness, one American farmer can now supply
    enough food and fiber more than 150 people.
  • Also, Americans spend less of their income of
    food than any other people in the world only 9
    percent of total personal disposable income.

69
  • No nation has better fed itself and still had the
    ability to contribute heavily to world food
    supplies. U.S. agribusiness supplies each citizen
    with close to 1,500 lbs. of food annually while
    still producing exports of vast amounts of
    grains, vegetable oils and fats, cotton, tobacco,
    and many other products. In fact, production
    agriculture became so efficient that the federal
    government had to establish restrictions of
    various kinds to ensure that the production was
    controlled and prices were maintained. It is
    thought by many, however, that if the
    restrictions were lifted, American agriculture
    would be able to meet the worlds needs for food,
    clothing, and shelter.

70
  • Because of the success and power of American
    business, it has an enormous responsibility to
    promote world peace and security. At the least,
    it is a major factor. The existence of underfed,
    poorly housed, and badly clothed people in
    different parts of the world represents a threat
    to global peace and security.
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