Agriculture and Agribusiness

1. Agriculture and Agribusiness Chapter One

2. Objectives: • Explain agribusiness • Describe the “big picture” of agribusiness • Explain daily effects of agribusiness • Discuss farming and agriculture before agribusiness • Discuss beginning of American agribusinesses

3. Objectives Continued: • Describe historical development of farm machinery and equipment • Describe Steam Era • Discuss historical development of internal combustion engine • Discuss historical development of farm tractors

4. What is Agribusiness? • An industry engaged in: • the producing operations of a farm • the manufacture and distribution of farm equipment and supplies • the processing, storage, and distribution of farm commodities

5. Agribusiness Further Defined • Can be narrowly interpreted • Not just large businesses within agriculture industry • John Davis and Ray Goldberg define it as: • all operations involved in the manufacture and distribution of farm supplies • production operations on the farm • storage, processing, and distribution of the resulting commodities and items

6. “Links” in the Agribusiness Chain~ • Primary production of raw materials • Tertiary transformation of commodities into value • Supply of inputs to primary and tertiary sectors • Wholesale and retail provision • Provision of educational, financial, and technical services to all sectors

7. Agribusiness as a Whole~ • Includes all activities “from the paddock to the consumer” • Production • Processing • Retail • Distribution • Provides Americans with the highest-quality, lowest-cost food supply in the world

8. Is Farming an Agribusiness? • Farming is “production” agriculture • Definitely a business! • Farmers manage: • interest • taxes • repair / replacement of equipment • fertilizers • wages • fuel • electricity • Farmers must be effective managers to succeed

9. What is Agriculture Economics? • Study of economic forces that affect the food and fiber industry • Refers to monetary and physical factors that affect the profitability of an agribusiness • Specific areas of study in ag economics are: • Community and rural development • Food safety and nutrition • International trade • Natural resource and environmental economics • Production Economics • Risk and Uncertainty • Consumer behavior and household economics

10. Big Picture of Agribusinesses • Agribusiness companies provide input supplies to the production agriculturalist (farmer) • The production agriculturalist produces food and fiber (cotton, wool, etc.) • Output is processed, marketed, and distributed by agribusiness companies

11. For Example… • Tennessee Co-op provides various input supplies to farmers (feed, fence, etc.) • Production agriculturalists use these items to produce food and fiber products • Tractor Supply Company markets and sells these products to the public

12. Levels of Agribusiness • Agribusiness Manufacturers • furnish production agriculturalists with the supplies and equipment needed to produce, store and transport their crops • Government Agencies • inspect and grade agricultural products for quality and safety • Trade and Commodity Organizations • educate, promote, advertise, coordinate, and lobby for their agricultural products

13. Importance of Agribusinesses • Millions of people are employed in agribusiness throughout the world • People across the globe also depend on agribusiness for their food, clothing, and shelter • Figure 1-3 (page 7)

14. Daily Effects of Agribusiness • What is involved in assembling a cheeseburger? • Figure 1-4 (page 8) • Agribusiness is essential to our daily lives • Agribusiness is crucial to the economy

15. 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 • Nearly all their waking time was spent searching for food by hunting or gathering nuts and other naturally grown foods

16. The Bronze Age~ • 3000 B.C. • Wooden implements were made sharper and more durable by using metal • Allowed people to cultivate larger areas of land faster • Caused agriculture to spread throughout the world and become a way of life • Bronze Age developments: • Bronze tools and plows • Nile River used to irrigate crops • Wheel was discovered • Population rose from 3 million to nearly 100 million people

17. The Iron Age~ • 1000 B.C. • Use of iron allowed for massive crop production • Trade among people resulted from the surplus of goods • Iron Age developments: • Iron hand tools and plows • Development of money • Leaving land fallow became a common practice

18. The Middle Ages~ • A.D. 400-1500 • Fall of the Roman Empire slowed the growth of agriculture • Middle Age Developments: • Crop rotation • New harness for plowing • Selective breeding of livestock • Fences • American agriculture now began to develop because Columbus discovered the “New World”

19. 17th and 18th Centuries~ • Developments during this time led to the way we farm today • Practice of putting dead fish into the ground along with corn seed led to the development of organic fertilizer • Rice, 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

20. After the American Revolution… • More people moved to US • People went west and developed new ways to produce food • New developments included: • Surveying of land • Invention of cotton gin by Eli Whitney in 1793 • Discovery of vaccines by Edward Jenner • Invention of first one-piece, cast-iron plow in 1819 by Jethro Wood • Interchangeable parts for equipment

21. The Agriculture and Industrial Revolution~ • 1840s and 1850s • Spurred the growth of production agriculture and agribusiness • Movement from farms to factories in cities • Shift from animal power to man power • To produce ONE acre of wheat… • 56 hours of manpower before 1830 • Less than 2 hours today

22. Industrial Revolution Developments~ • Steam engine • Railroads • Sewing machine • Powered loom for weaving • Automobile by Henry Ford • Crop rotation promoted by Charles Townsend • Livestock breeding advances by Robert Bakewell • Seed drill by JethroTull

23. Additional Developments~ • Mechanical reaper by Cyrus McCormick • Stationary grain threshing machine • Better one-piece steel plow by John Deere • Barbed wire • Gasoline-powered tractor in 1892 • Seed and plant genetic development by Gregor Mendel

24. By 1900… • Farming had become most important industry • Many improvements for American farmers: • New machines • Better transportation • Marketing Options • High farm prices • Farming research

25. Early 1900 Developments~ • Bureau of Forestry established by U.S. government • Vaccine developed for hog cholera • Panama Canal opened for shipping • Cooperative Extension Service created • Federal Land Banks were established to give farmers credit • Hybrid plant seed developed • Smith-Hughes Act established vocational agriculture in high schools • Development of new products by agricultural scientists such as George Washington Carver

26. After World War I… • Farmers could not sell as much overseas • Farm prices dropped • Many farmers went bankrupt • “Dust Bowl” devastated mid-western farms • Entire country lost money • Stock market crashed in 1929 • Great Depression resulted

27. Agriculture Helped US Pull Through~ • Soil Conservation Service (SCS) established in 1935 to prevent catastrophes like the Dust Bowl • FFA (Future Farmers of America) began in 1928 • Higher crop yields due to better management practices • Better agricultural research and education conducted • Antibiotics used to treat animals • DHIA (Dairy Herd Improvement Association) organized to monitor dairy herds

28. After World War II… • Great Depression ended • Farm prices increased • Advanced farming methods established: • Artificial insemination • Electric fences • Disc plows • Chemical fertilizers and pesticides • Futures trading • Computers • Gene splicing • Cloning • Gene mapping

29. Agribusinesses Created and Include: • Farm machinery dealerships • Commodity (futures) brokers • Artificial breeding services • Research consulting firms • Agricultural chemical companies • Veterinary supply companies • Livestock supply companies • Animal feed companies • Biotechnology firms • Export companies

30. Historical Development of Modern Farm Equipment~ • Cotton gin (1784) • Cast iron plow (1787) • Cotton planter (1825) • Corn planter (1828) • Steel plow (1837) • Tractor (1892)

31. From Manpower to Horsepower… • 1850 – 294 million acres used for farming • 1880 – 536 million acres used for farming • 1800 – 90% of population lived on farms • 1900 – 50% of population lived on farms • Farmers became self-sufficient • Farmers increased productivity and profit • Used additional earnings to purchase equipment • Made transition from manpower to horsepower

32. The Steam Era~ • 1850-1900 • Over 70,000 steam engines produced • Provided alternate mobile source of power

33. Internal Combustion Engine~ • Various fuels used in early engines: • Gun powder • Turpentine • Coal Dust • Kerosene • Early tractors called “gasoline” tractors, BUT their major source of fuel was kerosene • Tractors had one tank for gasoline and one for kerosene • Farmers started with gasoline and switched to kerosene because it was more efficient

34. Engine Popularity~ • 1899 – more than 100 firms making engines • 1911 – more than 500 companies in operation • Engines continued to be a popular source of power through the 1940s • Many small engines being restored by private collectors

35. Farm Tractors~ • First gas-powered tractor built in 1892 by John Froelich • Forerunner of the Waterloo Boy • Modern John Deere line of tractors • Originally called “gasoline traction engines” • Term tractor first coined in 1906 by a salesman for the Hart-Parr Tractor Company

36. Tractor Sales~ • World War I Effects: • 1910 – 15 companies sold 4,000 tractors • 1920 – 166 companies sold 200,000 tractors • Great Depression Effects: • 1921 - 186 companies sold only 68,000 tractors • 1925 – 58 companies survived • After the Depression: • 20 companies sold more than 1 million tractors • 90% of sales came from 9 companies

37. Nine Major Tractor Companies: • International Harvester • John Deere • J.I. Case • Massey-Harris • Oliver • Minneapolis Moline • Allis Chalmers • Cleveland Tractor Company • Caterpillar Tractor Company

38. Shift to Tractor Power • PTO (Power Take-Off Unit) • 1918 • International Harvester • Allowed operator to control mounted and drawn equipment with the engine of the tractor • Pneumatic Rubber – Tired Tractor • 1932 • Allis Chalmers • Completed basic design of a light versatile tractor that could handle most farm jobs • These advancements finalized the transition from horses and mules to tractors with internal combustion engines

39. Impact of Shift to Tractor Power~ • 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 • Producing 100 acres of corn: • 141 days with animal power • 51 days with tractor power

40. Machine Power Continues… • Caterpillar Tractor Company • 1931 • developed a diesel-powered, crawler-type farm tractor • diesel engine had a major impact • Minneapolis Moline Company • 1941 • Liquefied Petroleum (LP) gas tractors • made it possible for farmers to use clean-burning, low-cost butane and propane for fuels

41. Modern Tractor Accessories • Hydraulic lifts • Torque amplification • Hydrostatic transmission • Power steering • Turbochargers • Heated and air-conditioned cabs • One farmer today can do the work of 1,000 workers without machine power • No wonder one farmer feeds more than 131 people!

42. 1960’s and 1970’s • Shift to diesel as major fuel • More than 80% of tractors now use diesel • Increase in horsepower • Most tractors have hp rating of 200 or more • Shift to 4-wheel drive power • Ability to use more power efficiently • Better traction and flotation with less soil compaction • Increased safety • Standard on large tractor models • Optional on medium and small models

43. Success in American Agribusiness~ • One farmer provides for 150 people • Americans only spend 9% of income on food • 1500 pounds of food supplied for each US citizen • Numerous exports produced as well • Promotes world peace and security • Restrictions from government on exports • Could today’s farmers meet the world’s need for food, clothing, and shelter if restrictions were lifted?