Larger Machinery

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Larger Machinery
AgEcon 278 - Farm Agribusiness Management
Dr. Makus
Is Farm/Agribusiness Management Changing??
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TODAYS DETAILS(8/27/08)

• Check on those not here last time or new this
  time.
• Questions on course syllabus or outline?
• If want Wall Street Journal, let me know.
• The first lab is this evening at 630 (Section
  3), and then Sections 1 and 2 are tomorrow at
  1230 and 330.

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Changes in Farm and Agribusiness
Management(Chapter 1)
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The Agri-Food System
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Agribusiness is BIG Business
112 Agribusiness Firms Fortune 500
89 Beverage Companies Coca-Cola, Pepsico
262 Food Consumer Products Companies H J
Heinz, Hershey
80 Food Production Companies Tyson Foods,
Gold Kist
109 Food Service Companies McDonalds, Starbucks
21 Food and Drug Stores Kroger, Safeway
322 Forest and Paper Products Meadwestvaco
20 Tobacco Companies Altria Group, Inc.
68 Food Grocery Wholesalers Sysco
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Objectives

• Discuss some changes in agribusiness that will
  affect you as a farm, ranch, or agribusiness
  manager.
• Identify skills that you may need for responding
  to changes in agribusiness management.

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Strategic Planning

• Setting goals as a business family
• Personal values
• Individual skills interests
• Financial physical resources
• Economic social conditions

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Tools for Making Decisions

• Economic principles
• Budgets
• Enterprise record summaries
• Investment analysis
• Financial statements
• Various other management techniques

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What Kinds of Decisions?

• Input/Output levels and combinations.
• When and how to acquire additional resources.
• Analyze risk and returns of new technology.
• New capital investments.
• Adjusting farm size.
• Changing enterprises.

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Modern Management Decisions

• Same types of decisions but information has
  changed.
• Technology provides new inputs and products.
• More accurate timely information.
• Competition for land, labor, capital resources.
• Good managers will adapt to changes and spread
  their skills over larger units of production.

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Number of Farms in the U.S.
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Size of Farms in the U.S.
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Farm Numbers Salesby Annual Sales
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Structure of Farms Ranches

• Larger machinery.
• Automated equipment.
• Confined livestock facilities.
• Outside employment opportunities.
• Labor cost up faster than cost of capital
• Substitute capital for labor.

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Structure of Farms Ranches

• Want a higher standard of living?
  gt increase size.
• For example, consider a 200 cow cow/calf
  operation??
• New technology is available only in a minimum
  size or scale gt
  expand production to spread out fixed costs.

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Future Structure of Farms and Ranches

• Enterprises that are easy to centralize
• Feedlots
• Hog and poultry production
• Large-scale agribusiness entities.

• Enterprises that have difficulty concen-trating
  production
• Crop production
• Grazing
• Management and operation by family units will
  continue.

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Information Age

• Rapid changes in
• - Data collection
• - Data analysis computers, GPS
• - Interpretation
• Whole farm data.
• Individual unit data.

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Financial Management

• Compete with non-agricultural businesses for
  capital
• Financial markets are becoming larger and more
  closely integrated.
• Need more detailed documentation of financial
  performance and credit needs.
• GAAP Standard Performance Measures.

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Human Resources

• Agribusinesses will need to offer similar
• Wages, benefits, working conditions
• More regulations for worker safety
• Chemicals, equipment
• Fewer employeesgtspecialized responsibilities.
• Paid consultants and advisors
• Diagnosing animal plant diseases
• Developing legal contracts
• Commodity pricing strategies
• Formulating rations
• Crop fertility programs

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Producing to Meet Consumer Demands

• Past - Undifferentiated products.
• Now Specific characteristics
• Biotechnology
• Niche markets
• International markets

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Environmental Health Concerns

• Adequate quantity of food becomes more and more
  taken for granted.
• More concerns for food quality, food safety, soil
  conditions, water, air.
• More people moving to rural areas
• Odors, dust, crop chemicals

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New Technology

• Biotechnology
• Increases production efficiency
• Livestock genetics
• Growth stimulants
• GPS
• Challenge gt Should this new technology be
  adopted?

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Summary

• Same Decisions - Different Circumstances
• Farm Structure
• More Information
• Financial Competition
• Human Resources
• Consumer Demands
• Environmental Health Concerns
• Technology