Agribusiness

What is agribusiness? Sector of the industry that combines agricultural production and business decisions. Important to farmers because this is how they buy and sell their products and purchase necessary inputs and services.

The Role of Consumers Consumer preferences have a major impact on agricultural production because consumers dictate markets. Supply: amount of a product available at a specific time and price. Demand: willingness of consumers to buy something, greatly influenced by price.

Agricultural Inputs & Outputs Inputs – Feed – Seed – Machinery & Equipment – Fertilizers & Chemicals – Insurance – Credit – Animal Medications Outputs – Crops – Market & Breeding Animals – Milk – Eggs – Timber

Important Financial Concepts Cash Flow – Income & Expenses – usually on a monthly or annual basis Net Worth (Balance Sheet) – Assets & Liabilities Budgets – Income & Expenses – helps with projecting future Income Statements (Profit/Loss) – Reflects profitability of business

Cash Flow Terms Income/Receipts – Wages, gifts, government payments Expenses – Personal: food, fuel, insurance, clothing, utilities, taxes, recreation, medical, child care, school, loan payments (mortgage, auto, etc.) – Business: seed, feed, chemicals, payroll, equipment, insurance, taxes, loan payments

Balance Sheet Terms Assets (things a person owns) – Short term: projected life of less than 1 year Cash, checking, savings, crops for sale, market animals, accounts receivable – Intermediate term: projected life of 1-10 years Vehicles, machinery, equipment, breeding animals – Long term: projected life of 10+ years Real estate and improvements, houses Liabilities (things a person owes money on) – Short term Operating loans, credit cards, accounts payable – Intermediate term Auto/equipment loan, loan to purchase breeding animals – Long term Mortgage, real estate loan

Financial Calculations Net Worth: difference between total assets and total liabilities – Net Worth = Total Assets – Total Liabilities Liquidity: ability to pay debts as they come due – Liquidity = Short term Assets – Short Term Liabilities Solvency: ability to convert all assets to cash if needed to pay all debts at once

Important Financial Terms Interest: charge for borrowing money from a bank or individual – Typically based on term of loan and repayment ability of consumer (based on customer history and credit score) Variable cost: expenses that change regularly – Fuel, food Fixed cost: expenses that stay the same each month – Insurance, mortgage payment

Careers in Agriculture Choose a career in agriculture – ONE DIFFERENT CAREER PER PERSON Make a poster with the following information: – Job Title – Job Description – Education Requirements – Work Schedule – Salary – Personal Characteristics