1. Structure of the Food & Fiber Industry Linkages to the Farm Business Sector LESE 306 Fall 2008

2. The Farm Business Sector

3. General Economic Influences

5. Impacts of Macro economic Policy Interest rates Inflation Economic growth Unemployment Budget deficits National debt Exchange rates Trade balance

6. General Economic Influences

7. Impacts of International Trade Comparative advantage Trade deficit Trade agreements WTO rulings Importance to agriculture Energy related issues

8. General Economic Influences

9. Impacts of Domestic Economy Consumer spending is 70% of GDP Income affects the demand for food and fiber Energy and and other prices Population Tastes and preferences

10. Food And Fiber System

12. Impacts of Farm Input Supply Sector Source of new technology and productivity Increased consolidation of suppliers Price setters to farmers Firms have become more diversified in recent years

13. Food And Fiber System

15. Impacts of Processing and Manufacturing Sector Add value to raw farm products Price setters to farmers Contracts with farmers Narrow profit margins Compete for shelf space

16. Food And Fiber System

18. Impacts of Wholesale and Retail Trade Interface with consumers Price setters to consumers Just in time inventories Changing structure over time. Food safety Packaging trends

19. Unique Policy Influences

21. Impacts of Farm Policy Commodity policy sets rules for farm subsidies Price and income important historically Storage of surplus production

22. Unique Policy Influences

24. Impacts of Environmental Policy Conservation programs Chemical application regulations Water pollution Air pollution Global warming concerns

25. Important Market Linkages

27. Impacts of Farm Credit Markets Indicators of financial stress Cost and availability of farm operating and mortgage loans Subsidized credit programs Financial crisis in the 1980’s

28. Important Market Linkages

30. Impacts of Labor Markets Cost and availability of hired farm labor Importance of off-farm employment to farm operator families. Impact on consumption

31. Important Market Linkages