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
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 Jethro Tull

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: Great Depression Effects:
1910 – 15 companies sold 4,000 tractors
1920 – 166 companies sold 200,000 tractors
Great Depression Effects:
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 Increase in horsepower
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?