Agribusiness, Commodity Chains & Technology Miss McDonald Unit V

Agribusiness: Any business related to commercial agriculture – but generally involved with the production processing and distribution of agricultural products.

Commodity Chain: The process used to gather resources, transform them into goods (commodities), & distribute them to consumers. This process is often globalized, connecting many places of production/distribution and the products is often sold on the world market.

The POULTRY & PORK Commodity Chains

Green Revolution ( Review ) **Began partially due to Malthus’ Theory of population growth Crop Modification Genetically modified seeds & selective breeding Resistant to chemicals/pesticides Higher yield per plant Technology Developments Irrigation practices Mechanization (using machines to process food) Feed/water animals Process seeds meats “assembly line” Fertilizer Pesticides

Green Revolution in Meat commodity chains

Green Revolution in King Corn

Who Benefitted the most? Mexico India 2-4 times greater yield Shorter growing season Increased farming incomes Fewer hungry people Local infrastructure has been upgraded (roads, taxes, politics, etc) Increased employment in farm- support/related industries

Government Agriculture Subsidies What is a “Subsidy”? Money granted from the government, to an industry to control prices or production on the market What is a “Direct Subsidy”: Money payed directly to the farmer with a few key elements… Government sets a “target price” (what the product should be worth) Farmer produces product and sells at market price (usually below target price) Government pays the price difference in the form of a direct subsidy

Problems With Subsidies Iraqi case study Saddam Hussein’s government subsidized Iraqi farmers Seeds Fertilizer Chemicals Below-market prices No incentive to produce quality grain Gummed up flour mills U.S. continued subsidy but Fed Iraqi grain to animals Or burned it More product = more government money…which leads to a suplus (extra) & lower market prices The more food a farmer produces, the more the government subsidizes his operation. Interferes with globalized trade Reduces imports Leads to more competition in export markets Potentially reduces crop quality

A 1992 UN report found that even in countries where food intake had risen, diseases associated with vitamin &mineral deficiencies had increased. linked to consumption of Green Revolution crops, which can be low in vitamins & minerals. High amounts of fertilizers and pesticides are needed to maximize production. This is very costly New varieties require more weed control & fertilizers Income gap is widening Middle & high-income farmers have benefited more low-income farmers- struggle with affording 3rd agricultural revolution products/technologies Mechanization of farming has increased rural unemployment (directly farm-based) Some new varieties have inferior taste & nutrients Concerns!

Conditions needed for commercial Ag. & Green rev. Success Financially stable (available credit/banks) Political stability Middle class, independent farmers (with desire for growth) Market economy (competition) Effective transportation systems Cultural acceptance of modified crops/technology Education

Conditions that may limit success of commercial Ag. & Green rev. Increased costs of products GMO Seeds Herbicides Fertilizers Decline in Soil Quality Water Pollution/Decline Drought Aquifers Availability of funds (bank loans) Climactic factors Erosion, desertification, etc.