1. Introduction to Economics & Agribusiness
Unit 1, Section A-D
Definitions, History,
and the Role of Agriculture in the Economy
Mrs. Martin

2. What is Agricultural Economics?
Agricultural Economics is the Science dealing with how we use technological knowledge and scarce (limited) productive resources to make sound management decisions as it deals with land, labor, capital, and management to produce food and fiber and to distribute (market) to various members of society.
Society = Consumers

3. Vocabulary to be Familiar With…
Agribusiness: The business of agriculture
Capital: Productive resources (goods) that are available as a result of past decisions.
IE: money, buildings, tractors and other expensive equipment.
Ceteris Paribus: All other things remain “constant” or “equal”.
Latin term.
Macroeconomics: Deals with the economy as a whole.
Think “Big Picture” Economics.

4. Vocabulary to be Familiar With…
Microeconomics: Deals with individual decision units such as people, firms, or markets within the industry.
Marginal: Additional or extra.
Can be both positive and negative depending on each situation.
Marginal Cost: The change in total cost when an additional unit of output is changed by one unit.
Marginal Revenue: The amount added to total revenue when an additional unit of output is produced and sold.

5. Vocabulary to be Familiar With…
Variable: An element of doing business which cannot usually be predicted or is subject to constant change.
Example: Weather is a common variable in producing goods in agribusiness.
Gross Domestic Product (GDP):
The total value of goods produced and services provided in a country during one year.

6. Agriculture’s Impact on the Economy
The United States is now the world’s largest agricultural exporter. The value of agricultural exports equals nearly one-fourth of farm cash receipts, about twice the level of the overall U.S. economy, and 1 out of 3 acres are planted for export.

7. How much of its agricultural products does the United States export?
American farmers export:
45 percent of their wheat
34 percent of their soybeans
71 percent of their almonds
More than 60 percent of their sunflower oil.

8. What would happen if US Agricultural Production stopped today?
In 3-5 days: The American economy would begin to collapse.
Most American homes do not have enough food to last more than 3 days and not enough water on hand for more than 1 day.
Economic Example: Stock markets crashed after 9/11, driven by “the mood” (fears and confidences) of the public.
Emergency Example: Hurricane Katrina- Riots, looting, grocery stores bare in a matter of hours.

9. What would happen… Continued.
In 5 -7 days: The entire World would begin to suffer the same economic collapse.
Humanitarian aid to 3rd World or war torn countries would have stopped completely.
Northern European countries that rely on imports from America would begin to suffer a food shortage.
Finland, Sweden, Norway:
No fruit? No meat? No veggies?

10. Where would we be without Agriculture and Agribusiness?
Naked +Hungry=

11. Scope of Agribusiness in the U.S. Economy
Agriculture is a major industry in the United States and the country is a net exporter of food.
With vast tracts of temperate arable land, technologically advanced agribusiness, and agricultural subsidies, the United States controls almost half of world grain exports.
Products include wheat, corn, other grains, fruits, vegetables, cotton; beef, pork, poultry, dairy products; forest products; fish.

12. Scope of Agribusiness in the U.S. Economy
In 1955, 55% of Americans worked in services:
between 30% and 35% in industry
between 10% and 15% in agriculture.
By 1980, over 65% were employed in services:
between 25% and 30% in industry
less than 5% in agriculture.

13. Scope of Agribusiness in the U.S. Economy
America’s Main Import Goods:
Industrial Supplies %
crude oil - 8.2%
Consumer Goods %
automobiles, clothing, medicines, furniture, toys
Capital Goods %
computers, telecommunications equipment, motor vehicle parts, office machines, electric power machinery
Agricultural Products - 4.9%
*Percentages are proportion of goods imported. Not proportion of GDP.

14. Scope of Agribusiness in the U.S. Economy
America’s Main Export Goods:
Agricultural Products
(soybeans, fruit, corn) 9.2%,
Industrial Supplies
(organic chemicals) 26.8%,
Capital Goods
(transistors, aircraft, motor vehicle parts, computers, telecommunications equipment)49.0%
Consumer Goods
(automobiles, medicines) 15.0%

15. The American GDP by Sector; (2011 est.)
Agriculture: 1.2%
Industry: 22.1%
Services: 76.7%
Question: What does that mean?
Answer: Roughly 1% of Americans are literally feeding both our country and the World making it possible for all other industries to continue.

16. What happens next?