Agriculture: Background

Industry Composition:

The agriculture industry is made up of companies and corporations that are involved in the production of food or crops for consumption purposes. This includes both firms that specialize in raising animals and enterprises in growing crops. The animal production segment is not limited to traditional beef, dairy, chicken, or pork farms, but also apiaries (bee farms) and aquacultures (fish and seafood farms). Similarly, plant production comprises not only food crops but also includes greenhouses, nurseries, and field crops such as tobacco and cotton. Agriculture is both an old and new industry; it has been in practice for thousands of years, but the forms of production have been under constant evolution. The agriculture industry also includes the agriculture support businesses that produce the seeds, farm equipment, and other goods and services that have helped the agriculture industry become more efficient and productive over the years.


Agriculture dates back nearly 10,000 years. Former nomadic hunter-gatherers in the "Fertile Crescent" located in the Middle East first started to plan the sowing and harvesting of certain plants that were previously gathered for food in the wild. From this point on, agriculture began its expansion across the world. In the middle ages, the industry experienced higher efficiency with the invention of irrigation, crop rotation, and the plow. There also was an exchange of crop seeds during the trade triangles that occurred in the 1400s. Farmers were no longer restricted to local crops and could trade for more exotic crops. These exotic crops could either be replanted in the local market in hopes of creating a new local product or used by the farmers for miscellaneous purposes. The biggest factor contributing to the highly efficient agriculture industry that we have today is the advancement of mechanization in the 1900s. New technology significantly reduced the amount of work hours needed for crop production and allowed the small, family farmer to produce a larger yield. Nevertheless, despite all of the evolution in the industry, the basics remain the same; to sow and harvest crops for consumption or use by humans.


The vast majority of farms and ranches are small family-owned affairs, but corporate farms, which account for only 10 percent of total number of firms, produce over 75 percent of agricultural output. Certain sections of the industry may be concentrated, but on the whole, the industry is very fragmented. Major corporations on the crop growing side of the industry include Dole Food Company and Del Monte Fresh Produce; on the animal raising side, Cargill, Tyson Foods, and Smithfield Foods are well known. Nestle is the largest food conglomerate by measure of sales and is involved in many facets of the industry.


Many trends have developed in the industry as companies attempt to feed more people for a smaller cost. Genetic modification is becoming common as farmers seek to keep and enhance desired traits in their animals or crops, such as hardiness, high yields, and fast growth. Advancement is the development of biopharmaceuticals, or genetic altering of plants to grow certain drugs, and the practice of cloning animals to preserve the best genetic traits. Using technologies such as GPS positioning for planting and tracking animals or portable communications gear is also saving valuable time and money for various establishments. On the business side, consolidation is on the rise and food cooperatives such as Sunkist Growers, which share facilities and buy supplies together to reduce costs, have started expanding their capabilities to get into the processing stages involved in their product. Niche markets such as organic farming, naturally-raised meat, or locally-grown produce have also risen in importance.

Major Issues:

The rapid growth of the world’s population has caused an increase in demand for food production. This has come with many problems. Many people complain about the negative environmental impacts of large-scale cultivation, such as soil salinization, the loss of ecosystems as they are turned into arable land, air pollution from burning fossil fuels for farm machinery and from the vast numbers of livestock, land pollution from fertilizers, and reduction of diverse biomasses to a select few species of flora and fauna that the industry has deemed profitable. As interest in biofuels continues to grow, expect the price of crops used to produce these fuels to increase as well. Finally, there are concerns about increased usage of genetically modified organisms (GMOs). GMOs pose a threat to local crops, both by the risk of farmers not using local crops anymore and by potential cross pollination with these crops, and can give too much pricing control to the creator of these seeds due to their patent protection. GMOs also allow for cheaper agricultural products, however; which is a huge issue with commodity prices on the rise recently. This increase in commodity prices impacts the agricultural industry in two ways: it raises the price of inputs (fuel and fertilizer) while also raising the price of outputs (actual food products).

Future Outlook:

Amongst all uncertainty and concern, the agricultural industry will stay strong; it will continue to be more volatile than it has been in the past but it will remain an active and exciting industry. Scrutiny and regulations will continue to grow due to concerns over food safety and sustainability. Integration within the industry is expected to rise, leading to an ever evolving trade. As with most other industries, the agricultural industry will continue to evolve and the rate of innovation is expected to continue at recent high levels. In many countries, this industry is subsidized by the local government to make up for tight margins, but no matter how it is accomplished, the world population is growing and this industry must grow in proportion with it.


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