Transcript The Farm Business Sector - Department of Agricultural Economics

The U.S. Food & Fiber
Industry
Linkages to the Farm
Business Sector
Spring 2010
The Farm Business Sector
Farm Business
Sector
General Economic Influences
Farm Business
Sector
General Economic Influences
Farm Business
Sector
Impacts of Macro
economic Policy
 Interest rates
 Inflation
 Economic
growth
 Unemployment
 Budget deficits
 National debt
 Exchange rates
 Trade balance
General Economic Influences
Farm Business
Sector
Impacts of
International Trade
 Comparative
advantage
 Trade deficit
 Trade
agreements
 WTO rulings
 Importance to
agriculture
 Energy related
issues
General Economic Influences
Farm Business
Sector
Impacts of
Domestic Economy
 Consumer
spending is 6670% of GDP
 Income affects
the demand
for food and
fiber
 Energy and
and other
prices
 Population
 Tastes and
preferences
Food And Fiber System
Farm Business
Sector
Food And Fiber System
Farm Business
Sector
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
Food And Fiber System
Farm Business
Sector
Food And Fiber System
Farm Business
Sector
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
Food And Fiber System
Farm Business
Sector
Food And Fiber System
Farm Business
Sector
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
Unique Policy Influences
Farm Business
Sector
Unique Policy Influences
Farm Business
Sector
Impacts of
Farm Policy
 Commodity
policy sets rules
for farm
subsidies
 Price and
income
important
historically
 Storage of
surplus
production
Unique Policy Influences
Farm Business
Sector
Unique Policy Influences
Farm Business
Sector
Impacts of
Environmental Policy
 Conservation
programs
 Chemical
application
regulations
 Water
pollution
 Air pollution
 Global
warming
concerns
Important Market Linkages
Farm Business
Sector
Important Market Linkages
Farm Business
Sector
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
Important Market Linkages
FarmBusiness
Business
Farm
Sector
Sector
Important Market Linkages
FarmBusiness
Business
Farm
Sector
Sector
Impacts of
Labor Markets
 Cost and
availability of
hired farm
labor
 Importance of
off-farm
employment to
farm operator
families.
 Impact on
consumption
Who is this man?
His first
days on the
job back in
2006…
He had
little to
smile
about last
year…
What job stress will do to you …
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