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AGRI 4411 Farm Managment Chapter 1

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Trends for 21st century agriculture

Trends for 21st century agriculture

Published in: Education, Technology, Business

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  • 1. CHAPTER 1:FARM MANAGEMENT IN THE 21ST CENTURY AGRI 4411 Farm Management - Chapter 1
  • 2. Objectives Discuss how changes in the structure and technology of agriculture in the twenty-first century will affect the next generation of farm and ranch managers Identify the management skills that future farmers and ranchers will need to respond to these changes
  • 3. Decision Making Manager – Makes decisions – Using economic principles, record summaries, investment analysis, financial statements, etc.. Decisions: – Input and output levels – When and how to acquire resources – Analyze risk and returns from new technology, adjusting farm size, changing enterprises
  • 4. 21st Century Manager  Technology  Management information systems – Aided by electronic innovations  More competition with Non-Ag Businesses for land , labor, and capitalNO3-N Pre-Season Residual Map resourcesfrom 0 to 12 Inches of Soil Depth
  • 5. Structure of Farms & Ranches # Farms decreasing Average farm size increasingWhy??? Labor saving technology Employment opportunity off-farm Cost of labor increasing faster than cost of capital Desire for higher standard of living (off-farm income) Cost of new technology requires spreading cost over more production Also fixed costs to learn new skills in production, marketing, and finance
  • 6. Alternative paths for farm andranch businesses
  • 7. Trends Farm sizes will continue to increase Sophisticated management skills Centralized production (poultry industry) Management segregated into more layers – More specialized
  • 8. Information Age  Decision making tools and budgeting tools underused in the past because data was hard to get or to complicated to analyze  GPS in crop production  Miniature electronic sensors (Animals)  Portable computers – Increase speed, accuracy, and availability of information sharing
  • 9. Financial Management  Sources of farm credit more vertically integrated – Increased competition with non- farm sector – require detailed documentation of financial performance and credit needs – Conformity to generally accepted accounting principles (GAAP) – Cash accounting will not always be acceptable – Audits – Controlling assets more important than owning them
  • 10. Financial electronic banking standardized financial statements electronic accounting
  • 11. Human Resources  Team of employees  Need to offer wages, benefits, and working conditions comparable to non-farm  Increased regulations with chemicals and equipment  Specialized responsibilities  Paid consultants and advisors
  • 12. Producing to Meet ConsumerNeeds  Ex: Livestock with uniform size to fit processing equipment, standard packaging, and quality levels  Foreign markets important  Niche market important – Ex: organic farming
  • 13. Vertical Integration Farmers may fill one niche in the supply chain. – e.g. raising dairy replacement heifers, – producing bedding plants for home gardeners, – buyer supplied inputs such as pigs or broilers finished in contract facilities on independent farms Highly specialized, highly skilled. May have contracts up and down the chain. Quality and timeliness are critical.
  • 14. Environment & Health Concerns  Food quality  Food safety  Present and future soil condition  Agriculture waste (air and water quality)  Successful managers will generate profit while conserving resources and minimizing environmental problems
  • 15. New Technology  Biotechnology offers production efficiency  Precision Farming  Genetic characteristics and growth stimulants
  • 16. Flow of Information more automated collection of information easier to classify and analyze how much can the human mind comprehend? what information is relevant? electronic communication is fast but impersonal
  • 17. More Differentiationof Raw Materials  genetic engineering  product identification and separation  specialized markets  advance contracts
  • 18. Globalization World economy is more integrated. Trade barriers are being reduced. Farmers from all countries will compete for markets. All countries will compete for resources.􀁡There will be winners and losers.
  • 19. Smaller Farms Will Continue toForm Alliances achieve efficiencies specialize less independence more difficult to coordinate cooperatives
  • 20. Rural Communities Farmers will be scarcer More rural residents May be residential centers but not commerce centers Quality of life will be more important
  • 21. Agriculture must learn to serve anaffluent society
  • 22. Final Thoughts As long as people eat there will be a living in agriculture. Agriculture is a mature industry. Extreme economic conditions tend to turn around. Good managers will take advantage of the good times and protect against the bad.