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.

History:

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.

Leaders:

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.

Trends:

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.

Sources:
Deloitte Industry Outlooks open_in_new

KPMG Industries open_in_new

PwC Industry Sectors open_in_new

EY Industries open_in_new

https://globaledge.msu.edu/industries/agriculture/background#:~:text=Agriculture%20dates%20back
%20nearly%2010%2C000,its%20expansion%20across%20the%20world.