Production Agriculture

Technological Innovation

 Many technological advances are driving

production agriculture
 Telecommunications, biotechnology,
satellite communications, etc.
 Technology, not land, is the driving force
behind Japan, Korea and China’s
agriculture success
Benefits of Increased
Production?

 Each farmer feeds about 100 consumers

today as compared to only about 5
consumers in 1900
 Production is rising, while man-hours worked
is declining
 More inputs are purchased off-farm
 Chronic excess production (policy effect)
 Increasing globalization of agriculture
Changes over time

 Trends in size, location, ownership, and

specialization of farms are changing how
food is produced and marketed
 Closer ties between farmers and
agricultural supply and marketing firms
Structure of Production
Sector

 Large number of small farms producing a

small share of total output
 Small number of large farms producing a
large share of total output
Specialization

 Restricting the scope of economic activity

and concentrating on doing a few tasks
well
 Commodity
 Personnel
 Process
Important Considerations

 Much of agricultural production enters the

marketing system in small lots
 The farmer is primarily interested in
production, not marketing
 Changes are taking place
 The marketing system must serve two
different groups
Product Characteristics

 Products as raw materials

 Agricultural products are bulky and
perishable
 There is quality variation
Farm Marketing
“Problems”

 Farmers do not have complete control

over their output
 Farmers face difficulties in improving their
prices
 “Free-rider problem”
 The “cost-price squeeze”
 Changing food market pricing efficiency