Agribusiness

Lesson 5.7
Overview
 Definition
 Economics of agribusiness
 Example: Tyson Foods
 Advantages
 Disadvantages
 What is
Agribusiness?
1. Agribusiness: Application of
business principles to all
areas of agricultural
production.
2. Sometimes called industrial
farming
3. Occurring in DEVELOPED
COUNTRIES
4. HUGE agribusiness farms
have replaced family farms
 Economic Ideas
Important to
Agribusiness
 Vertical Integration
 Owning or controlling

the levels of production

◦ Growing
◦ Processing
◦ Marketing
 Also called a
“commodity chain”
 Economic Ideas
 Horizontal Integration
 Owning or controlling several companies in the same field
 Eliminates competition
 Agriculture: A few huge Agribusiness companies and farms
have replaced the large amount of small family farms
Economic Ideas

 Mechanization
 Use of machines

instead of
humans or
animals
 More

productivity
Economic Ideas Automation/Specialization
 Old Way:  Today
 One person raises chicken,  One location specializes in
 Same person kills chicken, each step of the process
 Same person cleans  Uses as much automation

chicken, and mechanization as

 Same person prepares possible
chicken
Economic Ideas –
Specialization - CAFOs

 Concentrated Animal
Feeding Operation
 Huge amounts of
animals kept in
captivity and fed until
ready for slaughter
 Source of most
chicken and beef in
the United States
Economic Ideas: Economies of Scale
 Reducing costs by
increasing outputs
 In other words, a large

company . . .
◦ Can buy in bulk
◦ Pressure seller for lower prices
◦ Produce more goods to pay
for factories, energy and other
inputs
Example: Tyson Chicken
Tyson has all phases of production of chicken
Hatcheries
Research
Feed
Delivery of Hatchlings
Growing
Pick-up of Chickens
Slaughtering
Preparing/Cooking
Distribution/Transportation
Marketing
HATCHERIES
RESEARCH FARMS
PULLET ( young hens) FARM
FEED and FREEZER DISTRIBUTION CENTER
TYSON “Cooking” FACILITY
MARKETING and SALES at your local grocery
store
Vertical Integration in the case of Tyson means -
Tyson and Horizontal Integration
 If you are eating chicken – 70% chance it is
produced by Tyson
 KFC, Popeye’s, Church’s, McDonald’s, Burger King,
Boston Market, Taco Bell, Pizza Hut, Wendy’s – just
a few customers
 Also makes taco shells and tortillas
Other Examples
 Monsanto:

◦ Horizontal integration of seeds

◦ Controls upwards of 70% of corn and soybean
crops in US
 Cargill: Controls huge section of meat industry
Advantages
 Increased amount of meat and grain
 Each farmer and acre of land can produce MUCH more food

then previously
◦ 1900: One farmer can feed 5-10 people
◦ Today : Over 100
 Historically lower costs
 Year round availability
 More widely available
 Reliable pay for farmers
 Disadvantages
of Agribusiness?

 Let’s take a look

 Then you tell me
https://www.youtube.com/watch?list=PLP4f6srGCbwRD5w1ZXm1MdN6j5fLfjAm-&time_continue=18&v=u4_pzPrMTrs
Life in a CAFO
CAFOs
https://www.ewg.org/research/exposing-fields-filth#.WsypAHrwbIU
The “Assembly” Line
While in chicken houses, the
chickens are kept up 23 hours
a day
Darkness causes them to sit
Kill room is also dark
Poultry Processing
www.viewimages.com
De-feathering machine
http://img.trade.cn/uploaded/2011-10/893678CC0E7E5-A942-84DA-FFC7-267DE9761E59.jpg
How many birds are slaughtered each day in
Dardanelle, AR?
 280,000 per
day
 1.35 million

per week

http://www.chinaslaughter.com/slaughtering-defeathering-130-1.html
https://www.motherjones.com/food/2015/09/peak-inside-industrial-chicken-slaughterhouse /
Disadvantages
 Problems of monopoly:
◦ Artificially high prices
◦ Artificially low wages
◦ Eliminates competition: Small Farmers
 Individual farmers lose control
◦ Must grow, produce what they’re told
◦ Not allowed to use own seeds or methods
 Environmental concerns:
◦ Chemical run off
◦ HUGE users of water; draining aquifers
◦ What to do with all the poop?
Disadvantages
 Economic Concerns – loss of jobs
◦ Mechanization eliminates jobs
◦ Fewer family farms
◦ Low wages for remaining jobs
 Health concerns
 Huge amounts of government subsidies
 Animal cruelty?
 Sustainability?

◦ Heavy reliance on non-renewable inputs

◦ E.g.: Gas for the tractors
◦ E.g.: All the electricity for the “assembly lines”
◦ E.g.: The chemical fertilizers and pesticides