Agriculture Reference
In-Depth Information
with goods producers as it can be measured and tested. Quality in service producers is dif-
fi cult to measure because it is measured on intangibles such as customer perceptions, com-
munications, and time, each subjective in nature.
Time-based competition
Time-based competition
is competing for customers and market share using the dimension
of time as a source of competitive advantage. Quicker response to changing customer needs
is one example of time-based competition. Technological innovations, especially with the
Internet, have enabled fi rms to compete on the basis of time. Global competition and higher
expectations by consumers are other reasons. Agribusinesses are reducing the time it takes
to develop and introduce new products or services. As well, they are responding faster to
customer orders, deliveries, service needs, and problems.
Productivity
Productivity
can be defi ned as the dollars (or quantity) of output (goods and services) pro-
duced divided by the dollars (or quantity) of resources (materials, wages, equipment cost)
used. Productivity is the prime determinant of a nation's standard of living because employee
wages are generally determined by the productivity of human resources. Part of the concern
over productivity has arisen because of the shift to a service-oriented economy. Many econ-
omists believe that it is more diffi cult to achieve the same improvements in productivity for
the service sector as can be achieved in the manufacturing sector.
From 1948 to 2008, agricultural productivity has been about half of the productivity of
the non-farm sector (Ball 2010). Between 1948 and 2008, U.S. agricultural output grew at
the average annual rate of 1.6 percent compared to 3.6 percent for the non-farm sector.
Moreover, the growth rate of productivity in agriculture has varied tremendously. Some
speculate that U.S. agriculture is losing its competitive advantage. Reasons cited include the
increasing use of marginal land, real increases in prices for water and energy, increased
regulations for pesticide and chemical use, increased regulations for confi ned animal feeding
operations, and the lagged effects of decreasing real investment in agricultural research as a
public good.
Labor productivity in the retail food industry has increased moderately, but erratically,
because of extensive mechanization and technological improvements. Technological
improvements in supermarkets include computer-assisted checkouts and data processing.
New store concepts (i.e., food warehouses) that provide fewer services (and less labor inputs)
have also increased productivity. But productivity has also declined with some food retailers
because they have implemented expanded services, such as salad bars, delicatessens, and
in-store bakeries that require more labor. Some eating and drinking establishments have also
experienced declining productivity rates because of enhanced customer service and longer
store hours (generating revenues that are marginally higher than input rates).
Global competition
Globalization
is affecting the operations management of agribusiness. As noted in
Chapter
5,
trade is critical to this nation's agricultural economy. About 34 percent of U.S. agricul-
tural production is exported and imports account for a varied, but growing share of U.S.
consumption of agricultural products (World Agricultural Outlook Board 2011). Exports of
