Agriculture Reference
In-Depth Information
climate was a dominant factor (Schmenner 1993). Labor factors such as wage rates, worker
productivity, training requirements, attitudes toward work, and union strength are also
important considerations. One other such factor is the availability of qualifi ed labor. Food
and agricultural companies that require a great deal of research may fi nd it advantageous to
locate near a large land-grant university where highly skilled, technical resources are con-
centrated. In the meat packing industry example, meat packers located in unfavorable labor
climates and agreements were at a competitive disadvantage because wages and benefi ts
could be as much as 40 percent higher than a competitor's.
Agglomeration
Agglomeration , another factor in facility location decisions, is the accumulation of business
activity around a specifi c location. Firms often locate in close proximity to one another
because they can increase the effi ciency of services both at the business, household, and
social level. For example, a fi rm may locate near a group of existing fi rms because they can
share in the existing infrastructure such as transportation, water, or sewage systems. The
amenities of the agglomeration of restaurants, theaters, and/or professional sports teams can
also produce social benefi ts for the employees and management of agribusinesses.
Taxes and incentives
As mentioned, states are using tax and incentive packages as part of an economic develop-
ment package to attract industries. The fast and vast expansion in the North Carolina hog
industry provides an example of just how a thriving business sector can help give back to the
economy. In 1986, North Carolina hog farmers raised 2.4 million hogs and pigs on about
15,000 hog operations. Of those, only about 800 farms had more than 500 head of hogs. By
2009, the number of hog farmers in North Carolina had shrunk to about 2,800 while the
state's total hog production climbed to 9.6 million head. Ninety-nine percent of those hogs
were raised on about 1,600 farms, each handling 1,000 head or more. Overall North Carolina
pork production including growing, packing, and processing, and their associated industries
were responsible for an estimated 46,660 full-time jobs in 2007, with $7.2 billion in sales.
Proximity to other company facilities
Food and agribusinesses may also locate new facilities considering their proximity to other
company facilities . For example, agribusinesses may opt to open a new service facility in a
region that is not adequately serving its customers currently with existing company facilities.
Agribusinesses affected by climatic conditions may pursue a risk management strategy of
having facilities spread out across a variety of geographic, temperature, and soil conditions.
Seed fi rms locate production facilities in different areas (even countries) to assure them-
selves of seed production and to minimize the uncertainty of poor weather. Some agribusi-
nesses may locate new facilities in relative proximity to other company facilities because
they supply parts to one another or share management and staff. Also, proximity to providers
of packaging, software, etc. can lead fi rms to choose a location.
Location decisions for service businesses
Location decisions in service businesses can be even more important than in manufacturing
businesses. Factors such as convenience to customers, traffi c volumes, income levels, and
 
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