The business of agribusiness - Agribusiness Management - page 29

provide products and services to agricultural producers. Animal nutrition, seed, machinery
and equipment, fertilizer, crop protection, and credit and banking fi rms would be among the
enterprises which fall under the general category of input suppliers.
A description of just what these industries look like today only vaguely resembles their
appearance just a few years ago. During the last 40 years, these industries, like the food and
production agriculture sectors, have experienced vast and dynamic change. Taking a quick
look at the history topics helps defi ne today's agricultural input business. A rapidly growing
agriculture fueled a prosperous input supply sector in the 1970s. The massive adjustments of
the production sector in the 1980s brought an equally huge reorganization of the input supply
industries. Since the 1990s, continued consolidation in the livestock sector has reshaped the
input supply industries serving animal agriculture. Consolidation in the agronomic indus-
tries via mergers and acquisitions has led to fewer, larger players at both the manufacturing
and the distribution levels.
The productivity of the agricultural production sector continues to increase, in no small
part, due to the products and services provided by the input supply sector. Improved varieties
of seed may be attributed to advances in biotechnology among other more conventional
developments, which allow improved and lower-cost production methods. Animal nutrition,
farm machinery and equipment, agricultural pesticides and herbicides, and the many facili-
tating services offered to producers help increase the productivity of the production agricul-
ture sector. Information technologies such as global positioning and monitoring systems
have seen widespread adoption. For purpose of this text, we have categorized the farm input
supply sector into three areas:

• Manufacturing

• Distribution

• Services

We will explore each of these three areas in the remainder of this section.

Manufacturing

Manufacturers in the input supply sector include many company names you may well rec-
ognize. John Deere, Syngenta, Pfi zer Animal Health, and Monsanto are just a handful of
examples of large organizations that spend millions of dollars annually in research and
development to bring improved products to the producer. Virtually everything it takes to run
the farm or ranch must be purchased from an input supplier of some sort. Farmers purchase
over 72 percent of all inputs used for production. In 2010, farm production expenditures
were $287.3 billion ( Table 1.8 ) . On average, a U.S. farmer spends about $100,000 dollars
per year to run the farm business and these expenses for farmers represent the sales of
the input supply sector. Input manufacturers are responsible to the research, development,
production, and manufacturing that makes these products possible.
Livestock and poultry products include feed, feed supplements, and health products
which are required in the production of meat, milk, and fi ber products such as wool. Providing
producers with products such as these requires access to and use of high technology, often
large manufacturing plants, and a sizable research and development budget to support efforts
of this scale. In addition to products that feed animals and keep them healthy, other input
fi rms manufacture products for housing livestock, storing and managing livestock waste,
and moving livestock from farm to market.