Describe the “big picture” of agribusiness.
Explain how agribusiness affects us daily.
Discuss farming and agriculture before
Discuss the beginning of agribusiness in
Describe the historical development of farm
machinery and equipment.
Describe the Steam Era.
Discuss the historical development of the
internal combustion engine.
Discuss the historical development of farm
Discuss the success of American
What is Agribusiness?
According to Merriam-Webster’s Collegiate
Dictionary, agribusiness is “and industry
engaged in the producing operations of a
farm the manufacture and distribution of
farm equipment and supplies, and the
processing, storage, and distribution of farm
What is Agribusiness?
As this definition implies, some people
interpret the word narrowly to mean only
very large businesses within the agricultural
industry. However, John Davis and Ray
Goldberg, in their early research on
agribusiness, defined it as all operations
involved in the manufacture and distribution
of farm supplies; production operations on
the farm; and the storage, processing, and
distribution of the resulting commodities
“Links” in the
Primary production of raw materials
(“commodities”), such as unprocessed food, fiber,
Tertiary transformation of commodities into value-
added products where the value is derived from the
process of transformation.
Supply of inputs to the primary and tertiary sectors.
Wholesale and retail provision of processed or
unprocessed foods, fibers, and related products to
Provision of educational, financial, and technical
services to all sectors.
Therefore, agribusiness encompasses
all activities “from the paddock to the
consumer” that contribute to the
eventual production, processing (value
addition), distribution, and retailing of
food, fiber, and products based on
food or fiber.
All these definitions agree that
agribusiness includes all the activities
that take place in the production,
manufacturing, distribution, and
wholesale and retail sales of
Modern agribusiness is a dynamic and
growing industrial complex that
provides Americans with the highest-
quality, lowest-cost food supply in the
Is farming an
If we include production agriculture,
agriscience, and agribusiness under the
umbrella of the agricultural industry, we
must include production agriculture industry
(farming) within the context of this book.
We would be mistaken to think that farming
is not a business.
A typical farmer or production
agriculturalist manages interest, taxes,
repair and replacement of equipment,
fertilizers, wages, fuel, electricity, and
many other items. As you can see,
production agriculturalists must be
financial and business managers or
they will fail.
Is Agribusiness the same as
Agricultural economics refers to the
monetary and physical factors that affect
the profitability of the agribusiness.
According to the American Agricultural
Economics Association, “Agricultural
economics is the study of the economic
forces that affect the food and fiber
Specific areas of study in
agricultural economics include:
Community and rural development
Food safety and nutrition
Natural resource and environmental econ.
Risk and uncertainty
Consumer behavior and household econ.
Analysis of markets and competition
Agribusiness economics and management
Agricultural economists can be found
at every level of business,
government, and education around
The Big Picture of
Agribusiness companies provide input
supplies to the production
agriculturalist (farmer). The production
agriculturalist produces food and fiber
(cotton, wool, etc.), and the output is
taken by agribusiness companies that
process, market, and distribute the
Many services are needed in agriculture, such
as transportation, storage, refrigeration,
credit, finance, and insurance.
Agribusiness manufacturers furnish
production agriculturalist with the supplies
and equipment needed to produce, store and
transport their crops.
Government agencies inspect and grade
agricultural products for quality and safety.
Hundreds of agribusiness trade organizations,
commodity organizations, committees, and
conference educate, promote, advertise,
coordinate, and lobby for their agricultural
Millions of people are employed in
agribusiness throughout the world,
and people throughout the world also
depend on agribusiness for their food,
clothing, and shelter. Let’s take a look
at Figure 1-3 (page 7).
Agribusiness affects us
Consider one of the best-selling fast-food items,
the cheeseburger. To get an idea of how
agribusiness affects our daily lives, imagine
what is involved in assembling a cheeseburger
with all the trimmings. (Figure 1-4, p. 8)
As you can see, agribusiness is an essential
part of our daily lives and crucial to the
economy of the United States.
Farming and Agriculture
People have searched for ways to feed
themselves since prehistoric time.
If people did not eat one day, they would
hardly have enough energy to find food the
Thus, nearly all their waking time was spent
searching for food by hunting or gathering nuts
and other naturally grown foods.
Let’s think about life
The Bronze Age
(around 3000 B.C.)
During the Bronze Age, wooden
implements were made sharper and
more durable by using metal. This
allowed people to cultivate larger
areas of land faster. Agriculture spread
throughout the world and became a
way of life for most people.
Some of the developments
during the Bronze age included:
Bronze tools and plows made for easier and
The Nile river was used by Egyptians to
The wheel was discovered, making the
transport of crops possible.
World population rose from 3 million before
the invention of agriculture to nearly 100
The Iron Age
The year 1000 B.C. was the dawn of the
Iron Age. The use of iron gave people the
ability to produce even more crops. When
people could not use all the crops
themselves, they had to do something with
them, and trade among people developed
as a result.
Other developments of the
Iron Age were:
Iron hand tools and plows were created,
some of which are similar to those used
Money was developed because of the need
to trade excess crops.
Leaving land fallow face the soil a chance to
rebuild and store moisture.
The Middle Ages
The Middle Ages ranged from A.D. 400 to A.D.
1500. The fall of the Roman Empire slowed the
growth of agriculture. Farming was still a way
of life, but only a few important developments
occurred. These included crop rotation, a new
harness for plowing, and selective breeding of
The Middle Ages cont.’d
Farmers in the Middle Ages began to
understand the importance of conserving soil
moisture and nutrients. They accomplished this
by dividing their fields and leaving parts bare
during certain years. This innovation led to the
development of fences to mark separate fields.
Near the end of the Middle Ages, Columbus
discovered America, and people began to travel
to the “New World.” Until this time, most
agricultural developments had come from
Europe and Asia. Now there was an opportunity
to develop American agriculture.
Many developments in agriculture during
the 17th and 18th centuries eventually led to
the way we farm today. Some of the other
important developments included:
– The practice of putting dead fish into the ground
along with corn seed led to the development of
– Rice, the world’s most popular grain, was first
grown in the United States.
– George Washington created one of the first
– Thomas Jefferson experimented with seeds and
livestock, invented farm implements, and was
active in establishing a local agricultural society.
After the American Revolution, more people
moved to the United States, spreading out
and using more land. People went west and
developed new ways to produce food. Some
new developments were:
– Surveying of land was used to separate
– The cotton gin was invented by Eli Whitney in
– Edward Jenner discovered vaccines to prevent
– The fist one-piece, cast-iron plow was invented
in 1819 by Jethro Wood.
– Interchangeable parts were developed so that
people could fix their equipment.
The Agricultural and
During the 1840’s and 1850’s, the Industrial
Revolution created much change and spurred the
growth of production agriculture and agribusiness.
During these important years of rapid evolution,
many technological advances made a huge impact
on the world and in the agriculture industry,
including the steam engine, railroads, the sewing
machine, and the powered loom for weaving cloth,
among many others.
A by-product of the Industrial Revolution
was large-scale movement from farms to
the cities. The new and productive
machinery required much manpower,
leaving many farms vacant as the men
worked in factories. This allowed those still
farming for a living to increase production
for those who no longer did so. This
important era in agriculture marked the shift
from animal power to mechanical power.
During the lath 19th century, it became evident
that the Industrial Revolution had had a great
impact on the way farmers would operate. The
switch from animals to machines began with
the development of the steam engine in
England. It was first used for pumping water
out of coal mines, and later to power sawmills,
textile mills, and many other industrial
Before 1830, it took nearly 56 hours of human
labor to produce just one acre of wheat. Today,
according to the USDA, with the modern farm
machinery that has roots in the Industrial
Revolution and the switch to mechanical power,
less than two hours produce that same acre.
The Agricultural and Industrial
Revolution also brought us the
Henry Ford developed the automobile.
Crop rotation was promoted by Charles Townsend.
Advances in livestock breeding were achieved by
The first workable seed drill was invented by Jethro
Cyrus McCormick invented a mechanical reaper to
reduce hand labor in the harvest of grain.
A stationary grain threshing machine was
developed to separate grain from waste.
John Deere designed a better one-piece,
Barbed wire was invested to keep livestock
away from crop land.
The first gasoline-powered tractor was built
Seed and plant genetics were developed by
By the end of the 1800’s, farming had
become the world’s most important
industry. Many things had been done
to make agriculture a better, more
rewarding way of life.
Around the year 1900, things began to
improve for the American farmer. New
machines made farm work much easier, and
better transportation was developed, which
meant that farmers were able to market
their products to many more people. Farm
prices were high, and farmers were making
a good living. The extra money made
allowed people to pay for the research and
development of new ways to farm.
Some of these new
The U.S. government established the
Bureau of Forestry.
A vaccine was developed for hog cholera.
The Panama Canal opened for shipping.
The Smith-Hughes Act established
vocational agriculture in high schools.
The U.S. government established the
Cooperative Extension Service.
Federal Land Banks were established to give
Hybrid plant seed was developed for better
quality, higher-producing crops.
Many agricultural scientists, such as George
Washington Carver, were developing new
Bad times occurred after World War I, when
farmers could not sell as much food
There were not as many soldiers in foreign
countries, and thus there was not as much
need for American-grown food overseas.
Farm prices began to drop, and many
farmers were forced out of business.
A terrible drought in the mid-western states
also caused farmers to go broke. Those
days were called the “Dust Bowl” days.
As farmers made less and less money,
the whole country began to lose
money. In 1929, the stock marker
“crashed” and the United States
entered the Great Depression.
Something had to be done to pull
America out of this hole. Many
agricultural developments helped get
the United States back on track.
Some of these developments
The U.S. government began to pay farmers
for using soil conservation practices.
The Soil Conservation Service (SCS) was
established in 1935 to keep the Dust Bowl
The Future Farmers of America
(FFA) organization was started
Higher crop yields resulted from better
The U.S. government began to pay for more
research and education in agriculture.
Antibiotics were first used to treat animals.
The Dairy Herd Improvement Association
(DHIA) was organized to monitor dairy
Groves of trees were planted along the
edges of farmsteads to prevent wind
The United States came out of the
Depression after which World War II (1941-
1945) caused an increase in farm prices.
This trend got people stated on developing
more advanced farming methods. Many
advances were made in the areas of
production, marketing, and agricultural
– Artificial insemination was more widely used in
the livestock industry.
– Use of new technology increased productivity.
– Farmers began to use electric fences.
Disc plows came into widespread use.
Chemical fertilizers and pesticides were
Futures trading was used to control risk.
Computers became popular as agricultural
Biotechnology is now a vital part of
agriculture as well, with advances in
gene splicing, cloning, and gene
mapping. All these advances allow
farmers and scientists to work
together to create the most desirable,
profitable product possible.
The establishment of agribusiness
performed functions that farmers had
previously been required to do. Before, the
farmer would handle all operations required
to get the product from the farm to the
table. Agribusiness enterprises also supply
the equipment and machinery required for
these jobs. Agribusinesses now include:
– Farm machinery dealerships
– Commodity (futures) brokers
– Artificial breeding services
– Research consulting firms
Agricultural (ag) chemical companies
Veterinary supply companies
Livestock supply companies
Animal feed companies
Historical development of
Modern farm equipment
The development of modern farm
equipment began before tractors came on
the scene. One of the first agricultural
machines that had significant impact on
farming was the cotton gin, invented in
1784 by Eli Whitney.
Three years later the cast iron plow was
patented by Jethro Wood. This plow worked
very well in eastern soils but not the hard
soils of the Midwest.
In 1837 John Deere, founder of John
Deere Tractor Company, made the
first successful steel plow from a saw
blade, and by 1846 he was building
1,000 steel plows per year. The steel
did not wear out as fast as cast iron
and the soil did not stick to the new
plow as it did with the old one, so
farmers were very happy with it.
As late as 1800, it is estimated that almost
90 percent of the U.S. population still lived
on farms. These Americans were
agriculturists so they could feed, clothe, and
shelter their families. Even those who
farmed only to feed their families had a
difficult time producing enough to stay
comfortable. Understandably, there was
little to no surplus production left to
Beginning of Change
The 19th century brought the beginnings of
The century began with the Louisiana
Purchase in 1807 and the opening of the
farmland west of the Allegheny Mountains.
The first cotton planter was patented in
1825, and a corn planter was developed
three years later.
Between 1850 and 1880, the amount
of land used for farming increased 82
percent, from 294 million acres to 536
million acres, and the number of farms
rose 167 percent to 4 million.
From manpower to
In contrast to the early 19th century, only 50
percent of Americans lived on farms. In
addition, production agriculturalists were
not only self-sufficient, but had raised their
productivity to allow for extra income to be
used to purchase horse-drawn farm
equipment and other tools. By the end of
the 1800’s, the transition from manpower to
horsepower had been mostly completed.
The Steam Era
Although steam power had its major impact
on the industrial sector of the economy, it
also played a major role on the farm
between 1850 and 1900, which is generally
called the “Steam Era.” It is estimated that
more than 70,000 steam engines were
produced for farm use. The steam traction
engine ushered in a new era in agriculture
by providing and alternate mobile source of
power on the farm.
A wide variety of fuels were used in the
early internal combustion engines. Some of
the major types were gun powder,
turpentine, coal dust, and kerosene, which
was commonly called coal oil.
Even though early tractors were called
gasoline tractors, the major source of fuel
Most early tractors were made with small
tank for gasoline and a large one for
The farmers started the engine with
gasoline and then switched to
kerosene because it was cheaper and
In 1899 there were more than 100 firms
making internal combustion engines in the
United States, not counting automobile
engines, and by 1911 more than 500
companies were in operation. Small engines
continued to be a popular source of power
through the 1940s. Currently, these small
engines are experiencing a comeback
through restoration by private collectors.
The first gasoline-powered tractor
– In 1892 John Froelich build what is sometime
called the first successful gasoline-powered
tractor. The Froelich tractor was the forerunner
of the Waterloo Boy and the modern John Deere
line of tractors. The term tractor was first coined
in 1906 by a salesman for the Hart-Parr Tractor
Company ( a predecessor of Oliver, White Farm
Equipment Company and today’s AGCO).
Previously, they were called “gasoline traction
engines.” Although tractors have been around
for nearly 100 years, mules are still needed for
Effect of World War I on
Tractor production expanded rapidly in the early
1900’s. In 1910, 15 tractor companies sold 4,000
tractors. The onset of World War I marked another
turning point in the development of agriculture and
cause a rapid increase in tractor production, and in
1920, 166 tractor companies sold more than
Spurred by higher income from feeding war
ravaged Europe, U.S. production agriculturalists
began the process of replacing their horse-drawn
equipment with gasoline-powered tractors and the
larger tillage implements that those tractors could
Effect of the Depression
years on tractor production
After 1921, the number of tractor
companies decreased about as fast as it had
increased. This was due to the Depression
of the 1920’s. In 1921, 186 companies sold
only 68,000 tractors, and by 1925 only 58
companies had survived, although the
number of tractors sold increased. By 1935,
20 companies had sold more than 1 million
tractors, with 90 percent of sales coming
from 9 major companies.
The nine major
1. International Harvester
2. John Deere
3. J.I. Case
6. Minneapolis Moline
7. Allis Chalmers
8. Cleveland Tractor Company
9. Caterpillar Tractor Company
In 1918, International Harvester announced
a power take-off (PTO) unit, which allowed
the operator to control mounted and drawn
equipment with the engine of the tractor.
In 1932, Allis Chalmers, in cooperation with
Firestone Rubber Company, introduced
pneumatic rubber-tired tractor, which
completed the basic design of a light
versatile tractor that could handle most
This essentially finalized the transition from
horses and mules to tractors with internal
The shift from animal power to
tractor power affected American
farmers in two major ways.
1. Decreased demand for animal feed – a
large portion of the land that had been
used to produce animal feed was shifted
to the production of food.
2. Reduced labor time and cost – In 1936,
the Iowa State University Experiment
Station reported that production
agriculturalists with rubber-tired, two plow
tractors were producing 100 acres of corn
with 51 days of field work. The same
operation with horses required 141 days.
Machine power continued to change and
improve. In 1931, Caterpillar Tractor
Company developed a diesel-powered,
crawler-type farm tractor. The crawler-type
tractor did not fit most farm needs but the
diesel engine had a major impact a few
In 1941, liquefied petroleum (LP) gas
tractors were introduced by the
Minneapolis Moline Company. This
made it possible for farmers to use
clean-burning, low-cost butane and
propane for fuels, especially in areas
near these energy sources.
Modern Tractor Accessories
Today, hydraulic lifts, torque amplification,
hydrostatic transmission, power steering,
turbochargers, heated and air-conditioned
cabs, and many other features provide and
efficient and comfortable power unit for
modern production agriculturalists.
The production agriculturalists of today,
operating a 100-hp tractor, can do the work
of more than 1,000 workers who are
without machine or animal power. It is no
wonder that the average American farmer
produced enough for more than 131 people.
Increased size and four-
During the decades of the 1960s and 70s,
major changes included the shift to diesel as
the major fuel, and increase in horsepower
and a shift to 4-wheel drive power.
Currently, more than 80 percent of farm
tractors use diesel, and most major tractor
companies offer tractors with a hp rating of
200 or more. The major change in the 70s
was the shift to 4-wheel drive.
The major advantages of 4-wheel
drive include the ability to use more
power efficiently, better traction and
flotation with less soil compaction, and
increased safety. 4-wheel drive is now
standard on extremely large models
and optional on medium and small
Success in American
Due to the effectiveness and efficiency of
agribusiness, one American farmer can now
supply enough food and fiber more than
Also, Americans spend less of their income
of food than any other people in the world;
only 9 percent of total personal disposable
No nation has better fed itself and still had the
ability to contribute heavily to world food
supplies. U.S. agribusiness supplies each citizen
with close to 1,500 lbs. of food annually while
still producing exports of vast amounts of
grains, vegetable oils and fats, cotton, tobacco,
and many other products. In fact, production
agriculture became so efficient that the federal
government had to establish restrictions of
various kinds to ensure that the production was
controlled and prices were maintained. It is
thought by many, however, that if the
restrictions were lifted, American agriculture
would be able to meet the world’s needs for
food, clothing, and shelter.
Because of the success and power of
American business, it has an
enormous responsibility to promote
world peace and security. At the least,
it is a major factor. The existence of
underfed, poorly housed, and badly
clothed people in different parts of the
world represents a threat to global
peace and security.