Objectives and Effects of Diversification in Large-scale ... · Objectives and Effects of Diversification in Large-scale Agricultural Businesses: ... a dairy co-operative ... data

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Objectives and Effects of Diversification in Large-scale Agricultural Businesses:

Results of a Mail Survey in Eastern Germany

by

Ernst Kuehnle1

University of Hohenheim, Department of Farm Economics 410A; D-70 593 Stuttgart, Germany

Abstract - For purposes of this study, diversification was defined as the economic activity of

an agricultural business or company in areas other than livestock and crop production. With

the help of empirical evidence gathered from 210 operations in the new German states, it was

possible to define the importance of diversification for these businesses. The most important

expectations concerning diversification are cost reduction or profit increase, development of

new growth markets, risk reduction and job security. Within these four key goals, risk reduc-

tion as a means of increasing corporate stability and providing job security as part of a com-

pany’s social responsibility towards its employees were mentioned most often by those sur-

veyed. Expectations in the four areas of activity (upstream, downstream, related and other

sectors), are met with varying degrees of satisfaction. The most difficult goals to achieve are

the ones in the agricultural upstream and downstream sector, because they are directly linked

to agriculture. The accomplishment of goals is easier in the related and other sectors that

have no direct link to agriculture.

1. The Problem

The reunification of Germany gave rise to agricultural corporations in eastern Germany the

likes of which are unprecedented in the European Union member states. The transformation of

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agricultural production co-operatives and collective operations into free-market businesses has

brought a new type of corporation into European agriculture. Through their size and legal en-

tity (BML 1997) they strongly differ from their largely family-owned, EU counterparts. An

until now seldomly highlighted fact of the transformation process undergone by agricultural

businesses in the former East German states is that many of these corporations possessed non-

agricultural subsidiary companies when they started their transformation. These subsidiary

companies consisted mostly of trade operations, processing of agricultural commodities, sup-

ply utilities for the local population and communal service operations (Gosskopf and Kappel-

mann, 1991). Therefore, in addition to the restructuring of their agricultural production, busi-

nesses also had to consider the future of their subsidiary companies.

In the following pages, possible goals of the restructuring of subsidiary companies, or to be

more exact, of corporate diversification will be discussed. The analysis of empirical data will

show not only which goals are important in the diversification of agricultural businesses in the

new German states, but also to what level they are achieved.

2. Definition of Terms

There are at times vastly different interpretations of the meaning of the word diversification in

theory and in practice, so it is therefore necessary to clearly define this term.

The most common definition is one formed by Ansoff (1957), who sees diversification as being

one of four possible growth strategies of a business. These four strategies are differentiated

using the product-market strategies for business growth alternatives (see Figure 1).

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Figure 1: Product-market strategies for business growth alternatives

Market

Product line Old New

Old Market penetration Market development

New Product development Diversification

Source: Ansoff; (1957), p. 114

Growth strategies:

1. “Market penetration is an effort to increase company seal without departing from an origi-

nal product-market strategy. The company seeks to improve business performance either by

increasing the volume of sales to its present customers or by finding new customers for present

products.

2. Market development is a strategy in which the company attempts to adapt its present prod-

uct line (generally with some modification in product characteristics) to new markets. A pas-

senger airline that decides to branch into cargo transportation is an example of this strategy.

3. A product development strategy, on the other hand, retains the present markets and devel-

ops products that have new and different characteristics such as will improve the performance

of the market.

4. Diversification is the final alternative. It calls for a simultaneous departure from a present

product line and the present market structure (Ansoff 1957).“

Ansoff’s definition immediately presents the question of what is a new market or rather, what

is a new product? For example, a cash crop farmer decides to add lin seed to its crop rotation.

For that particular business, this represents a new product that will have to be sold to a previ-

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ously untargeted market. But the product of this operation has basically not changed: it is still

selling cash crops.

A differentiation specific to agriculture was developed by Ilbery (1988), who identified five

different areas of diversification for agriculture:

1. Farm-based tourism (Bed &Breakfast, Camping, etc.)

2. Farm-based recreation (Farmhouse teas, Golf course, etc.)

3. Adding value to conventional enterprises (Processing cheese, Direct marketing, etc.)

4. Unconventional enterprises (Sheep milk, Triticale, etc.)

5. Ancillary buildings/ resources (Farm woodland, Redundant buildings, etc.)

(Ilbery, 1988).

These categories are very well suited to systematise the non-agricultural sector, which is often

seen in family-farms. However, the differences between agricultural and non-agricultural ac-

tivities are still not quite clear. Especially the term “unconventional enterprises“ can lead to

various differentiations, should the businesses be located in different climatic regions. A further

problem of this differentiation is that areas such as trades and certain parts of the service sector

are not separately listed, but are all lumped together in a sixth category entitled “Others“.

As a result of the varying interpretations of the word diversification, the team working on di-

versification for the Schmalenbach Society (Luettringhaus 1973) defined diversification as:

• “the existence of a product that is so new for the business in question that a new market

must be found for it or

• the development of a market that is so new for the business in question that it leads to the

creation of a new product,

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• behind which is the intention of a permanent continuation of present markets and product

lines, as well as the addition of new ones (Luettringhaus, 1973).“

However, within the scope of a large scale survey, the definition put together by the team from

the Schmalenbach Society lacks practicality and efficiency, as it necessitates repeated inquiries

of the companies in question. Therefore, the methods of official statistics are generally relied

upon. Diversification is mentioned in this context when there are differences between the first

two, three or four digits of the statistical codes as they are used by the U. S. Census Bureau

(Gorth, 1962; Buehner, 1983; Jaquemin and Berry 1979).

For the purposes of this study, it was decided that diversification in agriculture occurs only

when a business or company in the agricultural sector was economically active in areas other

than livestock or crop production. The systematics of the industry branches (Statistisches Bun-

desamt, 1979) are used to distinguish agriculture from other product/market areas. A two digit

statistical code is used. This code differentiates 33 profit-earning subdepartments, whereby

agriculture and forestry represent one of these 33 departments. The definition of the subde-

partment agriculture and forestry is nearly the same as at the two digit NAICA (North Ameri-

can Industry Classification System; U. S. Census Bureau,1998) statistic code.

3. Basis for Data

Statistical data in reference to the impact of diversification in agriculture are not yet available

for the new German states. The studies that currently exist about the diversification of agri-

cultural businesses refer only to the old West German states (Boeckmann and Mose, 1994;

Kuhnert and Wirthgen, 1996). Therefore, it was necessary to conduct a widespread mail sur-

vey in the new German states in order to collect such needed data. To gather this information,

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1313 copies of a questionnaire were mailed out in the spring of 1996. It is important to note

that it was impossible to conduct a fully representative survey, as it was not technically feasible

to collect data from all existing operations. 425 questionnaires were returned, of which 215 did

not meet the selection criteria and were therefore eliminated. Amongst those that were

deemed unuseful, 100 were submitted by operations who were either in the process of liquida-

tion, were under 250 hectares in size and with fewer than five employees. The other 115 were

missing substantial portions of information. The business and production structure profile of

the agricultural region within which the businesses received the survey was not significantly

changed by the exclusion of the 115 questionnaires that did not supply adequate information

(average size of farm and workers per farm; t-Test, q<0.05 ). The results of this survey were

therefore based on the information received from 210 questionnaires.

In this survey, it is also important to note that the differentiation of a business here is not the

same one as used in German statistics. German statistics differentiate according to legal enti-

ties. According to German taxation laws and guidelines for grants of businesses, agricultural

corporations that become substantially active in areas outside of plant and animal production

are forced to form their non-agricultural activities into independent legal entities. This study

neglects these legal definitions and treats subsidiaries and mother company as a single business.

For example, a dairy co-operative that, for grant and taxation reasons, founds both a suckler

cow operation and a butchershop as subsidiaries, is treated as a business active in the areas of

agriculture and meat processing.

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4. Meaning of Diversification in Large-scale Agricultural Businesses

In order to better analyse the gathered data, a comparison was made between some structural

data and data from the 1997 Farm Report (see Table 1). The gathered data was compared to

those of corporate entities, as only 2% of the returned surveys came from natural entities.

Table 1: Structural Data Comparison of Survey Data with the 1997 Farm Report

BML-Test-

operations

legal entities

(n=298)

all surveyed

businesses

(n=210)

diversified

(n=108)

non-

diversified

(n=102)

Type of agricultural operation

fodder crops % 47.0 42.9 38.9 47.1

cash crops % 40.9 41.0 41.7 40.2

mixed % 10.7 13.3 16.7 9.8

other % 1.4 2.8 2.7 2.9

Average size of farm1) ha / farm 1451 1692 1907 1465

Soil quality index index 39.12) 39.6 38.9 40.3

Livestock units / arable land units/100 ha 69.4 65.6 70.0 60.9

Labour efficiency3) AWU/100 ha 1.67 1.67 1.69 1.65

*Index for the natural productivity of arable land (min. ca. 10 = sand soil, max. 100 = chernozem or loess with600 mm of annual precipitation and a yearly annual temperature of 8 C°)1) arable land2) Calculations based on a comparison figure3) Only workers in agricultural production; 1 unit be equivalent to 1 full-time workerSource: BML 1997 and own research 1996

It is clear that non-diversified businesses are nearly fully comparable to the operations in the

Farm Report. On the other hand, diversified businesses, meaning ones that are economically

active outside of agriculture, are only comparable to those in the Farm Report in terms of the

number of agricultural employees per square unit of land and livestock units per square unit of

land. In terms of the type of agricultural operation and total workable acreage however, diver-

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sified businesses showed significant differences (χ2-adjustment test q<0.05; t-Test q<0.05)

when compared to the other two groups. Overall, they are larger in size and their agricultural

production structure is less highly specialized.

Table 1 shows that out of the 210 businesses analyzed for this survey, 108 or 51% were eco-

nomically active outside of agriculture. This figure, however, does not indicate the importance

of the diversification to the business. To measure the level of diversification, criteria such as

relative share of turnover, share of cash flow and share of profit are often used (Schuele,1992).

But since a pre-test already indicated an inability or unwillingness on the part of the agricul-

tural businesses to provide suitable data, a different alternative was required. A good indicator

was found in the number of employees. These were divided into three groups: agricultural pro-

duction, non-agricultural sectors and others (including management, administration and other

internal services). This resulted in the statistics shown in Table 2.

Table 2. Number of Workers

All operations

(n=210)

diversified

(n=108)

non-diversified

(n=102)

Total number of workers WU 43.1 56.1 29.4

agricultural production WU 28.3 32.3 24.1

non-agricultural sectors WU 8.0 15.4 0.0

others WU 6.8 8.4 5.3

Source: Own research 1996; WU = Working Units

On average, 18.6% of all employees were working in non-agricultural sectors. But a compari-

son between these figures and the ones of the Farm Report presents considerable problems.

The 1996 Farm Report averages 44.9 workers in agricultural areas and 1.5 workers in other

business areas for legal entities, yet is not considered fully representative of all legal entities

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(BML, 1996). The 1997 Farm Report is not directly comparable to the 1996 version because

of changes in method that were made, but the 1997 survey is considered representative (BML,

1997). The methodical changes made between 1996 and 1997 also include a difference in the

classifications of employees of legal entities. In the 1997 report, distinctions are made between

Management and Administration, Plant and Animal production, and other workers. This pat-

tern is not identical to the one used in this survey. Here, the differentiation was made between

management, administration, other internal services as one group and remaining workers as the

other group. If the same numbers of management and administration workers were used in

this survey as were shown in the Farm Report of 1997, the results would show 9.6 other

workers in the operations surveyed. Should the number of other workers then be set against

the total number of employees, the percentage of other workers in this survey is 22.3% as op-

posed to the 18.6% in the 1997 Farm Report. Therefore, it can be assumed that the importance

of non-agricultural business branches is well reflected in the data that was collected throughout

the course of this research.

The proportion of employees in non-agricultural sectors in relation to the total number of em-

ployees clearly indicates that these sectors are an integral part of agricultural businesses.

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Figure 2: Share of Employees of Surveyed Diversified Businesses in Non-agricultural

Sectors:

7,4%

24,1%

13,9%

18,5%

36.1%

0%

10%

20%

30%

40%

> 5 % 5 % - 10 % 10 % - 25 % 25 % - 50 % 50 % <

share of employees

Perc

enta

ge o

f su

rvey

ed d

iver

sifi

ed b

usin

esse

s

Source: Own research, 1996

In one third of the businesses active in non-agricultural areas, only up to 10% of the employees

work in commercial/industrial sectors, indicating that this is only of minor importance to them.

Another one third of the businesses have 10-25% of their workers employed in non-

agricultural sectors, and for the final third, such activity makes up substantial part of their busi-

ness.

In addition to the statistics discussed above, the number of employees in the different business

branches is also of importance. The frequency of which the branches were mentioned by those

surveyed and the number of employees in the most important business branches are illustrated

in Table 3. As well as those listed in Table 3, the 108 diversified businesses are also active in

23 other branches that are non-agricultural. In total, 298 non-agricultural business activities

were registered.

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Table 3: Importance of Individual Non-agricultural Sectors

Non-agricultural business

branches:

number of

active

operations

average number of

employees in the

business branch

average percentage of

workers (of the total

number of employees)

Agricultural engineering 39 5.2 7.3 %

Construction industry 21 23.6 16.2 %

Agricultural contracting for

other farmers

19 1.7 3.5 %

Meat processing 19 12.7 18.9 %

Grocery retailing industry 17 9.0 13.3 %

Hospitality and tourism 16 3.5 6.1 %

Rural conservation and

environmental protection

14 5.2 8.1 %


With these results, it is important to note that there are several large corporations in the con-

struction and meat processing industries that heavily influence these averages. Should these

corporations be excluded, the number of workers in construction falls to an average of 5.8 and

the average number of workers in meat processing falls to 7.4. If one considers that the diver-

sified businesses employ an average total of 15.4 workers outside of the agricultural sector,

this indicates that they are for the most part active in a number of non-agricultural business

branches. 73% of the businesses are involved in multiple non-agricultural fields, 49% of which

show involvement in at least two or three.

5. Goals for the Diversification of Businesses

The goals that businesses are trying to achieve through diversification can be many, and it is

impossible, in the scope of this report, to list all the ones that are discussed in the literature

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pertinent to this subject (Schuele, 1992; Reed and Lufmann, 1986; Mohren, 1996; Jacobs,

1992). The goals and conduct of family-run agricultural businesses ( Bowler et al., 1996;

Schmitt, 1989; Sohn, 1989; Tschajanow, 1987) will not be discussed within this context, as

they were not included in this study. For the purposes of clarity, the most important theoretical

goals are divided into four specific groups:

1. Efficiency-oriented goals

2. Risk-oriented goals

3. Growth-oriented goals

4. Management-oriented goals

A business that chooses to differentiate using efficiency-oriented goals is one that tries to make

better use of inefficient or excess tangible and intangible resources. Generally, this is related to

the use of synergy potentials between the existing main sector of the business and the new sub-

sidiary branches, which eventually will lead to an increase in profits or a lowering of costs for

the company (Ansoff, 1987; Baumol et al., 1988; Seth, 1990b). Concrete goals of agricultural

corporations in this regard are, for example, increased capacity utilisation of machinery, the

smoothing out of labour peak, and improved usage of the multi-faceted knowledge of employ-

ees.

Risk reduction is another important goal of diversification. The entry into new markets should

make the corporation more resistant to disruptive effects within its business environment. This

is especially important for highly specialised companies, as their success is strongly dependant

on a very narrow field of buying and selling markets (Amit and Livant, 1988). Because of a

strong dependence on political decisions and at times suddenly volatile consumer behaviour

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(i.e. BSE-Crisis), risk reduction as a goal of diversification is growing in importance for agri-

cultural businesses.

Growth as a goal can be equated with a long-term strategy of security of livelihood. Through

the entry into sectors with good prospects for the future, companies whose current areas of

business are in the stagnant or degeneration phase of the product, branch or technology life

cycles are trying to guarantee the future success and survival of their corporations (Ansoff,

1957). Agricultural commodity production is without a doubt in the stagnant, if not the degen-

eration phase. An enterprise active in this sector only has potential for long-term growth if it

tries to be a price leader or if it branches out its activities into other areas.

The goals of management can often be derived from the „Theory of the Firm“ (Jensen and

Meckling, 1976). The group of management goals that could be relevant in this context con-

tains two approaches. The first one is that managers strive to maximise their personal benefits

(power and income). This is an irrelevant goal from the point of view of the profit maximising

business. The second approach implies that a manager‘s behaviour is influenced by social re-

sponsibility for the company, the workers and society, not by his personal desires. The creation

or preservation of jobs is especially desirable in the new German states.

To determine the relevance of these four groups in terms of business diversification, the oper-

ating managers were asked about their expectations in terms of the changes branching out into

non-agricultural sectors would bring. Table 4 shows the expectations of the four goal-groups:

efficiency (cost reduction), risk reduction, development of growth markets and job security.

They are sub-divided along the lines of diversified and non-diversified businesses, as it is as-

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sumed that non-diversified businesses will have more negative expectations about diversifica-

tion than businesses that have already extended their activities into non-agricultural sectors.

Table 4: Expectations of Change as a Result of Diversification

percentage of surveyed businesses

positive neutral negative

Cost reduction:

non-diversified (n = 55) 43.6 % 36.4 % 20.0 %

diversified (n = 86) 54.6 % 34.9 % 10.5 %

Commercial risk reduction:


diversified (n = 90) 74.5 % 14.4 % 11.1 %

Development of a growth market:


diversified (n = 81) 64.7 % 29.6 % 3.7 %

Job security:

non diversified (n = 61) 85.3 % 9.8 % 4.9 %

diversified (n = 98) 86.8 % 12.2 % 1.0 %


Contrary to the above assumption, the expectations of the diversified businesses are parallel to

those of businesses only active in agricultural sectors. This shows that large-scale agricultural

operations fundamentally believe that diversification is indeed an opportunity for the future.

The percentage of businesses with positive expectations is only marginally higher amongst di-

versified businesses than amongst those that are not diversified, except in the area of risk re-

duction. Overall, job security was the expectation that received the highest share of positive

assessments, followed by risk reduction. The belief that success could be achieved through the

development of growth markets and the reduction of costs did not find a lot of support, al-

though it is interesting to note that the long term possibilities for business expansion through

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the development of such markets were more positively rated than the short term increase of

earnings that cost reductions would bring. Of even greater significance is the restriction of the

risk of insolvency, which is at least partly caused by strongly fluctuating profits on the com-

modity markets. But the expectation that was mentioned the most by those surveyed is one

with a very human aspect: through diversification, operations expect to be able to provide job

security for their workers. Social responsibility towards their employees is one of the basic

motivations for businesses to move towards diversification.

6. Goal achievement

Of course, the degree to which the goals are achieved is substantially more important than the

actual determining of those goals. A quantitative measurement of the degree of goal accom-

plishment would be desirable, but is currently not possible as it demands uniform cost calcula-

tions and long term statistics. Due to these reasons, the economic analysis must rely on the

qualitative data gathered through the survey. To increase the level of detail in the responses,

the four sectors of diversification were divided into upstream sector, downstream sector, re-

lated sectors and others2 . The respondents rated the effects of these diversification sectors on

agricultural businesses as either positive (decrease), neutral or negative (increase)3 . The results

for production costs are shown in Table 5.

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Table 5: Effects of Diversification on Production Costs in Agriculture

percentage of diversified businesses


upstream sector (n = 45) 75.5 % 15.6 % 8.9 %

downstream sector (n = 33) 78.8 % 18.2 % 3.0 %

related sectors (n = 19) 63.2 % 36.8 % 0.0 %

other sectors (n = 34) 38.2 % 53.0 % 8.8 %


From Table 5 it becomes clear that the respondents see almost no negative effects in the agri-

cultural sector in terms of production costs. On the contrary, diversification in sectors linked to

agriculture (upstream-, downstream-, and related sectors) leads to a reduction of production

costs. As expected, activity in other sectors has no prevailing effects on production costs.

A different view is presented for overhead costs (see Table 6).

Table 6: Impact of Diversification on the Overhead Costs of Businesses






other sectors (n = 37) 43.3 % 37.8 % 18.9 %


The overhead costs of a business cannot be as positively influenced by activities in non-

agricultural sectors as were the production costs in agriculture. A positive effect on overhead

costs is only possible if the employees in management and administration had not been fully

17

utilised before diversification or if there is under-proportional growth in operating costs. The

exact opposite happened in 36.4% of cases in the downstream sector and in 18.9% of cases in

other sectors, showing negative effects in terms of overhead costs.

The diversified branches also show distinctive differences on the subject of risk reduction (see

Table 7).

Table 7: Effects of Diversification on Commercial Risk






other sectors (n = 34) 47.1 % 38.2 % 14.7 %


According to the information provided by those surveyed, interests in the upstream sector were

considered to be very beneficial to risk reduction. The downstream sector, on the other hand,

received the worst rating from the respondents. Involvement in the nutrition industry or with

the wholesale of agricultural products is believed to contribute to a risk increase. These results,

especially in the upstream and related sectors, do not correspond with the expectation that

commercial risk decreases the less closely tied together the diversified sectors of a business are

(Lehmann, 1993). Obviously the effects expected by the businesses overlap with the risks spe-

cific to each sector.

Should a business be considering expansion into a certain field, it is assumed that the reason for

such an expansion is the possibility for development. From an operational perspective, this

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indicates the presence of a growth market. As well, expansion leads to being able to provide

employee job security, which is one of the basic motivations for moving towards diversifica-

tion. Two goals, the development of new growth markets and job security, can be measured by

looking at the expansion intentions of a business. These intentions of businesses in each of the

four sectors are illustrated in Table 8.

Table 8: Diversified Businesses: Intent to Expand

Businesses

with intent to expand without intent to expand

upstream sector (n = 62) 21.0 % 79.0 %

downstream sector (n = 46) 21.7 % 78.3 %

related sectors (n = 21) 52.4 % 47.6 %

other sectors (n = 42) 40.5 % 59.5 %


The conditions for corporate expansion are rated as most advantageous in the related and other

sectors. This is especially true of waste disposal, which was named by ten businesses in the

related sector, and hospitality and tourism, which was named by 8 businesses in other sectors.

The percentage of businesses with expansion intentions in upstream and downstream agricul-

tural sectors is distinctly lower.

7. Conclusions

The above-mentioned goals of cost reduction, risk reduction, development of growth markets

and job security can be achieved by agricultural businesses through diversification. The degree

of accomplishment varies according to how the involvement in non-agricultural fields is carried

out and in what sectors it is carried out.

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The downstream sector is the one in which most businesses (78.9%) show a positive effect in

terms of production costs in agriculture. Here, production can be aimed more effectively at

sales volume. On the other hand, it is this same sector that has the worst results in overhead

costs and the highest percentage of businesses who think it leads to an increase in commercial

risk. Only one in every five of these businesses intend to expand further. The downstream sec-

tor, therefore, shows the greatest weaknesses in the most important goal-areas, those being

risk and long term growth. This is not surprising, since agricultural businesses have expanded

their scope of service only one level closer towards the end consumer, why they feel marketing

risks and limitations more directly. As a result, the downstream sector as a suitable diversifica-

tion field for agricultural businesses is contingent upon each business’ individual situation.

According to the results of those surveyed, diversifying into sectors such as agricultural cus-

tom operation and agricultural engineering result in both production and overhead cost reduc-

tion in the corporation’s main area of activity. Synergistic potential is evident here as machines

and know-how are used more effectively. In 60.5% of all cases, the surveyed businesses indi-

cated a decrease of commercial risk. In this context, the decrease in down time, better repair

and overhaul possibilities, and more machinery have a positive effect on the risk level. The high

percentage (63%) of active businesses and the small number (21%) who intend to expand in-

dicates that the existing potentials will continue to be used. In summary, the upstream sector is

very interesting in terms of its profitability, but does not offer any long term development pos-

sibilities.

The other sectors, which aren’t directly connected to agriculture, do not have any influence on

agricultural production costs in the minds of the majority of the respondents. The effects on

20

overhead costs are assessed in varying ways. 43.3% of the operations can obviously make

better use of available management and administration resources here, but 18.9% of businesses

indicate the exact opposite result, showing an increase in overhead costs. The risk factor and

the expansion intentions are represented in a very positive light. Long-term potentials in these

other sectors are substantially better than in the upstream and downstream sectors.

According to the assessments of those surveyed, jobs in areas such as rural conservation, hor-

ticulture, environmental protection and waste disposal do not have any negative effects on

production costs, and at times, have only minimal negative effects on overhead costs. Activities

in these areas make a higher maximisation of agricultural equipment and equal division of la-

bour possible. The commercial risk criterion has no influence in most cases. The fact that

52.4% of businesses in this sector want to expand is very key. The related sector is very suit-

able for strong and sustained corporate development. It is important to note, however, that this

is the sector within which there are the fewest number of active businesses. Market saturation

can therefore happen very quickly.

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1 An earlier version of this paper has been presented at the annual meeting of the “Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaus e. V.“ 1997.2 Upstream sectors: agricultural engineering, animal feed industry, agricultural contracting for other farmers,etc. Downstream sectors: nutrition, wholesale of agricultural products, grocery retail business etc. Related sectors: horticulture and landscaping, rural conservation and protection of the environment, waste disposal etc. Other sectors: construction, hospitality and tourism etc.3 The number of cases fluctuate since not all of the active corporations supplied information about their commercial risk, or about their production and overhead costs.

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