Agribusiness
What is agribusiness?
• Sector of the industry that combines agricultural production and business decisions.
• Important to farmers because this is how they buy and sell their products and purchase necessary inputs and services.
The Role of Consumers
• Consumer preferences have a major impact on agricultural production because consumers dictate markets.
• Supply: amount of a product available at a specific time and price.
• Demand: willingness of consumers to buy something, greatly influenced by price.
Agricultural Inputs & Outputs
• Inputs– Feed– Seed– Machinery & Equipment– Fertilizers & Chemicals– Insurance– Credit– Animal Medications
• Outputs– Crops– Market & Breeding
Animals– Milk– Eggs– Timber
Important Financial Concepts
• Cash Flow– Income & Expenses – usually on a monthly or
annual basis• Net Worth (Balance Sheet)– Assets & Liabilities
• Budgets– Income & Expenses – helps with projecting future
• Income Statements (Profit/Loss)– Reflects profitability of business
Cash Flow Terms
• Income/Receipts– Wages, gifts, government payments
• Expenses– Personal: food, fuel, insurance, clothing, utilities,
taxes, recreation, medical, child care, school, loan payments (mortgage, auto, etc.)
– Business: seed, feed, chemicals, payroll, equipment, insurance, taxes, loan payments
Balance Sheet Terms
• Assets (things a person owns)– Short term: projected life of
less than 1 year• Cash, checking, savings, crops
for sale, market animals, accounts receivable
– Intermediate term: projected life of 1-10 years• Vehicles, machinery,
equipment, breeding animals
– Long term: projected life of 10+ years• Real estate and
improvements, houses
• Liabilities (things a person owes money on)– Short term
• Operating loans, credit cards, accounts payable
– Intermediate term• Auto/equipment loan,
loan to purchase breeding animals
– Long term• Mortgage, real estate
loan
Financial Calculations
• Net Worth: difference between total assets and total liabilities– Net Worth = Total Assets – Total Liabilities
• Liquidity: ability to pay debts as they come due– Liquidity = Short term Assets – Short Term
Liabilities• Solvency: ability to convert all assets to cash
if needed to pay all debts at once
Important Financial Terms
• Interest: charge for borrowing money from a bank or individual– Typically based on term of loan and repayment ability
of consumer (based on customer history and credit score)
• Variable cost: expenses that change regularly– Fuel, food
• Fixed cost: expenses that stay the same each month– Insurance, mortgage payment
Careers in Agriculture
• Choose a career in agriculture – ONE DIFFERENT CAREER PER PERSON
• Make a poster with the following information:– Job Title– Job Description– Education Requirements– Work Schedule– Salary– Personal Characteristics