AGR 330- Chapter 1 Review Questions

The US agri-food system is the largest part of our economy. It generates about ____% of total gross domestic product and ____% of all employment (24 million jobs)

27% of total gross domestic product 18% of all employment

Explain what happened to the composition of agricultural trade between 1975 and 1999. What are the implications of this change for our agri-food system?

They were trading all raw agricultural commodities such as Wheat, Corn and Soybeans.

US Farmers receive ___ cents of each food dollar.

20 cents

Americans consume an average of ___ lbs of food each day.

6 pounds

Why have our agricultural exports to Europe declined 50% since 1975?

...

List and explain the 6 factors that people consider in their hierarchy or reasons for buying food.

1) When people are struggling to find enough to eat, they want to find enough affordable, safe and nutritious food. 2) Once they are confident they can achieve this on a regular basis, their food purchases become influenced by whether the food tastes good as well as offers variety. 3) When the first two levels of needs are assured, the next priority becomes convenience- the ease with which a type of food or meal can be prepared, cleaned up and consumed. 4) When consumers are confident they can achieve the first three levels of food needs, the next priority becomes finding foods that promote and protect their health. 5) next priority level is whether the food purchase helps one to live well. 6) achieving social status and supporting causes are at the highest level of the hierarchy.

Consumers spend ____% of their after-tax income on food, with ___% being spent for food at home and ____% spent for food away from home.

11% after-tax income on food 6% being spent for food at home 5% spent for food away from home

Each US Farm worker produces enough food to feed ____ people. This amounts to ____% in the US and ___% in other nations.

155 people 75% in the US and 25% in other nations

Because of the steady growth in farm productivity brought about by advances in the production sector, farmers in 1998 produces __ times as much output with the same amount of inputs as they did in 1950.

6 times

Net farm income as a percent of farm receipts dropped from 41% in 1959 to 19% in 1998. A) How has this contributed to the situation where today only 7% of US Farms account for approx. 60% of the output? B) what are the implications of this statistic for the size of firms needed to serve production agriculture in the future? C) What are the implications of this statistic for the size of firms needed to serve production agriculture in the future? D) What are the implications of this statistic for maintaining the small and medium sized "family farms" in the future?

A) Bigger farms to produce more. B) There will be less family farms in the future and more factory like farms. C) We are going to need bigger farms because as the population increases we will need more food. D) it's not going to happen

The farmers share of the consumer food dollar has been steadily declining over the past 30 years: a) Why is this happening?- b) Is this a good thing or a bad thing?

A) Consumers want more processing. B) It's a joke

Nearly all the benefits we derive from our world-class agri-food system come from the transformation of science into technology and the application of effective business management. A) What three conditions allowed US agriculture to develop such a system? B)How did an abundant supply or relatively cheap land contribute to the advancement of production technology? C) What business management skills must modern farmers and ranchers possess in order to be successful?

A) Free enterprise, Democratic System, vast tracts of land. B) Allows us to have large farms and equipment. C) Marketing, Human Resources, Finance and economics.

The Industrial Revolution led to the development of the input sector and the processing/manufacturing sector. A) How did this happen? B) How did farmers benefit?

A) From the changes and inventions that helped grow the farm industry. B) Farmers were able to buy inputs that were more productive and cheaper than the ones they produced themselves.

The processing/manufacturing sector brings out 1000 new products each month. A) What happens to most of them? B) Is this good for the farmers? Why?

A)They don't make it B) No. It's not good because that is just more that they have to produce.

What is US agriculture advantages in the export market today? What does this mean for how the agri-food industry must operate?

Advantages: Ability to utilize our cost saving technology to ship abroad value added products rather than raw commodities. It faces more competition from other countries.

What is the relationship between the size it takes for a farmer to survive and the size it takes for other parts of the agri-food system to survive?

All the farmers work together to survive and all the other parts of the agri-food system also work together to survive.

Why are agricultural exports a declining share of US total exports?

Because the US produces agricultural foods that contain GMO's and a lot of countries are against foods like this.

Give the most profound change that has happened in the input sector and tell what has happened to allow this to occur.

Decline in labor use. ; as farm equipment and technology becomes better, we don't need as many hired farm hands.

If US farmers received a higher percentage of the consumer's food dollar then farmers would have a higher net income. True, False or Uncertain. Explain your answer:

FALSE, because it's not % of what is received, it's what consumers want to buy. EX) Organic.

Farmers have been the primary beneficiaries of this tremendous increase in production efficiency. True or False? Explain your answer.

False. Consumers have been the primary beneficiaries of this success. Nearly all the productivity gains on the farm and elsewhere in the system have been passed along to consumers in the form of lower retail food prices.

How did government activity, research and private enterprise combine to build a separate stand-alone input sector during the 20th Century?

Government continues to research.

Explain the three forces that have changed the way the production sector operates and tell how these forces have led to the need for farmers to be large.

Initially the development of the input and production sectors of the agri-food system enabled farmers and ranchers to concentrate their efforts on producing greater quantities of agricultural commodities. Another force on the production sector stems from declining prices brought on by the adoption of new technology-farmers and ranchers have to seek lower cost-per-unit production methods. Lastly, many lower-cost production methods and productivity-enhancing inputs are expensive to purchase, making their use by smaller farms impractical.

List and Briefly explain the six components industries of the agri-food system

Input suppliers- ag business firms that prepare and sell things like feed, seed, fertilizer, and credit to farmers and ranchers. Producers- ag business firms (farms and ranches) that purchase items from input suppliers and produce agricultural commodities such as wheat, corn, raw milk, cattle, fruits, etc. Commodity Processors- ag business firms that buy ag commodities such as raw milk, wheat and live cattle from farms and ranches for processing. Food Manufacturers- ag business firms that purchase the processors' products to manufacture prepared food products. Food Distributors- ag business firms that transport agricultural commodities as well as processed and manufactured food products between different parts of the agri-food system. Food Retailers- ag business firms that sell agricultural commodities such as fresh fruits and vegetables, processed food products such as flour and pasteurized milk.

An increasing number of consumers are basing their food-buying decisions on the top items of Kinsey's hierarchy. What are implications of this for agribusiness firms?

Intense market competition for the consumer's food dollar, combined with the growing size of this market segment, means that agribusiness firms throughout the agri-food system must pay greater attention to these issues if they wish to be successful in the future.

Explain how the future of the agri-food industry depends on how responsive it is to the desires of consumers for greater accountability and specific product attributes.

Knowing the product, characteristics of the product.

What is the major cost component of a food dollar? Is it likely to go up or down in the future? Why?

Major cost component of a food dollar- Labor and Transportation. The cost component is likely to stay the same but labor and transportation prices will continue to rise.

Why are US grain exports declining?

More countries are exporting raw commodities and more of america's trading patterns are now self sufficient in these items.

Why is the loss of valuable cropland to urban and other non-farm use not considered to be a major concern?

Technology is always getting better and they can make a crop that produce more on less land.

The supermarket industry is very competitive, with net profit averaging only one percent of sale. How do Supermarkets survive?

They survive by generating high sales volumes and turning their inventory over several times each year.

With less than ___% of the worlds land, US Farmers produce ___% of the world's agricultural output including __% of the world's corn and __% of the world's wheat. As a result, more than __% of each year's production of these crops is exported.

less than 7% US farmers produce 12% of worlds ag output including 40% of corn and 12% of wheat.. more than 27%