What is Agribusiness?

Throughout the Midwest, there has been a longstanding reliance on crop farming, dairy farming, and ranching to support the economy and the families who live there. The tendency to imagine the small family farm and the tireless farmer out plowing the fields with a team of horses, however, has been outdated for decades. Instead, the work that goes into the land and livestock and the products that come out have led to the creation of whole industries that are intricately connected and which support – or in some cases replace – the traditional structures and responsibilities. As a whole, all of these functions are termed “agribusiness”.

One of the most important concepts to understand fully before you start a new company that will be engaged in this market or when you are considering ways to reposition your existing business through an expansion or merger is how the different components interact with each other. The complex network of suppliers, distributors, food manufacturers, and growers does not tend to permit one party to significantly outpace the success of those in parallel operations. Failing distributors can prevent produce and meats from reaching the market in a timely manner, costing farmers and ranchers substantial amounts of money in lost revenue as their goods expire.

Examples of Agribusinesses

With a scope as broad as that of agribusiness, it can be difficult to get a clear picture of which businesses belong in the category. Moreover, it can be a challenge to identify what role a specific company or kind of business plays in the larger scheme. It is helpful then, to break these separate concerns down into smaller groupings that can be more easily organized.

Farming and Ranching

Dairy farming – farmers who raise cows, milk them, bottle the milk for sale, make butter, and other dairy products

Cattle ranching – ranchers raise livestock intended to be sold for meat, leather, and other byproducts

Crop farming – crops are planted, grown, and harvested at which point they may be sent directly to market or sold to a company that will use the crop to make something else, frequently extracting oils

Suppliers

Farming machinery makers – design and build machines such as tractors, tillers, threshers

Retail farming stores – sell machinery and tools to farmers

Chemical companies – make pesticides, fertilizers, and other chemicals used to enhance growth in some way

Distributors

Direct delivery – for transporting goods directly to the retail environment where they will be sold

Warehouse delivery – crops will be carried to a distribution center where they will be stored with others until orders are received or a specified shipping date

Food Manufacturers

Canneries – making tinned fruits, vegetables, and other products intended for long shelf life

Companies which convert byproducts into useful goods

Companies that produce packaged items such as cereals, pet foods, etc.

To Learn More

The Des Moines agribusiness lawyers of LaMarca & Landry, P.C., can help you to fully understand how the present state of the law bears on your agribusiness. Speak with them directly to arrange a consultation.

Fighting Agribusiness Fraud

No one really thinks of fraud being a major agribusiness concern. But when a Georgia-based Temple-Inland, Inc., a corrugated packaging and building products manufacturer, recently found out it was a victim of a $4.8 million fraud scheme, the company became an example of how no industry is safe.

An employee of the company and eight of his accomplices alleged dreamed up and implemented a plot to overcharge the company for timber deliveries and then skim the overage off the top of the company’s payment for the non-existent timber. The employee is said to have discovered how to adjust the computer system in the company’s scale house so that he could produce two weight readings when one truck passed over the scales, thus creating an extra, fictional load. The employee allegedly secured the involvement of truck drivers to pull off the scheme. In one case, a driver received $910,000 in payments for deliveries when in fact he’d delivered nothing to the mill. The result – Temple-Inland paid close to $5 million for shipments they never received. That’s a lot of damage caused by one employee.

Temple-Inland’s agribusiness insurance policy, if it contains coverage for employee theft, would cover the loss up to the coverage limits stated on the policy. Still, with agribusiness insurance companies, as with most insurance companies, there’s a measure of responsibility that falls on the company to prevent future occurrences. Now that the plot has been uncovered, the company should be putting safety measures in place to prevent a repeat of the alleged crime. Coverage is a great way to mitigate the loss, but agribusiness companies do run the risk of having future claims denied if there is no indication of preventative measures.

When in doubt, talk to your agribusiness broker. Criminals are becoming more sophisticated in their approach. While you may not be able to predict the next incarnation of crime, your insurance broker can help you address potential areas of weakness in your business operations.

Android Smartphone AG Apps Being Created For Agribusiness

Farmers are typically early adaptors of new technology, especially tools that enable them to save money and increase overall profits. So it’s not surprising that as smartphone apps migrate from the era of cute games into fully interactive databases that are functional and extremely user-friendly Agribusiness would be on the leading edge.

A good AG app runs quietly in the background of the farmer’s everyday life, but is at the ready to be used to help him in his daily tasks. One of the biggest challenges each farmer faces is decisions related to marketing his grain. Small decisions on cash price, delivery period, who the grain buyer is, as well as basis and offset can dramatically affect a farm’s profit and loss.

Of course, traditional costs for fertilizer, land, irrigation, seed and fuel always need to be applied to the farming operation.

The average farmer needs to factor in dozens of variables to create a complete overview of the farm operation. Smartphone AG apps make this much easier. In addition to being able to send commodities pricing and breaking news to the producer, having both historic and up-to-date information in the palm of his hand allows the farmer to make much more informed decisions on marketing his grain

One of the first mobile Android AG apps on the market is Farmer’s Partner. Android apps are popular with many farmers because Verizon coverage typically reaches more rural areas than other mobile phones.

As the adoption of smartphones continues to increase among farm producers we’ll no doubt see many apps serving the AG market and today’s farmer.