Fundamentals of Agribusiness. Anna Warner

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1 Fundamentals of Agribusiness Anna Warner

2 Area: Agriscience 12 Unit: Fundamentals of Agribusiness Situation Statement: The juniors and seniors enrolled in this class have participated in most of the other agricultural class offered. The students have experienced some of the agribusiness fundamentals through their SAEs. Unit Objective: Upon completion of this unit, students will be able to explain basic concepts of agribusiness and apply concepts to their SAEs or future careers. CSO Numbers Addressed: Unit Analysis: 1. How do the principals of supply and demand determine price? 2. What are types of agricultural marketing? 3. What are sources of credit for agribusinesses? 4. How can interest be calculated? 5. What are the steps in planning an agribusiness? 6. Fundamentals of Agribusiness Test 2

3 Lesson 1 Anna Warner Fundamentals of Agribusiness Title: How do the principles of supply and demand determine prices? Audience: High school students in Agriscience 12 CSO Number: Teacher Objectives: Upon completion for this lesson, the student will be able to: 1. Define supply, demand, and equilibrium price 2. Draw supply and demand graphs 3. Explain how the price of a product changes with supply and demand Materials Needed: 1. Chalk board or white board 2. Practice problems 3. Transparency: Blank, with different color pens 4. Overhead projector 5. Resources: Cooper, Elmer L. and L. DeVere Burton Agriscience: Fundamentals & Applications. 3 rd ed. Albany, NY: Delmar, Thompson Learning Printable graph paper: Motivation: Explain the following activity and then have the students choose an envelope. In the envelope the students will find either an amount of money or a product. The students will be given 1-2 minutes to buy the product(s) of their choosing. Discuss which products brought more money and which brought less money. Products with a lower supply and higher demand should bring a higher price. Subject Matter Procedure Motivation Supply the amount of a product available at a specific time and price Use the motivation to lead into definitions of supply and demand. Write on board. 3

4 Lesson 1 Anna Warner Demand the amount of a product wanted at a specific time and price Drawing supply and demand graphs Use a transparency with different color markers to show students how to draw supply and demand graphs. Determining price Equilibrium price is the price at which the quantity of a product offered is equal to the quantity of the product in demand (the price at which supply and demand intersect on the graph) Effects of supply and demand on price Show example on the transparency Give a scenario that would change supply and demand and illustrate the change in supply, demand, and price on the transparency Have student practice a few problems Draw generalizations / conclusions about the concept or supply, demand, and price Summary/Review: Have students draw conclusions then show diagram from the book for reinforcement. Ask the students questions to check for understanding. 4

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6 Lesson 2 Anna Warner Fundamentals of Agribusiness Title: What are types of agribusiness marketing? Audience: High school students in Agriscience 12 CSO number: Teacher Objectives: Upon completion of this unit, students will be able to: 1. Define retail marketing and wholesale marketing 2. List and describe the different types of marketing Materials Needed: 1. Chalk board or white board 2. Overhead Projector 3. Transparency: Food Guide Pyramid 4. Grain samples 5. Resources: Cooper, Elmer L. and L. DeVere Burton Agriscience: Fundamentals & Applications. 3 rd ed. Albany, NY: Delmar, Thompson Learning Motivation: h Subject Matter Procedure Motivation Retail Marketing: Selling a product directly to consumers Usu. used for ready-to-eat products On-the-farm Roadside markets Farmers markets Discuss and write notes on board EX. Hams and bacons not sold at the auction Ex. Our lamb 6

7 Lesson 2 Anna Warner Wholesale Marketing: Selling a product to a middleman (a person who handles and agricultural product between farmer and consumer) who then forwards it to the consumer Most U.S. ag products marketed this way Terminal market usu. a stockyard that acts as a place to hold animals until they are sold to another party; never own but receive a yardage fee Auction markets animals are sold by public bidding on individual lots (video merchandising); commission Direct Sales producer sells crops and animals directly to processors Cooperatives groups of producers who join together to market a commodity Vertical Integration several steps in production, marketing, and processing are joined together Ex. 75% of milk is marketed through coops Ex. Allen s Older Methods: Trading one product for another developing 7

8 Lesson 2 Anna Warner countries Cash sales Summary/Review Ask students questions to check for understanding 8

9 Lesson 3 Anna Warner Fundamentals of Animal Nutrition and Digestion Title: What are sources of credit for agricultural businesses? Audience: High school students in Agriscience 12 CSO number: Teacher Objectives: Upon completion of this unit, students will be able to: 1. Explain the differences of ruminant and non ruminant animals 2. Name, locate, and describe the functions of the parts digestive systems of ruminant and non ruminant animals 3. Classify farm animals as ruminant and non-ruminant 4. Research topic and present information to the class Materials Needed: 1. Chalk board or white board 2. Handout: Sources of Credit 3. Textbook for each student 4. Resources: Cooper, Elmer L. and L. DeVere Burton Agriscience: Fundamentals & Applications. 3 rd ed. Albany, NY: Delmar, Thompson Learning Motivation: h Subject Matter Procedure Motivation See handout Summary/Review Have students use the book to complete handout. Discuss the answers as a class. Ask students questions to check for understanding 9

10 Credit Agriscience Fundamentals and Applications Pages What is the most important function of an agribusiness manager? 2. What is credit? 3. The use of is a that must not be. 4. Credit used wisely is a. 5. For each of the following, tell the time period and what it is used for: Short - term loan: Intermediate term loan: Long term loan: 6. Define capital investment and give an example.

11 What is productive credit? When is it justifiable? What is consumptive credit? It is the problem with consumptive credit? Give examples of productive and consumptive credit. Productive Consumptive Sources of Credit: Lenders differ in: What are the three most important sources of credit? What does each finance?

12 What are 6 other forms sources of credit and what is the primary use of each?

13 Credit Agriscience Fundamentals and Applications Pages What is the most important function of an agribusiness manager? Management of Finances What is credit? Borrowed money The use of _credit is a _privilege that must not be _abused. Credit used wisely is a valuable tool in business. For each of the following, tell the time period and what it is used for: Long term loans: 8-40 years, buildings and land Intermediate term loans: 1-7 years, capital investments Short term loans: less than 1 year, production needs Define capital investment and give an example. Capital investment money spent on commodities that are kept 6 months or longer. Ex. Breeding stock, tractors, store and warehouse equipment

14 What is productive credit? When is it justifiable? Productive credit used to increase production or income Justifiable when estimated increase in production will increase profits What is consumptive credit? It is the problem with consumptive credit? Consumptive Credit used to purchase consumable items used by the individual It is easily abused by families and limits the amount of productive credit. Give examples of productive and consumptive credit. Productive Consumptive 1. Livestock 1. Vehicles 2. plants and flowers 2. Clothing / shoes 3. equipment 3. Entertainment Sources of Credit: Lenders differ in: Interest rates Length of loan period Purpose for which the money is loaned What are the three most important sources of credit? What does each finance? 4. Commercial banks all types of loans 5. Individuals real estate 6. Retail merchants non-real estate loans, open accounts

15 What are 6 other forms sources of credit and what is the primary use of each? Federal Land Banks long term credit for agriculture, real estate Production Credit Associations (PCA) short-term credit for agriculture, Commodity Credit Corporation (CCC) loans made on eligible commodities Farmers Home Administration (FHA) for those who can t secure credit from anywhere else, land Small Business Association (SBA) loans for agribusinesses

16 Lesson 4 Anna Warner Fundamentals of Agribusiness Title: How can simple interest be calculated? Audience: High school students in Agriscience 12 CSO number: Teacher Objectives: Upon completion of this lesson, the student will be able to: 1. Define a simple-interest loan 2. Write the formula for calculating simple interest 3. Calculate simple interest on paper 4. Apply the simple interest formula to scenario or real-life situations Materials Needed: Motivation: h 1. Chalk board or white board 2. Feed tags 3. Nutrition label handout 4. Resources: Cooper, Elmer L. and L. DeVere Burton Agriscience: Fundamentals & Applications. 3 rd ed. Albany, NY: Delmar, Thompson Learning Subject Matter Procedure Motivation Simple-interest loan: A loan in which the full amount of a loan is received by the borrower and is paid back with interest after a short period of time Interest Formula Interest = Principal X Rate X Define on the board EX. If you borrow $600 for 12 months at 10% interest, how much interest will you have to 16

17 Lesson 4 Anna Warner Time (I=PRT) If I borrow $25,000 for 5 years at 8% interest, how much interest will I pay? What will my total cost be? Fats Minimum value as % of total weight Protein Minimum amount of crude protein (total protein) Crude protein cannot all be digested Digestible protein = approximate amount of true protein that can be utilized by an animal Vitamins Commercial feeds usually provide necessary vitamins pay? What will your total cost be? Have students complete the sample problems Have students complete the completion problem #2 on page 706. Numbers on feed tags are estimated, not exact like nutritional labels Have students use the computer and insect manuals to answer their questions and review answers with the class. Have students put their notes away and answer questions from the questions and answers sheet and from the right to check for understanding. Minerals Trace minerals usu. included and listed as minimum amounts Minimum and maximum amounts of select minerals listed Ex. Calcium, phosphorus, salt Summary / Review Give students a new feed tag and have them identify the amounts of the following: nitrogen free extract, fiber, fat, crude protein, minerals, 17

18 Lesson 4 Anna Warner ingredients Give the students an exercise to check for understanding. Check the answers with the feed tag. 18

19 Lesson 5 Anna Warner Fundamentals of Animal Nutrition and Digestion Title: What is feed conversion and how do I figure feed conversion? Teacher Objectives: Upon completion of this lesson, the student will be able to: 1. Define feed conversion 2. Apply feed conversion formula to realistic situations 3. Determine if feed conversion rates are good or bad 4. Identify factors affecting feed conversion Materials Needed: Motivation: 1. Chalk or white board 2. Feed Conversion Worksheets 3. Resources: Gillespie, James R. Modern Livestock & Poultry Production. 6 th ed. Albany, NY: Delmar, Thompson Learning For those of you who are raising ham, and bacon hogs, how would you like it if I told you that I could save you about $50-$75 per hog each year? What would this do to your profit? (increase it) Say you were raising 5 hogs for the four years that you were in high school, how much more money would you make on your hogs if you saved $25? ($500) How much would you make if you saved $75. ($1,500). It makes a pretty big difference. Now what would the difference be if you saved only $25 dollars but you raised 1,000 hogs this year? ($2,500). That adds up to a pretty big difference. So how do you think that you could save this money? (allow for answers) In most livestock operations 40-60% of costs is feed. If we improve feed efficiency, we can save money and make a larger profit. Subject Matter Procedure Motivation What is feed conversion? The amount of feed needed to produce one unit of live weight Explain and write notes on board. 19

20 Lesson 5 Anna Warner Lbs. feed fed Lbs. of live weight What is feed efficiency? The amount of feed needed to produce one unit of production (eggs, milk) Lbs. of feed Unit of production Unit of Production Lbs. of feed (dairy) Average Feed Conversion Rates: Fish 1.5-2:1 Poultry 2:1 Swine 3.5:1 Sheep 6:1 Beef 7.8:1 Average Feed Efficiency Rates Poultry (eggs): 4.3:1 doz Dairy Cows (milk): Applying Feed Conversion to Realistic Situations Use example: Ham and bacon hog is fed 700 pounds of feed and gains 200 pounds. What is the feed efficiency.? (700/200=3.5) Is this a good feed efficiency? (yes) Have students complete problems on worksheet and review answers. Summary/Review: What is feed conversion? (lbs feed/unit weight gain) What is feed efficiency? (lbs feed / unit production) Ask students questions to check for understanding. 20

21 Feed Conversion Name Date Directions: Read and answer each problem completely. Show your work for all calculations. Roud all Answers to the second decimal place. 1. You feed your two market lambs 350 lbs. of feed. Assuming they each eat the same amount of feed. Sally gains 26 lbs and Rodger gains 32 lbs. What is the feed conversion of each lamb. Which lamb has the best feed conversion? 2. You have a herd of 20 beef cattle. You feed the cattle a ton and a half of feed (3,000lbs) and they gain 385 lbs. What is the average feed conversion of the cattle? Is this an ideal feed conversion? 3. A flock of 300 laying hens produces 200 eggs per day. How much feed should the flock consume each day to meet the ideal feed efficiency? 4. What is the feed conversion on your tank of trout if you feed approximately 12.5 pounds of feed per fish and the fish gain approximately 4.3 pounds? Is this a good feed conversion? 5. If broiler chickens have a 2:1 feed conversion, how many pounds of feed should you feed 241 broilers so they each gain 8 pounds?

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23 Fundamentals of Agribusiness Test Name Date Multiple Choice: Circle the answer that best completes or answers the question. (2points each) 1. The amount of product available at a specific time and price is the A. commission. B. demand. C. production. D. supply. 2. Roadside stands are A. retail markets. B. terminal markets. C. wholesale markets. D. none of the above. 3. A type of wholesale market is a / an A. farmers market. B. on-the-farm market. C. roadside stand. D. terminal market. 4. Loans for 8-10 years are called A. amortized loans. B. intermediate-term loans. C. long-term loans. D. short-term loands 5. The most important source of credit is A. commercial banks. B. individuals. C. insurance companies. D. land banks. 6. The formula for calculating simple interest is A. I = P x R x T. B. I = R/P x T. C. I = P/R x T. D. I = P x T.

24 7. The selection of a product or service to be sold for profit is called the A. buying function. B. distribution function. C. promoting function D. selling function. 8. Determining the reason that a customers may wish to buy a product or service is called the A. buying function. B. distribution function. C. promoting function D. selling function. 9. Development of a plan to identify ways to make potential customers aware of a product or service is called the A. buying function. B. distribution function. C. promoting function D. selling function. 10. The large intestine is. A. longer than the small intestine B. wider than the small intestine C. longer and wider than the small intestine D. the same size as the small intestine 11. Which animal has the best feed conversion? A. Beef B. Fish C. Horse D. Swine 12. The fat soluble vitamins include. Completion: A. Vitamin A and B-Complex B. B-complex and Vitamin C C. Vitamin C and Vitamin D C. Vitamin D and Vitamin E is the amount of a product desired at a specific price and time. is borrowed money.

25 True or False: Read each statement carefully and write T for True and F for False on the line next to the statement. (2 points each) 13. Animals can not suffer from mineral toxicity or deficiency. 14. Water makes up the largest portion of all living things. 15. Ruminant animals can convert nitrogen into amino acids. 16. Cereal grains provide carbohydrates, fat, protein, vitamins, minerals, and water. 17. Animal products are the only source of fat in diets. 18. Plants provide the highest quality protein source in feed rations. 19. Sufficient amounts of major minerals are provided by the ingredients of the feed so no extra minerals need to be added. 20. Rumination is the digestion process in cattle. 21. Bacteria change low-quality protein into amino acids 22. Bacteria from the rumen stomach die & provide protein and vitamins to the animal. 23. Hydrochloric acid (HCL) and protozoa make up the gastric juices of the nonruminant stomach. 24. Horses are the only animal that does not use the large intestine to absorb nutrients. 25. Metabolism is all of the chemical and physical processes used by living organisms and cells to handle nutrients after they have been absorbed from the digestive system 26. A feed label list the name, guaranteed analysis, ingredient list, directions, and applicable warnings or important information.

26 Matching: For each word on the left, select the best description on the right. (2points each) 1. Carbohydrates A. aid in the support of life 2. Fats B. amino acids are the building blocks 3. Minerals C. inorganic material needed in small amounts 4. Proteins D. makes up the largest part of most living things 5. Vitamins E. not essential in animal diets 6. Water F. provide energy in two forms: simple & complex G. provide energy and carry vitamins H. two categories: fat soluble and water soluble 1. Bloat A. Acid that aids in digestion 2. Chyme B. Build up of carbon dioxide and methane gas 3. Crop C. Contains grit and oyster feed to grind feed 4. Gizzard D. Digested material that leaves the stomach 5. Proventriculus E. Enlarged section of the intestine 6. Villi F. Finger-like projections that absorb nutrients G. Gastric juices added in this part of the chicken s stomach H. Holds food a chicken eats for digestion later

27 Short Answer: Write the answer to each question. Animals use nutrient for three functions, what are these functions? Briefly describe each function. (6 points) What are the six categories of nutrients? (6 points) Name the four parts of the rumen stomach. (4 points) (1 point extra credit if you list in order) Which part of the rumen stomach is considered the true stomach? (1point) What is feed conversion? (you can just give me the equation used to find it) (2 points)

28 You have a herd of 20 beef cattle. You feed the cattle a ton and a half of feed (3,000lbs) and they gain 385 lbs. What is the average feed conversion of the cattle? Is this an ideal feed conversion? (5 points) Bonus What did we compare animal nutrition to in order to better understand it? (2 points) Why do chickens have a food storing mechanism in their digestive track? Why doesn t the food go right the stomach? (3 points)