Profitability, Risk, and Strategy in Food and Agribusiness Firms and Industries.
Опубликовано на портале: 06-02-2004Manhattan, 2000
Department of Agricultural Economics and Rural Sociology, College of Agricultural and Life Sciences
|Тематические разделы:||Экономика, Экономика отраслевых рынков, Экономика отраслевых рынков: Аграрная экономика|
The farm-to-retail price spread has widened in the 1990s due to increased costs associated with additional services and marketing provided by food processors. Producers have begun to search intensively for methods to maintain the larger portion of this price spread, essentially retaining a greater share of the consumers’ food dollar and becoming more profitable. Vertical coordination by producers has been identified as a sustainable means of enhancing the value of producers’ operations. Two methods of vertical coordination that have become more popular are ownership of closed cooperatives and ownership of investor-firms that, through their marketing and processing activities, add value to producers’ commodities. It is important for producers to explore alternatives to vertical integration due to profitability and risk variability. This study will explore and assess historical data from Standard and Poor’s Compustat database and Stem Stewart Management Services regarding profitability and risk from both industries and firms involved in agribusiness and the food value chain. The study has found that the successful companies operate in profitable industries, offer differentiated, branded products, are leaders in their respective industries, and often have vertically integrated their supply chains. This information and other conclusions will help agricultural producers, lender, educators, economists, and policy makers to understand the risk and profitability of closed cooperatives and investor-owned firms. This knowledge will benefit these market participants when making informed decisions.