Question 1 - The Characteristics of the Agro Food Industry are Fragmented and Co

Question

Question 1 - The Characteristics of the Agro Food Industry are Fragmented and Complicated.

a. What are the specific characteristics of the Agro Food Industry? Define each characteristic in detail

b. The world of the Agro Food Industry, as we know it today, has become increasingly industrialized. Nevertheless, industrialization is highly beneficial to lesser developed nations as it reduces Agro Food prices. Do you agree or disagree with this statement?

c. Food production is conditioned to be primarily important in the local market of the represented country while distribution is increasing global. Do you agree with this statement? Explain in detail.

Explanation / Answer

An analysis of quality and competitiveness in the small food industry requires standardized terms and concepts to avoid ambiguity and streamline the analysis . It is also important to briefly review some of the typical technical charecteristics of this sector which differentiate it from other industries and sector.

The food industries belong to the manufacturing industries group known as agroindustries, agricultural processing or agroprocessing industries. These charectersitacally receive raw and intermediate agricultural sector materials,process them and produce food and fr human consumption or semi processed materials which will in turn serve as raw materials for other processes. The food industries, by definition and by it's very nature, adds value to and stimulates agricultural production, contributing to market expansion and gathering collateral activities and industrial services. generally speaking, agroprocessing sector or agroindustries transform raw materialsfrom fields, forest and even aquatic resources, and therefore comprise many and varied types of activities. This sector ranges from industries with very simple processes and few operations, mostly handling fresh, semi processed, or simply processed goods, to those turning out products with extensive modern technological input and which may also labour and capital intensive. The specific feature of the sector lies in biological nature of its raw materials, once an integral part of living organisms and hence perishable.

Like any other industrial activity, agro industries have socalled "upstream" linkage, relating all stages of the food chain prior industrial activities processing and a "downstream" linkage for the post-process stages. Post-harvest grains drying and storage operations, for example, belong to the first group, whereas transport, logistics, bread making, and retailng belong to the second group. The technical economic relations linking to the food industries are further distinguishing charecteristics.In other words a given agroindustries has processes linking them to external agents, and internal processes linking their component factors among themselves.

The level and degree of technology, sophistication and innovation in productive processes, the capital investment compare to manpower use, the size of the investment, the scale and annual capacity of operations, the total number of workers and their distribution by level of training, the degree of organization and the managerial style are further distinctive charecteristics of this sector.Normally combination of various criteria are used to define a certain type of enterprise within this sector.

The term "agro industry", "agroprocessing industry" and "agrifood industry" exculde industries producing industrial or agricultual equipments and machinery or chemical inputs for agriculture. In ths case the term "industry" does not necessarily connote a previously established scale or size of operations, or complexity or cost of installation and equipment but refers rather to the principles, methods and objective charecteristics of a given industrialized production activity.

b) It has been argued that, by lowering agriculture's term of trade with industry, governments particularly those of socialist countries in the early stages of economic development, are able to extract a surplus from agriculture for industrializations. It is write that the industrialization of agro food may be highly beneficial for the economic growth of a country but the price level of the food product may not be affected for this, and it can vary widely based on the time period, spatial organizations, market conditions, regulatory forces and adapgtive mechanism. If we take an overview on this industry we can easily focus on three broad classes of social and economic effects-

Although social and economic dimesnsions of effects are distinct, they are more closely interrelated than other dimension. Taken as a whole this sector has experienced remarkable growth in output has occured with relatively little increase in the total combined used of factor inputs. The increase in output can be attributed mostly to an increase in the quality of labor, capital, and technology input. Therefore I think this industry has a very good future ahead, though presently it is in booming stage but it can be the main factor to the economic growth in coming future.

C) An increasing internationalization of firms and integration of markets are the most relevant trends in international economy. Several forces combine to drive this trend, including the decline in barriers to international trade and investment flows and the increasing freedom to move goods services and knowledge among countries and different locations. Advances in transport and communications technologies have created new opportunities for the development and growth of multinational firm.Advances in information processing and telecommunications enhance multinational abilities to coordinate complex function over great distances resulting in lower costs of cross-border coordination. The issue of globalization of the agro industry played a important function in a countries economy and its structure. Several studies have noted that the relative importance of agro food industries are increasing for a economy like fruits and vegetables, poultry and diary production. a large part of this production is making stronger and playing a strong role for the country.

It is also important to note that developing countries are taking advantage of this growth. Over the past decade, the growth of processed food exports from those countries to the developed region. While the growth in the in the value of processed food exports during the former decade fuelled mainly by exports from developed countries, processed food export from developin countries played a important role over the latter decades.

Despite the persistsnce of restrictions and distortions in world agriculture markets, some developing countries have been successful in shifting to agricultural and food exports with high value added and faster growth. The ability to enter the market is still limited. Some countries have performed far better than others in terms of processed food exports performance. For example, Bangladesh, Bolivia, Chile, Indonesia, Korea, Malaysia and Thailand had annual growth rate nearing 15% on this sector where as Cameroon, Ghana, Nigeria, Senegal, Tanzania exhibits very poor performance in terms of the above, Though this countries ave enough potential to this sector. Therefore not only agricultural advancement is not the end of the issue the other part also same important for the growth advancement of this industry.   

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