![]() ![]() ![]() New technology has dramatically changed the timeliness constraint that has been a significant limit on the growth potential for many grain operations. The end result is the prospect of an industry characterized by biological manufacturing of differentiated products for various food and nonfood uses. The types of technology that have the potential to be part of the future of the production industry include bio/nutritional technology, monitoring/measuring/communication technology and process control technology. Technology drives structural change through the form or type of technology that will be used in agricultural production as well as the rate and characteristics of the adopters of the technology. But most of these forces are directly as well as indirectly impacting the input supply (manufacturing and retailing) and product transformation (origination, processing/manufacturing, distribution, and retailing) stages of the chain as well. This discussion focuses on forces driving structural change in the production sector of the value chain because that is the sector in which the most dramatic changes are occurring. The drivers or determinants of structural change are numerous and diverse. Drivers of Structural Change in Agriculture Changes and innovations that require adoption/adjustment across the entire value chain (e.g., systemic innovations) is much more difficult to adopt and implement if that value chain is not only complex but also fragmented and not well coordinated (Brӧring 2008). The production sector in general is very fragmented which provides challenges for those firms further downstream that desire traceability or guaranteed and consistent quality attributes. The food and agribusiness industry is also characterized by very complex supply chains that are not well coordinated, particularly among the up-stream stages in that chain. And the time delays between a new idea and a commercially viable product are much longer than in industries characterized by continuous flow processing and short production cycles. The biological production processes for raw materials are also characterized by long production cycles and batch rather than continuous flow of production/processing, which means that in general production adjustments to changing conditions are lethargic. ![]() This fluctuation in output or supply combined with the inelastic or non-responsive demand for food products results in dramatic price fluctuations, particularly at the crop and livestock raw materials stages of the supply chain. A combination of biological production processes that are subjected to unpredictable biological predators (disease, insects, pathogens, etc.), combined with variable climatic/weather/heat/rainfall patterns, results in significant variability in production and processing conditions and thus efficiency and output. First, it is highly volatile, both in production and market conditions. Responding to these changes is difficult because of three fundamental characteristics of the agricultural industry. And the pace of change seems to be increasing. The global food and agribusiness industry is in the midst of major changes – changes in product characteristics, in worldwide distribution and consumption, in technology, in size and structure of firms in the industry, and in geographic location of production and processing. ![]()
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