Module 38 Lesson

5.6 & 5.7 Economic &
Spatial Organization of
Agriculture

Objective and Essential Learning

Explain how economic forces influence agricultural practices.

▪Agricultural production regions are defined by the extent to which they reflect subsistence or
commercial practices (monocropping or monoculture).

▪Intensive and extensive farming practices are determined in part by land costs (bid-rent theory).

▪Large-scale commercial agricultural operations are replacing small family farms.

▪Complex commodity chains link production and consumption of agricultural products.

▪Technology has increased economies of scale in the agricultural sector and the carrying capacity of
the land.

2

Open Ended

a) Name 3 regions of the world you would expect to find subsistence agriculture

b) Name 3 regions of the world you would expect to find commercial agriculture.

**Label with a) and b)

How do economic forces impact agriculture?

4

SUBSISTENCE

●Crops and livestock are grown to feed the farmer, family
& community. May sell small surplus at local markets.

●Access to markets are limited and farmers have less
access to credit to pay for expensive farming
improvements and labor.

○Little income from farming

○Manual and animal labor, hand tools.

○Lack of infrastructure to facilitate global trade.

●Periphery Countries: Rural Africa, parts of Asia and
Latin America

How do economic forces impact agriculture?

5

COMMERCIAL

●Crops and livestock are grown to sold on the global
market. Purpose is to make a profit, not to sustain the
farmer’s family.

●Access to markets and credit allow commercial
farmers to purchase modern farm equipment,
advanced technologies and large plots of land.

○Well developed infrastructure: Banking,
transportation, and agricultural supply industries.

●Core and Semi-Periphery Countries

6

Commercial agricultural production regions

How subsistence and commercial agricultural practices
are distributed across the world

3

Subsistence agricultural production regions

How subsistence and commercial agricultural practices
are distributed across the world

7

Commercial agricultural production regions

How subsistence and commercial agricultural practices
are distributed across the world

Subsistence agricultural production regions

8

Commercial agricultural production regions

How subsistence and commercial agricultural practices
are distributed across the world

Capital expenditures: Assets that cost money, such as land, machinery,
synthetic fertilizers and pesticides, seeds, and livestock feed.

Multiple Choice

Which of the following is not a characteristic of commercial agricultural production?

• a) Production targeted at market demands

• b) Operates with a large animal-based labor supply

• c) Small farms with high capital investment

• d) Large farms with hired labor

• e) Production is solely for local village consumption

The Economy of Commercial Agriculture

Monocropping (Monoculture)

▪The cultivation of one or two crops that are rotated
seasonally.

▪Allows for specialization and maximizes efficiency,
leads to higher yields

▫Profitable for plantations and large corporate
farms.

▪Can strip nutrients from the soil, decrease
biodiversity or put small farmers out of business.

▫Supply & demand = If there is more supply
than demand, price goes down.

9

10

Large-scale commercial operation: A large-scale farm oriented exclusively
toward the production of agricultural commodities for sale in the market.

Monocropping (monoculture): The cultivation of a single commercial crop
on extensive tracts of land.

Large-scale commercial agriculture and family farms

Agricultural cooperative: An organization where farmers pool their
resources in certain areas of activity such as services or production;
services or production resources are provided to individual farm members.

11

Family farm: A farming operation wholly owned by a family or family
corporation that sells its products to some defined market, either directly
or through a cooperative.

Large-scale commercial agriculture and family farms

• Small family farms (less than $350,000 gross cash farm income) make up

90 percent of the farms in the United States but account for only 21
percent of the value of production.

12

Large-scale commercial agriculture and family farms

• The decline of dairy

farms is due, in part,
to cost increases
(e.g., labor) and
global competition.

• Also, cropland has

shifted from small
farms to larger farms.

Multiple Choice

Which of the following does not describe monocropping?

• a) Large amount of acreage is needed

• b) Use of seasonal labor for harvesting

• c) Use of machinery to decrease production costs

• d) Planting a different crop each season to re-establish the nutrient base of soils

• e) Collective cooperation of farmers to pool resources for services or production equipment

The Economy of Commercial Agriculture

Agribusiness

▪The large-scale system that includes the
production, processing, and distribution,
financial funding and research of agricultural
products and equipment.

▫While a majority of farms worldwide are
family owned, the rise of agribusiness has
changed the nature of farming, replacing
small family farms with giant agribusiness
corporations.

13

The Economy of Commercial Agriculture

Economies of Scale

▪Large scale farming is cost effective due to lower
bulk prices for farming supplies and technologies.

▪Modern equipment, fertilizers, pesticides, GMO
and hybrid seeds all contribute to higher yields.
$$$$

▫Bigger purchases due to bigger farms ->
cheaper prices.

▫When production increases, the costs of
production (inputs) decrease.

▫Results in less family owned farms

14

The Economy of Commercial Agriculture

Technological Advances

▪Further increase the cost of
operating farms but also
increases the efficiency of
agriculture.

▪Increases the carrying
capacity of the land, higher
yields.

15

The Economy of Commercial Agriculture

Commodity Chains

▪Complex network that connects places of production with distribution to consumers.

▪Due to improvements in agricultural technology, agribusiness, and globalization
farmers tend to raise crops and animals far from their final markets, and consumers
can purchase them at low prices.

16

17

Commodity: In agriculture, a primary product that can be bought and sold,
such as coffee, rice, or milk.

Commodity chain: A series of links connecting a commodity’s many places
of production, distribution, and consumption.

Commodity chains

18

Agribusiness: Large corporation that provides a vast array of goods and
services to support the agricultural industry.

Commodity chains

Poultry production

• In the early twentieth century, poultry farming took place on family

farms located in rural areas or on the outskirts of towns and cities.

• Over the past half century, poultry farming has fundamentally changed,

with farmers signing contracts with agribusinesses.

• The entire process operates along a commodity chain.

Multiple Choice

What is the term for the control of the food production process from the seed to the distribution of the processed product meeting the demands of the market?

• a) Agribusiness

• b) Business

• c) Commodity control

• d) Farm to market

• e) Globalization

19

One technological innovation that has led to improved
economies of scale and carrying capacity in agriculture are
industrial inputs:

• Pesticides and synthetic fertilizers have become pervasive in

conventional agriculture.

• Farmers are now relying on concentrated feeds and synthesized

vitamins, hormones, vaccines, and antibiotics for livestock.

How technology has increased economies of scale and
carrying capacity in agriculture

20

One technological innovation that has led to improved
economies of scale and carrying capacity in agriculture are
industrial inputs:

How technology has increased economies of scale and
carrying capacity in agriculture

Concentrated animal feeding operation (CAFO): Animal rearing system
that confines livestock (such as cattle, sheep, turkeys, chickens, and
hogs) in high-density cages only large enough to allow the animal’s body
to grow and to accommodate equipment for feeding and waste removal.

21

Another technological innovation that has led to improved
economies of scale and carrying capacity in agriculture is
mechanization:

How technology has increased economies of scale and
carrying capacity in agriculture

• Industrialized farms are dependent on fossil fuels to operate

machinery, which is growing ever more sophisticated and
expensive (incorporating computer systems, lasers, drones, and
GPS).

22

Another technological innovation that has led to improved
economies of scale and carrying capacity in agriculture is
mechanization:

How technology has increased economies of scale and
carrying capacity in agriculture

Cool chain: The system that uses refrigeration and food-freezing
technologies to keep farm produce fresh in climate-controlled
environments at every stage of transport from field to retail grocers and
restaurants.

23

A cool chain

How technology has increased economies of scale and
carrying capacity in agriculture

• Thanks to cool chains,

low-weight, high-value
agricultural products can be
flown to any major city in the
world and sold fresh to shoppers
less than 48 hours after harvest.

Multiple Choice

What is the primary reason for the high intensity of land use in Western countries?

• a) Migrant labor flows

• b) Protective fencing

• c) Machines, fertilizers, and pesticides

• d) Organic farming techniques

• e) Quality seed varieties

Multiple Choice

What is the term for the system of refrigeration and food-freezing technologies used to keep farm produce fresh in a climate-controlled environment from the farm to the retailer?

• a) Chiller chain

• b) Milk chain

• c) Cool chain

• d) Farm to market chain

• e) Flash freezing

The Economy of Commercial Agriculture

Bid-Rent Theory: The value of land is influenced by its
relationship to the market.

▪Most desirable and accessible land is near the market
and costs the most money.

▫Farmers are able to purchase LESS land so farming
is typically INTENSIVE in order to earn a profit.

▪The least desirable and accessible land is located the
furthest from the market and costs the least money.

▫Farmers are able to purchase MORE land and
farming is typically EXTENSIVE and can earn a
profit.
24

25

Bid-rent theory: Explains how the demand for and price of land decrease
as its distance from the central business district increases.

Central business district (CBD): A dense cluster of offices and shops
located at a city’s most accessible point, usually its center.

Bid-rent theory

26

• According to modern bid-rent

theory, competition for accessible
sites near the city center,
or central business district (CBD), is
an important determinant of
land-use patterns.

• Different land users are prepared to

pay different amounts for locations
at various distances from the city
center. The most expensive land is
located nearest the city center.

Bid-rent theory

27

Intensive agricultural practices and bid-rent theory

• Farmers who engage

in intensive
agriculture, such as
market gardening, are
willing to purchase
land closer to the
market at a higher
cost per acre because
their products are
perishable and do not
travel well.

Bid-rent theory

28

Extensive agricultural practices and bid-rent theory

• Farmers who engage

in extensive
agriculture, such as
potato farming, are
less concerned about
perishability so they
are more likely to
locate farther from
the market (despite
higher transportation
costs).

Bid-rent theory

Multiple Choice

What factor, in addition to proximity to the market and cost of land, influences the location of agricultural activities?

• a) Transportation costs to market increase with distance

• b) The bulk size of agricultural products sold at the market

• c) The conditions of animals raised in CAFOs

• d) The noise of the market and its effects on live animals

• e) The amount of money banks are willing to loan to farmers to purchase land

Multiple Choice

Which of the following does not apply to a farm located at the furthest location from the market, according to bid-rent theory?

• a) Agricultural products that can perish easily in a short time

• b) Large and extensive amounts of land

• c) Completely mechanized planting and harvesting system

• d) Lower cost of the land offsets the cost of transportation to the market

• e) Monocropping for multiple seasons

Open Ended

Bid rent theory addresses the relationship between the price of land relative to its distance from the market.

1. Describe how distance from the market typically affects the price of land.

2. Explain the degree to which intensive and extensive farming practices are determined by land costs.

29

Summary and Review

Assets that cost money, such as land,
machinery, synthetic fertilizers and
pesticides, seeds, and livestock feed

1) Define capital
expenditures.

2) Contrast the locations of
regions of subsistence
agriculture and regions of
commercial agriculture.

Regions of subsistence agriculture tend to
occur in least developed countries and
closer to the equator. Commercial
agriculture tends to occur in newly
industrialized and more developed
countries along the temperate zone.

30

Explains how the demand for and price of
land decrease as its distance from the
central business district increases

3) Define bid-rent theory.

4) According to bid-rent
theory, describe the
relationship between land
value and distance from the
city center.

Competition for accessible sites near the
city center, or central business district
(CBD), is an important determinant of
land-use patterns, with the most
expensive land located nearest the city
center

Summary and Review

31

A large-scale farm oriented exclusively
toward the production of agricultural
commodities for sale in the market

5) Define large-scale
commercial operation.

6) Define family farm.

A farming operation wholly owned by a
family or family corporation that sells its
products to some defined market, either
directly or through a cooperative

Summary and Review

32

A series of links connecting a commodity’s
many places of production, distribution,
and consumption

7) Define commodity chain.

8) Describe agribusiness and
poultry production.

Poultry farming took place on family farms
located in rural areas, but over the past
half century, most poultry is produced
through agribusinesses that operate along
a commodity chain

Summary and Review

33

Animal rearing system that confines
livestock (such as cattle, sheep, turkeys,
chickens, and hogs) in high-density cages
only large enough to allow the animal’s
body to grow and to accommodate
equipment for feeding and waste removal

9) Define concentrated animal
feeding operation (CAFO).

10) Define cool chain.

The system that uses refrigeration and
food-freezing technologies to keep farm
produce fresh in climate-controlled
environments at every stage of transport
from field to retail grocers and restaurants

Summary and Review

Open Ended

Explain how large-scale agriculture affects family farms.

*Always include a "because" AND a specific example in a prompt that uses the "explain" task verb.

34