Due Diligence - Restructuring - Environmental Compliance
Agriculture
Agriculture, or farming, is the cultivation of plants and animals for food and other products needed to sustain our human species. The practice of agriculture has set the foundations for the development of human civilization as mankind turned towards a sedentary lifestyle. The provision of food security allowed for the specialization and division of labor within the primordial human communities. It is believed that Homo Abilis invented the first agricultural techniques at the end of the Paleolithic era (20,000BC circa). The first agrarian societies started to form during the Mesolithic era (circa 10,000 BC). Until the agricultural revolution mankind practiced predominantly subsistence agriculture, and with the rise of the world trade markets, developed economies began an increasingly more intensive type of agricultural production for the purpose of product trading. Modern agriculture has been shaped by modern agronomy; mechanization, the use of synthetic pesticides and fertilizers, breeding technologies and genetic manipulations, all of which have sharply increased production yields. Today’s farming techniques can be roughly divided into two general categories:
- “conventional” or “intensive agriculture”: requiring high inputs and generating high yields. This type of farming often requires over time higher and higher inputs, leading to poorer economics, environmental damage and often lower quality products
- “sustainable agriculture”: requiring lower inputs, generating lower yields but generally better quality products ensuring long-term sustainable production from an economic and environmental point of view.
The last decades have seen a growing public dissent over intensive farming practices due to its perceived negative externalities, which has resulted in increasing support for sustainable and organic farming techniques. At the same time population growth has created demand side driven price rises that threatens to drive more of the World's population into food poverty and has heightened concerns over food security. As land is required to be more productive to support the ever greater population then the effect of crop failures and climatic events is further amplified in an already unstable system.
Agriculture is the second greatest source of employment worldwide after services with over 1 billion people employed in farming. The agriculture sector is the mainstay of many economies, ensuring food security, export earning and rural development. The world’s rural population range between 21% and 71% of total population in emerging world countries and developing economies with a world average of 48% of the population being involved in agriculture.
Farming is greatly influenced by individual farm-level decisions (structure of production; size of business; marketing of products; quantity of production; means of production (mix of inputs); adoption of new technologies; risk and responsibility bearing). Alongside individual farm based decisions government policy decisions (macro-economic, legislative and institutional support) guide approach to farming and the selection of farming techniques throughout the World.
Although the agricultural profiles vary widely between different World regions and between each country within regions, the issues faced by farming communities generally gravitate around a few key issues. Size of the landholdings dictates the overall resource efficiency with small-holdings being less efficient than larger farms. (Succession rights and different land tenures can result in fragmentation of farms leading in turn to inefficiencies.) Capital investment to establish and maintain agricultural infrastructure such as irrigation systems and grain silos. Availability of agricultural inputs such as fertilizers, pesticides, herbicides, energy, quality seeds and genetic stocks at an affordable cost. Degree of mechanization selected in the farming technique. Labour availability and the direct cost of labour. External features which include the availability of credit facilities, the availability of adequate infrastructure, (such as transport, communication, research, extension services, marketing systems), and the income profile of farmers and the size of the agricultural population.
To evaluate any business opportunity in the agribusiness sector it is as important to understand the local culture in which the business operates as it is to understand the technical and scientific facets of the agricultural methods utilized and the means of production available.
The Per Astra agriculture team has years of experience in working within a wide range of different cultures Worldwide. We can provide a valuable insight into how to diligence, establish, grow and diversify an agribusiness. Our experts have experience in Europe, Central and Eastern Europe, Africa, South and Central America, China, India as well as the USA.