Agribusiness (SEC syllabus content)
Domain 1: Agribusiness (SEC syllabus content)
This section tests how you think about a farm as a business within a wider value chain, not only as a place where crops or animals are produced. Expect questions on agribusiness sectors, inputs and outputs, business functions, stakeholders, records and simple decisions.
Core rules and concepts
- Agribusiness covers input supply (seed, feed, fertiliser, machinery), primary production (the farm), processing, distribution, retail and support services (finance, advice, transport).
- A farm adds value by changing form (packing, processing), place (transport), time (storage) or information (grading, labelling).
- The three basic business questions are what to produce, how to produce it and for whom; each involves trade-offs and opportunity cost.
- Records turn physical production into management information: yields, costs, margins, cash flow, labour and compliance.
- Risk is everywhere: weather, pests, price, policy, labour and finance. Diversification, contracts and insurance are common responses.
Worked example
A tomato grower has 1,000 kg. Fresh market: 85% marketable at €1.40/kg; grading and packing €0.18/kg marketable; transport €60. Revenue = 850 × €1.40 = €1,190. Packing = 850 × €0.18 = €153. Net before harvest = €1,190 − €153 − €60 = €977. Processing: all 1,000 kg at €0.55/kg, collected at farm = €550. The fresh channel is better by €427, but only if the rejected 150 kg has no cost and the price holds. The reasoning is contribution after channel-specific costs, not price per kilogram.
Traps
- Comparing headline prices without marketable yield.
- Forgetting channel-specific costs such as grading, packaging, transport and commission.
- Treating a contract price as risk-free; rejection, quality standards and payment delays matter.
- Listing the farm as the whole agribusiness chain.