Agricultural Enterprise: Characteristics and Economic Performance
Agricultural Enterprise: An Overview
Agricultural enterprises are social units deliberately structured to achieve specific social purposes. They comprise individuals or groups within a defined structure and context, controlled by shared values. Three key elements characterize these enterprises:
- Actors: Individuals and groups involved in the organization, pursuing personal goals.
- Resources: Tangible and intangible assets available to the actors, varying based on availability.
- Values: Desired future states the organization aims to achieve or maintain, aligning with individual purposes.
A company is a specific type of organization, playing a vital role in wealth creation, contributing to societal growth, and improving the quality of life for its members through business activities. The agricultural enterprise focuses on economic performance and long-term sustainability within its natural environment.
General vs. Particular Characteristics
It’s important to distinguish between general and particular characteristics. General aspects are common to all companies engaged in primary production, regardless of location. Particular aspects are specific to agricultural enterprises, shaped by the historical, economic, and sociocultural context of a country.
General Characteristics of Agricultural Enterprises
- Climate Dependence: These enterprises are susceptible to climate conditions (humidity, temperature) due to biological production processes, creating a climate-related risk factor.
- Soil as a Production Factor: Land is essential for primary production:
- It is inherently natural and tied to climate and agro-ecological conditions.
- It provides resources, but horizontal expansion is limited.
- Its use is subject to the law of diminishing returns.
- Overuse can exhaust its properties, requiring careful management.
- Vegetative Growth Cycles: Plants and animals have genetic traits that allow self-generation, growth, and production cycles.
- Operating Lengths: The time between purchasing inputs, transforming them, selling products, and receiving payment is typically longer in agricultural companies.
- Capital Lockup: A high capital lockup is required for both land (fixed capital) and improvements (machinery, equipment, vehicles, tools, animals) and circulating capital (working capital) which is immobilized by the production cycle and should be fully recovered after restarting the same cycle.
- Difficulty or Impossibility of Long-Term Storage: Some primary goods are perishable (fruits, vegetables, eggs), while others are difficult to store long-term (grains, vegetables), requiring specific storage conditions.
- Need for Integration in the Food Chain: The primary producer is the first link in the agro-food chain, operating within an “agroalimentario system” where primary production, industrial inputs, and secondary/tertiary services are interconnected to process inputs into agro-food products.