Encyclopedia of the Great Plains

David J. Wishart, Editor


The agribusiness industry includes all those activities performed to produce, process, and distribute food and fiber. Harvard's John H. Davis and Ray A. Goldberg first used the term agribusiness in 1957, and its scope continues to evolve and now includes the following distinct yet interrelated sectors: inputs, production, processing-manufacturing, and distribution.

The input sectors include those firms that sell feed, seed, equipment, credit, insurance, chemicals, and other inputs to producers. The farmers and ranchers who produce raw commodities comprise the production sector. The processing-manufacturing sector includes those firms that process commodities into basic ingredients and basic ingredients into final consumer products. Finally, the wholesalers, distributors, and retailers who bring finished products to consumers represent the distribution sector.

As agricultural e.ciency continues to improve, the number of people engaged directly in production agriculture continues to decline, now accounting for only about 1.5 percent of the U.S. population. However, according to the U.S. Department of Agriculture, as a whole the agribusiness industry is the single largest industry in the U.S. economy, accounting for over 17 percent of employment and over 14 percent of gross national product. Throughout the Great Plains region, agribusiness is an even larger economic engine. For example, 25 percent of the employment in Nebraska is dependent on agribusiness.

Although all four sectors of agribusiness are important in the Great Plains, production and processing-manufacturing form the foundation. In particular, the expansive scope of agribusiness in the Great Plains is driven by the regional importance of agricultural production and the economic necessity of locating a significant share of the input and processing-manufacturing sectors near production. It follows that an appreciation of agribusiness in the Great Plains must begin with an appreciation of agriculture in the Great Plains.

The Great Plains is an important region for the production of many types of livestock, poultry, dairy, and food and feed grains. For example, eastern Nebraska is a major cornand soybean-producing region, and oats and barley are mainstay crops in North Dakota and the Prairie Provinces of Canada. However, from Texas to the Prairie Provinces, cattle and wheat are the quintessential agricultural commodities of the Great Plains.

Mixed- and shortgrass prairies once dominated the Great Plains, with the tallgrass prairies lying mainly to the east. Climate, most notably rainfall, dictated this delineation. While the original grasslands have largely disappeared, they remain marked by the crops that have replaced them. Corn grows where tallgrass prairies once flourished (and in irrigated outliers farther west), while wheat is the dominant crop of the former mixed- and shortgrass prairies of the Great Plains, with North Dakota, Kansas, and Montana the leading U.S. producers. Similarly in Canada, the Prairie Provinces of Alberta, Saskatchewan, and Manitoba produce twenty times the wheat output of the rest of the nation. The Plains, which once supported North America's great bison herds, are today the epicenter of North American cattle production, led in the United States by Texas, Nebraska, Kansas, and Colorado. In Canada, Alberta is the dominant beef producer, supplying 65 percent of the total market.

While the prominence of the Great Plains in cattle and wheat production is dictated by the characteristics of the land and climate, its relative strength as a food processing-manufacturing region is dictated by economics. Food processors-manufacturers must decide about locating near farm production or near consumer markets. Although the Great Plains is an important region for agricultural production, its sparse population makes it a relatively small consumer market. For example, according to the U.S. Census Bureau, Kansas, Nebraska, Montana, South Dakota, and North Dakota rank thirty-second, thirty-eighth, thirtyninth, forty-third, and forty-eighth, respectively, in 1998 population estimates. The Prairie Provinces of Canada reflect a similar pattern.

The location of agribusiness processing-manufacturing depends on the costs of transporting farm products to the plant versus finished products to the consumer. If the commodity is bulky and relatively low value compared to the final product, processing-manufacturing will more likely be located near the commodity source. With respect to this economic rule, the two primary commodities of the Great Plains, wheat and cattle, are quite different.

Until the 1950s, flour mills were usually built near growing regions because the rail charge to ship wheat versus flour was about the same. Since then, the rates for shipping flour have risen, relative to the rates for shipping wheat, so more modern milling operations tend to be found near major population centers throughout North America and hence outside the Plains.

Processing of the other major Great Plains commodity, beef cattle, is the dominant agribusiness processing-manufacturing concern in the region, again dictated by economics. It is much less costly to ship processed meat than it is to ship live animals. The beef-processing industry is highly concentrated, with the top four firms accounting for approximately 80 percent of the fed cattle slaughtered in the United States. These four firms–IBP, Cargill's Excel, ConAgra's Monfort, and Farmland–are among the most prominent Great Plains firms in any industry. IBP has major plants in Emporia and Finney County, Kansas, in West Point and Lexington, Nebraska, in Amarillo, Texas, and in Brooks, Alberta. Monfort's main plants are in Greeley, Colorado, Garden City, Kansas, Dumas, Texas, and Grand Island, Nebraska. Excel has plants in Friona and Plainview, Texas, Dodge City, Kansas, Fort Morgan, Colorado, Schuyler, Nebraska, and High River, Alberta, and Farmland's main processing centers are in Liberal and Dodge City, Kansas. Beef represents one of the largest export products from the Great Plains. For example, in 1998 the export value of beef from the United States was $2.3 billion, representing approximately 10 percent of total beef sales, and most of that beef came from the Plains.

Because of their interdependence, the future of agribusiness and of the Great Plains region go hand in hand, and there are significant changes on the horizon. First, like many industries, all sectors of agribusiness are concentrating, resulting in fewer, larger entities. This holds from the farm to the processing plant to the grocery store. Second, as the impact of technology on agribusiness grows, the need for more educated employees also grows. Genetic engineering and precision farming are two prominent examples. Finally, the agribusiness industry must continually adapt to its ultimate customers, who are constantly in flux. Given shifting consumer demographics and dynamic societal influences, change will be the only constant facing the agribusiness industry as it seeks to continue to meet the needs of consumers.

See also AGRICULTURE: Cattle Ranching; Wheat / HISPANIC AMERICANS: Meatpackers.

Tim Burkink Arizona State University East

Beierlein, James G., Kenneth C. Schneeberger, and Donald D. Osburn. Agribusiness Management. Prospect Heights IL: Waveland Press, 1995.

Kohls, Richard L., and Joseph N. Uhl. Marketing of Agricultural Products. Upper Saddle River NJ: Prentice-Hall, 1998.

Madson, John. Where the Sky Began. Ames: Iowa State University Press, 1995.

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