The Transformation of Agriculture into Agribusiness
Introduction
The transformation of the agricultural field began in the 1950s. In more developed parts of the world, agriculture started to shift from simply producing crops or animals to becoming a growing business. This new approach focused on producing what society needed, considering consumer demands, conducting crops by tradition, providing value-added products, and prioritizing consumer needs.
Background
In 1954 at Harvard University, the concept of agribusiness was introduced. It emphasized business market management and the financing of agriculture, with production tailored to the specific requirements of consumers.
During the second half of the twentieth century, strong protectionism prevailed. Governments were heavily involved in agricultural planning, input supply and production, storage, and marketing. Basic products (maize, beans, rice, meat, and others) were regulated by government bodies, creating a highly distorted trading system dependent on subsidies. This fostered an environment of low competition and a lack of long-term planning, without considering market forces.
Chapter 1: Definitions
Agricultural Sector: The primary producing activity that takes place on land or involves processing activities that may occur elsewhere. It includes the production of cereals, vegetables, fruit, industrial crops, vineyards, and livestock, among others.
Natural Resources: Material goods and services provided by nature undisturbed by humans, valuable to human societies by contributing to their welfare and development. These can be direct (raw materials, minerals, food) or indirect (ecological services essential to the continuity of life on the planet).
Erosion: The disaggregation, detachment, and entrainment of solids from the ground by the action of water, wind, gravity, ice, or other forces. It’s the process by which the substrate is broken up and carried away from an area.
Contamination: The introduction of physical or biological products that damage the environment.
Pest: Any organism that is harmful, disruptive, or problematic.
Productivity: The relationship between the amount of goods and services produced and the amount of resources used.
Performance: Compensation to invested capital, expressed as a percentage of that capital. Applied to an asset, it’s its quality of producing a profit or return, usually money.
Competitiveness: The ability to generate greater consumer satisfaction at the lowest price, meaning with the lowest production cost.
Marketing: A set of activities undertaken by organizations and a social process.
Funding: The pooling of financial monetary resources to carry out an economic activity, typically involving borrowed sums that complement an entity’s own resources. It also refers to the financial resources that the government obtains to cover a budget deficit. Funding is contracted domestically or internationally through credits, loans, and other obligations under the subscription or issuance of credit or other documents payable at a specific term.
Chapter 2: What is Agriculture?
Agriculture encompasses all activities within the agricultural sector (excluding fishing). It is based on land use or resources that result naturally or through human action (grass, forage, other feed, etc.). The agricultural sector can be divided as follows:
Agriculture is farming, which includes a whole range of human actions that transform the natural environment to make it more suitable for growing crops.
Chapter 3: Who is Involved?
GDP: Gross Domestic Product
Tepeyac:
Don Alfonso 1950: Made inroads as a pioneer in fertilization in the Northwest, acting as a reseller for the firm “Fertilizer Guanos and Mexico SA.”
1955: Tepeyac Obregon Fertilizer was established with four of Don Alfonso’s children as shareholders (Juan, Alfonso, Enrique, and Javier), under the direction of Don Juan Bours Almada. In 1957, the First Northwest Liquid Fertilizer Plant was founded.
1965: In a closed economy, the government initiated tight control over solid fertilizers, prohibiting and controlling imports through Fertimex production and marketing. Alternatives to liquids were sought, and the production of maize and wheat seeds began.
1970: With Fertimex focusing on solids, liquids consolidated their position, and the firm began expanding in Sonora (Hermosillo, Navojoa) and Sinaloa (Los Mochis, Guasave, and Culiacan).
1980: As a transition to a more open economy, the pricing scheme for farmers changed to reach international levels for crops, which sharply reduced the profitability of the field, partly supported by subsidies through fertilizer prices. This heavily impacted the business, leading to the closure of operations in Culiacan and Hermosillo and reduced operations elsewhere in the chain.
1990: Structural changes began in Mexico, and NAFTA was established, allowing the importation of solid fertilizers. The forced intermediary role of Fertimex was eliminated, and private enterprise gained more weight in the economy.
Tepeyac’s shareholding changed to Don Alfonso and Don Javier Bours Almada, with Ing. Rodrigo Bours Castelo taking over as General Director. With a new vision, a growth plan was resumed, repositioning the closed squares in Sonora and Sinaloa, opening new branches, and projecting into the states of Baja California and Baja California Sur.
1995: The company ventured into the agrochemicals market, initiating sustained growth in this line. Markets in Jalisco and Colima were explored, and outlets were established in Chihuahua. In 1997, Gerardo Bours Castelo became the General Director. Growths undertaken in the Northwest were consolidated, and new outlets were opened in Chihuahua, Jalisco, Colima, and Guanajuato.
2000: Growth in the agrochemicals line started in the northeast, achieving significant market penetration rates. Efficiency systems were implemented as a basis for consolidating the growth and expansion plan.
2003: Parafinanciera Tepeyac was established as the financial arm of the company to enter the market of customers requiring grubstake loans.
2005: Tepeyac had a stronger logistics and administrative platform. It opened branches in Nayarit, Michoacan, and Durango and established subsidiaries in Zacatecas, the Gulf of Mexico, and the Southeast markets.