Industrial Level System

CHAPTER 2

INDUSTRY LEVEL

2.1        Industry Level

        Industrial system in industry level takes a wider view than the company-level. The Industry Level System highlights the range of other factors relevant to the operating environment of the firm showing the range of the agents, enablers and processes influencing the behavior and performance of the firm. Each of the actors has their own set of expertise and connections beyond those engaged with industrial system and behavior in each of the systems with which they are engaged may influence the dynamics of the other.
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Fig. 2.1 Industrial Level System

        Industrial level in agricultural industry talk about external topic that can influence manufacturing systems. Those topics are societal trends, political & economy trends, industry trends and technology trends. Societal trends discuss the customer & customer trends. Thus societal trends discuss what the customer wants on the industry. Political and economy trends discuss about environment and economy. Thus political and economy trends discuss about what environment (politic, social, culture) and economy wants on the industry. Industry trends discuss about competitors & suppliers on industrial sector, meanwhile technology trends discuss about availability of technology currently in the industry..        

        The Industrial level shows some stages which integrated in the industry. From agricultural industry views, those stages are chemical companies & seed companies as input stages; agricultural production as production stage; fresh food processing & manufacturing as processing stages; retail & catering as delivering to customer stages.

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Fig. 2.2 Agricultural Value Chain
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Fig. 2.3 Key Profitability Metrics for The Agribusiness Value Chain

        The agribusiness sector’s complex value chain spans input companies, farmers, traders, food companies and retailers, all of whom must ultimately satisfy the varying demands of the consumer in a sustainable manner. The sector encompasses huge diversity and variety at each stage, from R&D-based input companies to generic manufacturers, subsistence farmers to high tech agroholdings, biotech boutiques and small and medium-sized enterprises (SMEs) to multinational corporations.        Table 1 provides profitability metrics for the major sectors in the chain. While most reports on the sector tend to focus on specific parts of the value chain, the approach taken here is to look across the whole value chain, thus reflecting the tendency for it to become increasingly integrated. The participants of this value chain contribute to a total profit pool of around US$600 billion. Agribusiness is currently one of the few bright spots in the global economy, with high crop prices sustaining the income of farmers and businesses which sell to them, and high levels of R&D investment in certain sectors indicative of faith in its future.

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2.2        Agricultural Company

        For this part, There is a table for explained about agricultural company from trading market view:         

        Table 2.1 Agricultural Company

(Source: http://www.nasdaq.com/symbol/mon/competitors)

        Those agricultural company is arranged based on market trading on  agricultural sector. Based on the level with most market cap terbesar are  Monsanto Company (USA) with market cap of 42.048.4178 , following by  Potash Corp. (Canada) with market cap of 16.573.738 , then the third level is Agrium Inc. (Canada) with market cap of 13.985.280. This matter shows that agricultural company from North America dominates world agricultural market. Indeed Monsanto Company (USA) dominates agricultural supply chain in USA. Therefore if we talk about agricultural company in America, they will answer of  Monsanto.

2.3        Supply Chain Financing Approaches

        This discussion talks about supply chain approach from financial point of view. Value chain on financing approach is  farmer, trader, processor, retailer and consumer. There is 2 approaches i.e chain liquidity and agriculture finance. On chain liquidity, there is product and money flow that occurred at supply chain. While agriculture finance talk about the activity of the microfinance institution, banks and equity funds in the value chain of traders, processors and retailer.

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Fig 2.4 Supply Chain Finance Approaches

2.4        New Vision for Agriculture

        Agriculture provides the food, fiber and energy that helps propel human activity on a day-to-day basis around the world. But agriculture provides much more than food. It also provides livelihoods – not just for farmers, but for everyone involved in the value chain, including those who sell, process, transport, market, and eventually consume the many products that emerge as a result of the seeds the farmer plants, tends and harvests. That is the exponential value agriculture brings to humanity – the value farmers everywhere have always brought to the places they live and grow.