MGT1AGM Agribusiness Management Essay

The term agriculture indicates that agricultural field flows, seeds, crops are harvested, cows are milked or livestock is fed. Before recently this was a pretty accurate description but today's farming is radically different; it has developed into an agri-business system that stretches far beyond the field to include everyone involved in the process. Agriculture is not limited to those who cultivate the soil, but also to all the players in the entire process, including distributors, carriers, and producers of the goods. When new industries evolved and traditional farms expanded, the agribusiness underwent rapid process transformation. Agri-business defines the network of food, fiber and marketing that comprises thousands of businesses from small farms to big multinationals. Raising agriculture productivity can also foster broad-based entrepreneurial practices such as new product diversification, rural business production, agro-processing industry creation and new market development (Diao et al., 2007). Who constitutes agribusiness management work is a constant discussion, given the development and interest in the farming industry (Barry, Sonka, and Lajili, 1992; Harling, 1995; Robbins, 1988). Knowing what is or is not research into agri-business management relies on its concept. Meanwhile Davis and Goldberg's (1957) Agriculture has, subsequently, been defined as seminal definitions of agribusiness in a number of ways, like agribusiness (Boehlje 1999; Cook and Chaddad 2000), value, (Lazzarini, Chaddad, and Cook, 2001). Both concepts share a common perspective on the inter-dependence of the various sectors of the food supply chain, moving towards consumer products and services development, manufacturing, delivery and sales (Boehlje, 1999; Cook and Chaddad, 2000). All elements of a farm-to-fork system for the specific food item are part of a food supply chain, which includes different stages relating to the procurement, development, post-harvesting, storage, refining, delivery and linkages of component parts. The basic principles thereby mimic the supply chains of industry. Agri-business as a key source of food supplies plays an important part in the world economy. Agricultural products have three different features that make it more difficult to manage the risk of agribusiness supply chains (ASCs) than to manage traditional manufacturing supply chains. Such attributes are seasonality, demand fluctuations (often called "vulnerability") and perishability. To deal with seasonality, planning is required since growth is seasonal and consumption is consumed year-round. However, most farm products have long lead times of delivery which cannot be adjusted towards design quickly. Recovery and post-harvest activities, including packaging, processing, storage, and transport, can be very demanding due to increases in supply. In fact, time pressure on post-harvest operations is often significant, as most agricultural items can be burned. According to perishability, special care, processing, and inventory control are also required. If properly managed, there can be significant loss in brand value as a result of lag in transport (Behzadi et al., 2018). For this study we will analyse the agribusiness of Moxey Farms which is one of the Australia's largest dairies with more than 200 full-time employees. The journey began in 1919 with 24 hectares of cattle by the Moxey family in Richmond. In 1992, a farm was enlarged by the family to Gooloogong, close to Cowra in Central West NSW.  Dairy farming is also one of the leading rural Australian sectors for upstream production in terms of added value. The business adds value to manufacture fresh items, including butter, cheese and yogurt, by dairy production.

Different types of risk can be further defined in addition to both categories. There are five standard forms of risk: (1) provision; (2) process; (3) demand; (4) intellectual property. In a different vein the risks are characterised as internal threats to the company, including process and management risks; external risks to the business, but internal to the supply chain: demand and distribution risk; and eventually external environmental risks. Quantitative model applications in farming issues date from the 1950s and are widely covered in the literature [Glen, 1987; Lowe and Preckel, 2004). Modeling approaches were primarily used for transport, distribution, harvesting, location and agricultural planning problems in the agribusiness sector (Tatsiopoulos and Tolis, 2003; Dooley, Parket and Blair, 2005; Lucas and Chhajed, 2004; Gupta, Harboe and Tabucanon, 2000), with a particular focus on the problems of agricultural planning. Key management of dairy farming in agribusiness issues is (i.e. yield, harvesting time, demand, etc.) depend on different sources of uncertainty, traceability, including weather, animal disease, and price variability. Tracking is the potential to monitor an item downstream in the supply chain and monitoring includes the ability to establish the origin and characteristics of a specific product by linking to upstream supply chain information (Bechini et al., 2008). In addition to this, threats on the demand side that result in supply risk, particularly if supply risk is linked to security issues that can significantly affect public perception and associated demand lately. In the 2014 botulism scare of Fonterra, fear for the safety of milk powder led to massive warning of the brand and shadowed the credibility of the whole of the NZ dairy industry (Industries, 2013). A hidden risk can also be taken into consideration in agriculture by the mass use of industrial agriculture (i.e. large, highly specialized farms with a large input of fossil fuels, pesticides, and other oil-derived chemicals). For short-term quality estimates, most of the costs of industrial agriculture were in effect neglected, but serious long-term consequences for the agribusiness sector as whole entail harm to natural systems and threats to safety. Peck(2006) describes the contamination and recall of products, loss of access due to terrorism, loss of access due to protests, loss of site, reduced capacity (e.g., weaknesses in production capacity when sites are affected), people loss and provider loss and reduced treaty cover in the case of service failure or general deficiency. Uncertain variables such as the climate frequently influence crop yields, but unusual weather conditions (for example a hurricane) may produce a very low yield that is destructive rather than natural. It is important for modern companies to track the history of a food product and gather all of the information relating to its distribution through the supply chain in a rigorously formalized manner. This is attributed to many different reasons, including observance of the mandatory legislation, international standards, and criteria for certifications, introduction of marketing strategies and programs, verification of brand origin, identification and quality and the need for effective methods to respond to spread of health outbreaks. Dabbene et al (2014) discuss that there are several issues which the management has to face in terms of traceability firstly the food crisis management is active when the traceability system has to deliver the strategic details in the case of food crisis which results into recall. Bulk product is also an issue of traceability where most factories use liquid ingredients (milk, vegetable oils, etc.) as powder (coca, condensed milk, meal, etc.), crystals (e.g. salt, sugar), and kernels held in large silos which are never drained entirely, so that many tons are contained in containers concurrently. Fraud and counterfeiting are on the rise in the food industry, which in turn leads to reputations and economic losses in unfair competition with high-end products (e.g. beer, cheese, extra virgin oil, ham). The major problems that make this sector underdeveloped include the feed shortage, high mortality rates, degradation of land rangelands, and the lack of value-added services, lack of resources, insufficient distribution networks, and inadequate extension and regulation restrictions. This review article aims primarily at addressing the problems and drawbacks of the dairy sector and its possible solution. Sarwar et al (2002) discussed the issues in dairy agribusiness which are low herd genetics, poor marketing channels for animals, lack of technical human resources for the dairy sector, high environmental stress levels, reproductive abnormalities and udder abnormalities, poor market management practices, insufficient commercial feeding stuffs, and less use of milk substituting products. Intensive milk production can harm the quality of soil, especially in sensitive soil types where organic matter and/or structural resistance are low, as well as winter grazing pressures (Drewry et al. 2000; Drewry and Paton 2005). Such fragile soils are often poorly drained, aerated and structurally sound. Damage to wet soil limits both short- and long-term field development as well as lower soil penetration levels (Drewry 2006). 

Some of the best stuff in life is made from milk, from ice cream to cheese and butter. The first confirmation of the use of milk was 6,000 years and milk products are now consumed worldwide. Over the last couple of millennia, creativity and innovation in the production, storage, and use of milk products have been amazing. In 2017, the worldwide milk demand size was estimated at about 216 metric tons, which by 2021 will exceed 234 metric tons. Perhaps not surprisingly, as of 2017 liquid milk accounts for 54 percent of the world's milk market, followed by yogurt and others. The vast majority of dairy products are made from cow's milk in terms of production. India is at 56.5 million among the highest milk cows in any region, while Europe, led by the US and India, is the leading producer of cow's milk worldwide. Although East Asian countries have a long history of milk consumption, China's amount of domestic milk production has more than tripled since 2000 in recent years. One of the many consequences of globalisation, is that the world is now consuming milk products and trading between countries every year in huge volumes of milk and cheese and other dairy products. In 2017, more than USD 45 billion of dairy products were exported, up sharply from the previous year’s estimate of around USD 39 billion. The EU controls a 39 percent share of the global milk export market, which is the biggest in any region, with countries such as France, Ireland and Germany renowned for their cheese and butter. Germany alone exported cheese worth approximately $4.4 billion a year. Australia sends about 40% of the dairy products it manufactures elsewhere, while 60% are sold inside Australia. Australia is the world's third-largest exporter of dairy products and ships milk goods to over 100 countries. Cheese, butter and milk powder are the most common export products. (www.statista.com, 2019).

Due to the additional level of vulnerability associated with losses, risk management approaches for perishable agriculture products need particular consideration. Newsvendor modelling (i.e. a single-period inventory management model) is a simple approach to coping with perishability and short life cycles. A recent representative example of such modelling is that it discusses livestock supply chain procurement strategies to minimize the expected cost of the packer under yield and demand uncertainty. During single cycle preparation, they researched mixed position and contract approaches. The model of the news provider reflects the peregrination of dairy products. The optimal solution minimizes the estimated overall cost of the dairy packer by deciding on procurement, processing, and manufacturing. Perishability may also be modelled for multiple periods by looking at estimates of the shelf life/freshness of at-risk agricultural products. Such templates can track the effect from one scheduling period to another of disruptive events or risks. The sophistication of the theoretical mathematical models increases therefore, concerns of shelf-life / perishability. This problem leads to a more competitive international market but a risk of transport failures. These defections impact the non-finished and finished (processed, not still delivered) goods both (ordered and not yet finished). In fact, a major threat to perishable products is the waiting period until delivery. The main alternative is therefore whether to wait to deliver the finished product at discounted prices on the local market. However, the decision to slow down or alter the process for unfinished products to adapt to suitable delivery time is made. These are decisions that prevent peregrinations and losses, and ultimately reduce the total expected cost of the production system. Vulnerability of the supply chain is the propensity of risk sources and risk drivers to outweigh risk mitigation policies, leading to loss and adverse effects of supply chain Hence, vulnerability "is a function of certain supply chain properties, such as supply chain density, complexity, and criticality of the node," which affects the probability as well as the severity of supply chain risks. The definition of vulnerability and risk is different. The concept of vulnerability depends on the characteristics of the supply chain, and risk constitutes an external threat. This could contribute either to the lowering of the probability and the degree of effect of the threat (Boyabatli, Kleindorfer, and Koontz, 2011). The sector faces increasingly complex market opportunities and threats. To promote successful decision-making, it is important to understand and track the key drivers of productivity for the sector. The governments of the States and territories are accountable and enforced for animal welfare legislation and the legal requirements for animal welfare should be understood. As dairy production from pastures to animal health has a major impact on climate and temperature, environmental instability and climate change are key issues for Australia's future. To overcome challenges and create opportunities to expand in the dairy agribusiness efficient planning beforehand of the process and supply chain is to be done as there are numerous factors involved which are uncontrollable but manageable, this requires constantly evolving and be situationally aware of the scenario there is ample opportunity in the growing dairy industry.