- - AGRICULTURAL CORE CURRICULUM - -

(CLF1000)  Advanced Core Cluster: AGRICULTURAL BUSINESS MANAGEMENT

  (CLF1200) Unit Title:  ECONOMIC PRINCIPLES

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  (CLF1206) Topic: COMBINATION OF ENTERPRISES           Time            Years
                                                      1.5 Hours         3 / 4
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           Topic Objectives:  Upon completion of this lesson, the
                              student will be able to:

           Learning Outcome #:

              (E-4)  -  Distinguish among supplementary, complementary,
                        competitive, and independent enterprises.

           Special Materials and Equipment:  Resource information on a local 
                        enterprise (see the last activity).  Develop a mock 
                        operation.  Cooperative Extension cost figures for the 
                        enterprises to be considered in the last activity

           References: Castle, E. N., Becker, M. H., & Nelson, A.G.  (1987). 
                         FARM BUSINESS MANAGEMENT: THE DECISION-MAKING PROCESS 
                         (3rd ed.).  New York: Macmillan.
                        Casavant, K., & Infanger, C.  (1984).  ECONOMICS & 
                          AGRICULTURAL MANAGEMENT: AN INTRODUCTION.  Reston,
                          VA: Reston Publishing.
                        Leftwich, R. H. (1976).  THE PRICE SYSTEM AND RESOURCE
                          ALLOCATION (6th ed.).  Hinsdale, IL: Dryden Press.

           Evaluation:  Unit Exam

TOPIC PRESENTATION: COMBINATION OF ENTERPRISES

A.  Enterprises frequently compete for limited resources.

    1.  Land

    2.  Labor

    3.  Machinery and equipment

    4.  Buildings

    5.  Capital

    6.  Management

B.  When enterprises are selected, the following is assumed:

    1.  That a market for the product is available

    2.  That the commodity can be economically grown in the area.

C.  The selection of enterprises involves the principle of comparative 
    advantage which states that the tendency of any economic unit is to 
    concentrate on the production of those items that give it the greatest 

    relative advantage or the least relative disadvantage.

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        ACTIVITY:

        1.  Discuss comparative advantage and relate it to
            commodities grown locally.  Identify the specific
            advantages that might be available: climate, soils,
            water, market, available labor.
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D.  The relationship between enterprises usually assumes one of four 
    relationships:

    1.  Competitive - The enterprises are competing for the same resources.
        An increase in the output of one results in a decrease in the output 
        of the other.  Wheat and barley are competitive products since they 
        compete for the same resources at the same time of the year. 
        Wheat and beans are generally not competitors because they are grown 
        at different times of the year.

    2.  Supplementary - An increase in the size of one enterprise has little 
        or no effect on the other.  A small vegetable grower who adds a 
        greenhouse to produce vegetables in the winter is an example.  As long 
        as enough money is available not to affect the other enterprises, the 
        greenhouse does not compete for resources because it has extended the 
        growing season.

    3.  Complementary - One enterprise contributes to the production of the 
        other, that is, an increase in the production of one enterprise 
        results in an increase in the production of the other.  A green manure 
        crop raised to provide nitrogen for the next crop is an example. 
        Wheat or corn planted after alfalfa is an example.

    4.  Independent - An independent enterprise is one that is neither 
        positively nor negatively connected to another enterprise.  An example 
        of an independent enterprise operated by a farmer would be a retail 
        store in a nearby town (that sells merchandise completely different 
        from what the farmer produces on the farm).

E.  Whether enterprises are competitive, complementary, supplementary, or 
    independent usually depends on the size of the enterprise.  Most 
    enterprises become competitive as they become larger. 


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        ACTIVITY:

        Provide small groups of students with a mock farm or 
        agribusiness operation; include such factors as size,
        labor available, any limiting resource, potential
        commodities.  This can be as simple or as complex 
        as time and conditions permit.  Use a local example
        and develop a production plan.  Discuss complementary,
        supplementary, and competitive relationships. 
        Specialization and diversification are closely related
        and should also be considered.  This is a good 
        opportunity for research on local enterprises and 
        conditions. 
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