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1Agribusiness Fundamentals & Applications
2Cliff Ricketts & Kristina Ricketts
3Second Edition
4Chapter 1: Agriculture and Agribusiness
5	Vocabulary
6A.D.: Anno Domini (“in the year of the Lord”), indicating a year since the birth of Christ.
7Agribusiness: The manufacture and distribution of farm supplies to the production agriculturalist, and the storage, processing, marketing, transporting, and distribution of agricultural materials and consumer products that were produced by production agriculturalists.
8Agriscience: All jobs relating in some way to plants, animals, and renewable natural resources. Also, the application of scientific principles and new technologies to agriculture.
9Agronomic: Any part of agriculture having to deal with field crop production and soil management.
10B.C.: Before Christ; used to identify years.
11Biotechnology: Technology concerning the application of biological and engineering techniques to microorganisms, plants, and animals; for example, gene splicing cloning, and DNA mapping.
12Compression: The process of squeezing the fuel mixture in a cylinder of an internal combustion engine.
13Cooperative Extension Service: Organization that is responsible for programs in four major areas: agricultural and natural resources, home economics, community development, and 4-H youth development. The Cooperative Extension Service of the land grant colleges and unviersities was created under federal legislation (the Smith-Lever Act of 1914). The Cooperative Extension Service philosophy is to help people identify their own problems and opportunities, and then to provide practical research-oriented information that will help them solve their problems and take advantage of their opportunities.
14Cotton gin: A machine used to separate the cotton seed from the lint; invented by Eli Whitney in 1793.
15Crawler-type: A diesel-powered farm tractor developed by Caterpillar Tractor Company in 1931.
16Crop rotation: Growing annual plants in a different location in a systematic sequence. This helps control insects and diseases, improves the soil structure and productivity, and decreases erosion.
17Cultivate: To loosen the soil and remove weeds from among desirable plants; cultivation is the planting, tending, harvesting, and improving of plants.
18Cylinder: The piston chamber in an engine.
19Dairy Herd Improvement Association (DHIA): Group that, among other things, periodically weighs the milk of cows to provide official milk records for dairy cattle.
20Domesticate: To bring wild animals under the control of humans over a long period of time for the purpose of providing useful products and services. This process involves careful handling, breeding, and care.
21Draft animals: Animal used for work stock; in some countries, these animals are still used for plowing and pulling heavy loads.
22Drought: A period of insufficient rainfall for normal plant growth which begins when soil moisture is so diminished that vegetation roots cannot absorb enough water to replace that lost by transpiration.
23Exports: Shipments of commodities or products, such as agricultural commodities, to foreign countries.
24Fallow: Cropland left idle to restore productivity through accumulation of moisture.
25Federal Land Banks: Several banks that are a part of the Farm Credit Administration of the United States; through local national farm loan associations, the Federal Land Banks make long-term (5-40 years) amortized, first-mortgage, farm real estate loans.
26Futures: Legally binding agreements made on the trading floor of a futures exchange; trading by means of buying or selling agricultural commodities that are to be produced or are in the process of being produced.
27Hog cholera: An acute, contagious, viral disease of swine characterized by sudden onset, fever, high morbidity, and high mortality.
28Hybrid: The result from a cross between parents that are genetically unlike; hybrid plant seed was developed for better-quality, higher-producing crops.
29Hydraulic lift: Machines that provide a means of raising or lifting by pressure transmitted when a quantity of liquid is forced through a small orifice, such as a tube or hose.
30Hydrostatic transmission: A transmission in which fluids tend to be at rest.
31Implements: Tools that aid a person by making work and effort more productive and effective.
32Indigo:  A leguminous plant that produces a blue dye used for various purposes.
33Input: Supplies and services farmers use to produce crops, livestock, and other items; any resource used in production.
34Irrigate: To furnish water to the soil for plant growth in place of, or in addition to, natural precipitation, by surface flooding or sprinkling and sub irrigation methods, using surface water or water from underground sources.
35Mechanical power: Power originating from mechanized sources or objects, such as the steam engine.
36Organic fertilizer: Usually refers only to natural, organic, proteinaceous materials of plant and animal origin; excludes synthetic, organic, nonproteinaceous materials such as urea.
37Output: A marketable product of a farming operation, such as cash crops, livestock, and so forth; the result of the production process.
38Pesticides: Chemical used to control weeds, insects, and diseases that affect crops, livestock, or people. Pesticides include herbicides, insecticides, fungicides, nematocides, and rodenticides.
39Pneumatic: Adapted for holding or inflated with compressed air.
40Power take-off (PTO): A supplementary mechanism allowing the operator to control mounted and drawn equipment with the tractor’s engine.
41Production agriculturalists: Farmers; those who actually produce food and fiber. Their output is taken by agribusiness companies that process, market, and distribute agricultural commodities and products.
42Raw material: Crude or processed material that can be converted by manufacture, processing, or combination into a new and useful product.
43Reaper: Used to cut or harvest, as a crop of grain; Cyrus McCormick invented the mechanical reaper to reduce hand labor in the harvest of grain.  
44Resources: The means available for production; include land, labor, capital, fertilizer, chemicals, machinery, transportation, marketing, and the like.
45Selective breeding: The breeding of selected plants or animals chosen because of certain desirable qualities or fitness, as contrasted with random or chance breeding.
46Sickle: A sharp, curved metal blade fitted with a short handle; used for cutting weeds or grasses; one of the earliest hand implements used for harvesting small grain.
47Soil Conservation Service (SCS): A bureau of the USDA established by the Soil Conservation Act of 935. Its basic purpose is to aid in bring about physical adjustments in land use and treatment that will conserve natural resources, establish a permanent and balanced agriculture, and reduce the hazards of floods and sedimentation.
48Surveying: The practice of measuring a tract of land for size, shape, or the position of boundaries.
49Terminal: A station for delivery or receipt of produce; a depot or warehouse needed to store items for later distribution in smaller quantities to retail food stores or to restaurants.
50Tertiary: Third-rank; occurring third in a series of steps or operations.
51Threshing machine: Separates the grain from the waste of the plant.
52Torque amplification: A feature that expands or increases the force that tends to produce rotation.
53Tricycle-type: A tractor introduced by International Harvester in 1924, which was very popular for cultivating as well as plowing.
54Turbochargers: A centrifugal blower driven by exhaust gas turbines and used to supercharge an engine.
55Turpentine: A substance used as a fuel in early internal combustion engines.
56Vaccines: A substance that contains live, modified, or dead organisms or their products that is injected into an animal in an attempt to protect the host from a disease caused by that particular organism; discovered by Edward Jenner.
57
58
59Chapter 2: Agricultural Economics and the American Economy:
60	Vocabulary:
61Aggregate: Total.
62Agricultural economics: An applied social science dealing with how humans choose to use technical knowledge and scarce productive resources such as land, labor, capital, and management to produce food and fiber to distribute agricultural commodities and products for consumption to various members of society over time.
63Allocation: The distribution or apportioning of something for a specific purpose.
64Applied science: The application of basic scientific theories to specific problems.
65Basic science: Research done to investigate general relationships between two or more variables.
66Capital: Goods used to produce other goods and services; the investment that the owner has put in the business.
67Capitalism: An economic system in which individuals own resources and have the right to use their time and resources however they choose.
68Classical economic theory: Classification of economics that contends that an economic system is self-sufficient in itself and that any outside interference by government does more harm than good.
69Communism: Economic system in which the government has total control of economic matters and private individuals have none.
70Cost-price squeeze: Condition in which a production agriculturalist is pressured by increasing cost of resources on the one hand and lower prices received from marketing firms on the other.
71Economics: Many and varied definitions; most often defined as the science of allocating scarce resources (land, labor, capital, and management) among different and competing choices and utilizing those resources to best satisfy human wants and needs.
72Fascism: Economic system in which productive property, though owned by individuals, is used to produce goods that reflect government or state preferences.
73Free markets: The movement of goods and services among nations without political or economic obstruction.
74Goods: Things that have economic utility or satisfy an economic want.
75Initiative: Programs and actions instituted to implement policy.
76Keynesian: Classification of economics contending that economic systems are not always self-sufficient and sometimes need outside help.
77Laissez-faire: Noninterference by government; leaving coordination of an individual’s wants to be controlled by the market.
78Macroeconomics: Concerned with the study of the economy on a large scale, or nationally.
79Microeconomics: Concerned with the study of the economy on a small scale.
80Needs: Things that are really crucial to daily living.
81Normative economics: Subjective statements about economic issues based on opinion only, often without a basis in fact or theory; value-based, emotional statements that focus on “what ought to be.”
82Payment in Kind (PIK): A government program established to help farmers by giving them products as payment for reducing acres planted of certain crops, for example, giving soybeans instead of cash.
83Positive economics: Statements based on economic theory rather than emotion or social philosophy; objective statements dealing with matters of fact and questions about how things actually are.
84Profit: A valuable return.
85Scarce: Deficient in quantity or number in relation to demand.
86Scarcity: Economic term describing a situation in which there are not enough resources available to satisfy people’s needs or wants.
87Services: Nontangible products that cannot be held, stored, or touched. They can include benefits, activities, or satisfactions that are offered for sale.
88Socialism: Economic system in which there is public ownership of all productive resources. The government, or the state, directs all decision making.
89Subsectors: Parts of the economy: household sector (all consumers), business sector (all firms), and government sector (all government agencies).
90Subsidies: Government grants of money to aid or encourage a private enterprise that serves to benefit the public.
91Synthesis: The combination of parts or ideas into a whole.
92Wants:  Things that are not crucial to daily living.
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94
95Chapter 3: The Size and Importance of Agribusiness
96	Vocabulary
97Agribusiness input sector: All resources that go into production agriculture to produce farm commodities.
98Agribusiness output sector: Any phase of the agribusiness sector after the commodity leaves the farm, such as sales or marketing.
99Agriservices sector:  The portion of the agriculture industry concerned with researching new and better ways to produce and market food, to protect food producers and consumers, and to provide special, custom services to all the other phases of agriculture.
100Distillation: The process of separating the components of a mixture by differences in boiling point; the evaporation and subsequent condensation of a liquid, as when water is boiled in a retort and the steam is condensed in a cool receiver.
101E-85: Fuel blend that is 85 percent ethanol and 15 percent gasoline (formerly called gasohol).
102Ecologists: One who is concerned with the interrelationship of organisms and their environment.
103Economists: People who specialize in the study and application of economics and concern themselves chiefly with description and analysis of the production, distribution, and consumption of goods and services.
104Enterprises: Projects on a farm, such as the production of any crop or livestock.
105Environmentalists: Any person who advocates or works to protect the air, water, and other natural resources from pollution.
106Ethanol: The alcohol product of fermentation that is used in alcoholic beverages and for industrial purposes.
107Exports: Shipments of commodities or products, such as agricultural commodities, to foreign countries. 
108Fermentation: The processing of food by means of yeasts, molds, or bacteria.
109Gasohol: Registered trade name for a blend of 90 percent unleaded gasoline with 10 percent fermentation ethanol.
110Gross domestic product (GDP): Total value of goods and services produced in a country in a given year.
111Humus: Organic matter in the soil that has reached an advanced stage of decomposition and has become colloidal in nature It is usually characterized by a dark color, a considerable nitrogen content, and chemical properties such as high cation-exchange capacity.
112Imports: Shipments of commodities and products, such as agricultural commodities, from foreign countries for sale, use, or donation.
113Industrialization: The process of becoming mechanized or industrial.
114Outstanding loans: Loans that have not yet been paid.
115Private agriservices: Any services not included in federal, state, or local government programs; for example, the Farm Credit System.
116Production efficiency: Receiving optimum output from a reasonable input.
117Public agriservices: Groups at the federal, state, and local levels that provide special services to production agriculturalists and others. The major areas of emphasis include research, education, communication, and regulation.
118Value-added: Increasing the value of a product through processing, packaging, or other improvement after the product leaves the site of production.
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120
121Chapter 4: Emerging Agribusiness Technologies:
122	Vocabulary
123Augmentation: The act or process of making greater, more numerous, larger, or more intense.
124Bovine somatotropin (BST): A growth hormone found in cattle. Injections of extra BST are used to increase the production of meat and milk. 
125Callus: Plant tissue that is not differentiated into leaf, root, stem, or other specialized tissue.
126Cloning: A process through which genetically identical organisms are produced.
127Deoxyribonucleic acid (DNA): The molecule that carries the genetic information for most living systems. The DNA molecule consists of four bases (adenine, cytosine, guanine, and thymine) and a sugar-phosphate backbone, arranged in wo connected, twisted strands that form a double helix. DNA contains the genetic material for every cell and is found in every cell.
128Embryo splitting: A form of cloning that is accomplished by dividing a growing embryo into equal parts using a surgical procedure performed with the aid of a microscope.
129Embryo transfer: Procedure for placing living embryos obtained from a donor animal into the reproductive tract of a recipient female animal.
130Flaming: The process of setting a field on fire to destroy all organic matter.
131Gender selection: Managing the reproductive processes to produce animal offspring of the desired sex.
132Gene mapping: The process of dinging and recording the locations of genes on a chromosome.
133Gene splicing: The process of removing a gene from its location on a chromosome and replacing it with another gene.
134Genetic engineering: The practice of modifying the heredity of an organism by inserting new genes from other organisms into the recipient organism’s chromosome structure.
135Hormones: A substance produced in the body and carried by body fluids to tissues where it causes specific body functions to occur.
136Host: A living plant or animal in which a parasite lives.
137Hybrid: The result from across between parents that are genetically unlike; hybrid plant seed was developed for better quality, higher-producing crops.
138Hydroponics: A plant production system in which plant nutrients are provided in a water solution, and plants are grown without soil.
139Implant: A device placed under the skin or in the female reproductive tract to slowly release hormones into the bloodstream of the animal.
140Integrated pest management (IPM): The use of natural insect enemies and limited chemical applications to control harmful insects while providing protection for useful insects.
141Pathogens:  Disease-causing organisms.
142Pessary: A sponge or other material to which hormones have been added and that is implanted under the skin or inserted in the female reproductive tract.
143Pheromone: A chemical substance emitted by animals and insects, used to attract mates through the sense of smell.
144Physiologically: Characteristic of, or appropriate to, an organism’s healthy or normal functioning.
145Porcine somatotropin (PST): Type of growth-enhancing hormone used on pigs.
146Precision farming: A crop management system that adjusts applications of fertilizers and other crop inputs on the basis of production capacity differences within a field.
147Restriction enzyme: A specific enzyme capable of removing a particular gene from its location on a chromosome.
148Solarization: A cultural method that inhibits the accumulation of starch in leaves in the presence of intense illumination.
149Tissue culture: The development of roots, stems, and leaves from callus tissue using a solution containing nutrients and hormones.
150Transgenic: An animal that has developed from a genetically modified cell to which a gene from another living organism has been transferred.
151Xenotransplantation: Transplantation of organs and tissues between species.
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153
154Chapter 5: Planning and Organizing an Agribusiness:
155	Vocabulary
156Business cycles: The repeated rise and fall of economic activity over time.
157Business plan: A written description of a new business venture that describes all aspects of the proposed agribusiness. It helps you focus on exactly what you want to do, how you will do it, and what you expect to accomplish.
158Business survey: A survey that a business conducts to determine the market potential for a selected business.
159Capital: Goods used to produce other goods and services; the investment that the owner has put in the business.
160Capital intensive: Having a high capital cost per unit of output; requiring greater expenditure in the form capital than of labor.
161Capitalism: An economic system in which individuals own resources and have the right to use their time and resources however they choose.
162Collateral: Something of value deposited with a lender as a pledge to secure repayment of a loan.
163Diligence: Steady application; constancy in an effort to accomplish something.
164Entrepreneur: Person who accepts all the risks pertaining to forming and operating a small business.
165Financial institutions: Any business that lends money.
166Financial resources: Any place where a consumer or business person can acquire money.
167Free enterprise: Economic system that allows individuals to organize and conduct business with a minimum of government control; individuals privately own what they produce.
168Investors: One who provides money to another, usually a business, for later income or profit.
169Niches: A place or position in the community or industry suitable for a person or thing.
170Rapport: A harmonious or sympathetic relationship.
171Small business: A business that is independently operated, is not dominant in its field, and meets certain size standards in terms of number of employees and annual receipts.
172Small Business Administration (SBA): A division of the federal government that oversees small businesses.
173Undercapitalization: Not enough capital (assets) to get a company started; may lead to business failure.
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175
176Chapter 6: Types of Agribusiness
177	Vocabulary
178Board of directors: A group of individuals chosen to make decisions for a company.
179Common stock: Partial ownership of a business; gives the owner the right to vote on business matters. 
180Cooperative: An organization in which the profits and losses are shared by all members.
181Corporate charter: A license to operate in a specified state granted when the articles of incorporation of a business are in agreement with state law.
182Corporation: A legal classification of an entity with authority to act and have liability separate from its owners.
183Dividends: Money paid to a shareholder.
184Double taxation: System under which regular corporations must first pay taxes on the profits of the firm and then the income is taxed again as individual income when stockholders receive their dividends.
185Franchise: A contact in which a franchisor sells to another business the right to use the franchisor’s name and sell its products.
186Franchisee: Person or firm that purchases a franchise.
187Franchisor: Person or firm that grants a franchise.
188General partnership: Association of two or more people who, as owners, manage a business together.
189Legal classification: See legal structure.
190Legal entity: Status under law whereby a corporation is separate from the people who own it or work for it.
191Legal structure: The way a business is set up for legal or tax purposes, such as a corporation, cooperative, or sole proprietorship.
192Limited liability: Status in which limited partners are not responsible for the business’s debts beyond the amount of their investment; their personal assets are not at risk.
193Limited partner: Person who risks whatever investment he or she makes in the firm, but has limited liability and cannot legally help manage the company.
194Limited partnership: Special type of partnership in which some partners are not completely liable for other partners’ debts. This partnership is for investment purposes only.
195Marketing cooperatives: Organizations that assist production agriculturalists in marketing agricultural products by finding buyers who will pay the highest price.
196Parent company: The franchisor; firm that prepackages all the business planning, management training, and assistance with advertising, selling, and day-to-day operations.
197Partnership:  An organization whereby two or more people legally agree to become co-owners of a business.
198Preferred stock: Gives a person the opportunity to invest in a business, and, it is hoped, to receive a reasonable return on investment.
199Prepackages: Business assistance provided by a franchisor or parent company; generally, includes management training and assistance with advertising, selling, and day-to-day 
200Single (sole) proprietorship stock: An organization that is owned, and usually managed, by one person.
201Stockholders: The owners of corporate stock, who pay a set price for their shares; each stockholder has one vote in the major decisions made b the corporation for each share of stock purchased. 
202Subchapter C: Regular corporation; company that sells stocks to investors. 
203Subchapter S: Small business or family corporation.
204Subchapter T: Type of corporation for cooperatives.
205Unlimited liability: Legal status in which creditors can make claims on the owner’s personal assets, as well as the business assets, for payment of business debts. 
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207
208Chapter 7: Financing the Agribusiness
209	Vocabulary
210Actuarial interest rate: Interest rate equal to the actual rate charged on a loan.
211Add-on interest: Interest that is added to the loan by taking the total interest paid on a loan and adding it to the loan amount. This allows the lender to divide by the number of periods to get the installment payment amount.
212Amortize: To set up equal installment payments.
213Annual percentage rate (APR): Common name for actuarial interest rate; the rate charged for interest on a loan.
214Appreciate: To increase in value.
215Buyer’s fever: When a buyer acts on quick, thoughtless decisions; buying without thinking.
216Collateral: Something of value deposited with a lender as a pledge to secure repayment of a loan.
217Contractual interest rate: Interest rate not always equal to the actual rate charged on the loan.
218Debt-equity ratio: The ratio of debt to equity allowed in the business. For example, if the ratio is 2, one can have twice as much debt as equity.
219Depreciable: Losing value over time.
220Discount (prime) rate: Rate set by the Federal Reserve System. These rates are influenced by the supply and demand factors for money.
221Equilibrium price: The price in a market at which quantity supplied and quantity demanded are equal. See also point of equilibrium.
222Equity capital: Venture capital; capital invested or available for investment in the ownership element of a new or fresh enterprise.
223Farm assets: Something that is of value or a complement to the farm, whether real estate or non-real estate.
224Financial assets: Funds or capital that a person, corporation, or other party has in its possession.
225Fixed expenses: Items that can be used over and over for a long period of time and results in the same cost (expense) each year; bills that are due every month, such as house payments.
226Foreclosure: A procedure whereby a lender takes steps to obtain ownership of property given as security for a loan (collateral).
227Interest: The charge for or cost of borrowed money.
228Interest rates: The price charged by lending institutions for use of money.
229Lien: The lender’s right to take possession of the asset in collateral if the borrower fails to repay the loan.
230Long-term credit: The extension of credit by the decision of the lender. One source includes Farm Credit Services.
231Operating expenses: Any regular expenses associated with the operation of the business, including rent, salaries, utilities, insurance, and depreciation.
232Principal: A capital placed at interest, due as a debt, or used as a fund.
233Secured: Relieved from duty; made certain or guaranteed.
234Simple interest: Interest that applies to loans with a single payment. Because no borrowing fes or down payment are required, the APR is the same as the rate charged.
235Speculative investments: Assumption of unusual business risk in hopes of obtaining commensurate gain.
236Startup expenses: Costs incurred before the business begins operations, such as attorney’s fees, incorporation expenses, and cost for site development.
237 
238
239Chapter 8: Personal Financial Management:
240	Vocabulary
241Annual Percentage Rate (APR): Common name for actuarial interest rate; the rate charged for interest on a loan.
242Balancing a checkbook: Making sure your checkbook register records are the same as the bank’s records.
243Brokerage: Firm that buys and sells stock or other products for a commission.
244Compatible: Agreeing with or capable of existing together in harmony. 
245Compound interest: Interest computed on the accumulated unpaid interest as well as the original loan principal.
246Enterprises: Projects on a farm, such as the production of any crop or livestock.
247Entrepreneurship: The art or process of organizing, managing, and perhaps even owning a business. Also entails performing all business functions associated with a product or service and includes social responsibility and legal requirements.
248Extrapolate: To infer from known data.
249Fidelity shares: Low-cost shares of money invested.
250Financial security: Having no financial strain or monetary problems; being able to pay monthly bills without stress.
251Fixed expenses (costs): Items that can be used over and over for a long period of time and results in the same cost (expense) each year; bills that are due every month, such as house payments.
252Gross pay: Total amount earned before deductions are taken from a paycheck.
253Individual retirement account (IRA): Account in which the government allows the owner to invest $2,000 yearly, with taxes deferred until retirement; contributions are subject to income restrictions.
254Investment portfolio: A record of all investments; the goal is diversification to get greater returns.
255Liquid income: Money that is available quickly, such as cash.
256Locked into: Committed; condition in which someone cannot get out of what he or she is doing because debts exceed assets.
257Mutual funds: Investments made solely by a company on behalf of others. By law, a mutual fund must invest in at least 30 different stocks or other investments; most invest in many more.
258Net pay: Amount taken home in the paycheck after deductions.
259Part-time (avocational) enterprises: Supplemental pursuits that provide extra income in addition to a full-time occupation.
260Perseverance: Steady persistence in a course of action.
261Plastic prosperity disease: The impression that no money was spent when a credit card was used, because no cash changed hands.
262Prospectus: Document explaining how mutual funds work and where the money is invested.
263Reconcile: To compare, as in balancing a checkbook, to see if whether one record matches another.
264Risk management: Making investments to get the highest returns with the least possible risk.
265Tax-deferred: Postponement of taxes until retirement.
266Tax-deferred savings: Savings on which taxes are not due until the savings owner retires.
267Term life insurance: Insurance for which a yearly premium is paid, but that never accumulates a cash value.
268Therapeutic activity: Something done as a stress reliever.
269Tax shelter account (TSA 403b): An investment allowed by the government for teachers and hospital employees that allows annual investment of 20 percent of income and on which taxes are deferred until retirement.
270Universal life insurance: Insurance for which a yearly premium is paid and that accumulates a cash value in addition to providing a death benefit.
271Utilization of resources: Using whatever resources you already have to limit expenses, or purchases made for greater economic efficiency.
272Variable expenses: Expenses that change regularly such as recreation and entertainment, in which one has control over the amount spent.
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274
275Chapter 9: Agribusiness Recordkeeping and Accounting:
276	Vocabulary:
277Accounting cycle: The sequences of accounting procedures used to record, classify, and summarize accounting information.
278Accounts payable: The liability arising from the purchase of goods and services on credit.
279Accounts receivable: A balance due from a debtor on a current account.
280Accrued: Accumulated.
281Assets: Economic resources that are owned by a business and are expected to benefit future operations. Some examples include cash, receivables, inventory, investments, equipment, buildings, and prepaid accounts.
282Balance sheet: Reports the business’s financial condition on a specific date.
283Budget: Financial plan for an agribusiness.
284Budgeting: The orderly fashion in which owners of an agribusiness put their financial plans on paper.
285Capital: Goods used to produce other goods and services; the investment that the owner has put in the business.
286Capital expenditures budget: Budget that shows how money project for capital expenditures is to be allocated among various divisions or activities within the agribusiness; lists projects (equipment, etc.) that management believes to be worthwhile, together with the essential cost of each.
287Cash-flow budget: Budget that summarizes the amount and timing of income that will flow in and out of the business during the year.
288Chronological: Arranged in, or according to, the order of time.
289Cost of sales: The expense and labor that are directly associated with the production or acquisition of products held for sale.
290Credit: An entry on the right-hand side of a ledger constituting an addition to a revenue, net worth, or liability account.
291Creditor: The person or company to whom an account payable is owed.
292Debit: An entry on the left-hand side of a ledger constituting an addition to an expense or asset account or a deduction from a revenue net worth, or liability account.
293Deficits: An excess of expenditure over revenue.
294Depreciation: The systematic write-off of the value of a tangible asset over tis estimated useful life.
295Double-entry bookkeeping system: Practice of writing every financial transaction in two places.
296Equities: Money value of a property or of an interest in a property in excess of claims or liens against it.
297Erroneous: Mistaken, wrong; containing or characterized by error.
298Incidental expenses: Any expenses that occur rarely but are business related, including unexpected emergencies due to accidents or weather damage.
299Income statement: Reports revenues, costs, expenses, and profits (or losses) for a specific period of time and shows the results of business operations during that period.
300Inventory: A physical count of all assets in a business, with their estimated worth.
301Journals: Books where accounting data are first entered.
302Ledger: An accounting system that includes a separate record for each item. It consists of three parts: a title (name of the particular asset, liability, or owner’s equity), the debit (left) side, and the credit (right) side.
303Liabilities: Amounts that are owed; debt. Examples include accounts payable, notes payable, and mortgages.
304Net profit: Revenue minus the cost of sales; also called profit margin.
305Net worth: The difference between total assets and total liabilities.
306Note payable: A formal written promise to pay a certain amount of money, plus interest, at a definite future time.
307Operating budget: Summaries the expected sales or production activities and related cost for the year; an estimate of sales and income plus the fixed and variable expenses that the agribusiness should experience during the year.
308Operating expenses: Any regular expenses associated with the operation of the business, including rent, salaries, utilities, insurance, ad depreciation. 
309Owner equity: Money the owner invests in the agribusiness.
310Posting: The process of transferring debits and credits from the general journal to the ledger account.
311Receivables: A type of asset, which is owned by a business and is expected to benefit future operations.
312Revenue: The value of what is received from goods sold, services rendered, and other financial sources; money coming into the agribusiness; income.
313Salvage value: The value of a piece of equipment once it has been fully depreciated.
314Single-entry bookkeeping system: The simplest bookkeeping system, in which entries are made only in a checkbook or the checkbook and a journal.
315Solvency: Condition in which there is more than enough cash to cover all liabilities if all assets were converted to cash.
316Statement of cash flows: Reports cash receipts and disbursements, related to the major activities of a business: operations, investments, and financing.
317Taxable income: The difference between revenue and expenses; gain or loss by an agribusiness.
318Trial balance: The proof of the equality of debit and credit balances.
319Write-off: To depreciate or reduce the estimated book value of.
320
321
322Chapter 10: Managing Human Resources
323	Vocabulary
324Alien: Person who is not a citizen of the United States.
325Goal-setting theory: Management theory holding that the setting of specific, attainable goals creates high levels of motivation and performance if the goals are accepted by managers and accompanied by feedback.
326Hawthorne Effect: Refers to people’s tendency to behave differently when they know they are being studied.
327Human resource management: Management of people and employees; includes finding the right people, motivating them by providing incentives in an ideal environment, and evaluating them.
328Hygiene factors: Have to do mostly with the job environment, and may cause dissatisfaction if they are missing, but would not necessarily increase motivation if they were improved or increased.
329Impairments: Real or perceived handicaps or disabilities.
330Inherent: Built in or inbred; innate.
331Job description: Lists the duties and responsibilities of each job as well as the educational level, skills, and special characteristics required for that post.
332Job enlargement: Strategy in which several tasks are combined into one job to make that job ore challenging, interesting, and motivating.
333Job rotation: System in which new employees move from job to job until they learn the various tasks.
334Medicare: The U.S. national health insurance program that was established under the Federal Insurance Contributions Act.
335Motivators: Factors that provide satisfaction and stimulate people to work.
336Nonexempt employees: Employees who must be paid overtime if they work more than 40 hours in a standard work week.
337Performance appraisals: Evaluations of an employee’s performance and achievements.
338Resume: Concise listing that provides detailed information about work history, personal traits, and skills. The main purpose of a resume is to highlight a person’s qualifications and abilities.
339Self-actualization: A person’s need to accomplish personal goals and develop to his or her full potential.
340Self-esteem: A person’s (positive) perception of his or her own worth.
341Social maturity: Ability to get along with and work with many types of people even if a particular person is disliked.
342Statutes: Laws; bills that have been formally enacted by a legislature and approved by the executive branch of government.
343
344
345Chapter 11: Farm Management:
346	Vocabulary
347Accelerated cost recovery system (ACRS): Method under which an asset is depreciated more in the early years of its useful life.
348Accrual adjustments: Adjustments to income.
349Accumulated depreciation: Total amount of depreciation claimed (to date) during the ownership period of an asset.
350Break-even point: When total receipts equal total costs (or when your expenditures equal your income).
351Cash-flow budget: Budget that summarizes the amount and timing of income that will flow in and out of the business during the year.
352Cash-flow statement: Summarizes all of the cash receipts and cash expenditures throughout the year.
353Complete budget: Also called ¬whole-business budgeting or operating budget; the most comprehensive of all budges; a financial plan for all segments of the business.
354Current ratio: Number obtained by dividing total current assets by total current liabilities.
355Debt-to-asset ratio: Number equal to total liabilities divided by total assets.
356Depreciable asset: An asset that is important to the farm and loses value over time.
357Depreciation: The systematic write-off of the value of a tangible asset over tis estimated useful life.
358Economic depreciation: Calculated by following a declining-balance schedule for the remaining value of a machine or piece of equipment where the amount of depreciation remains constant for the life of the machine.
359Enterprise: Projects on a farm, such as the production of any crop or livestock.
360Enterprise budget: An inventory of all the estimated income and expenses associated with a specific enterprise.
361Financial efficiency ratios: Financial figures that illustrate the percent of gross farm revenue that went to pay interest, operating expenses, and depreciation, and how much was left for net farm income.
362Fixed expenses (costs): Items that can be used over and over for a long period of time and results in the same cost (expense) each year; bills that are due every month, such as house payments.
363Income statement: Reports revenues, costs, expenses, and profits (or losses) for a specific period of time and shows the results of business operations during that period.
364Industrial revolution: Time when advances in technology allowed many firms to become more efficient and productive, and enhanced communications and transportation allowed businesses to expand sales into larger areas, thereby increasing sales and the need for employees.
365Liquidity:  The ability to pay debts as they come due.
366Management: Accomplishing tasks through people.
367Managers: Individuals who make sure that things get done.
368Modified accelerated cost recovery system (MACRS): Method under which assets are depreciated more at the beginning of their lives; the years of an asset’s useful life are mandated by the 1986 Tax Reform Act, so MACRS applies to any property placed into service after 1987.
369Net farm income: Overall income earned from the farm manager’s capital and labor; calculated by adding capital gains to or subtracting losses from the net farm income from operations.
370Net farm income from operations: Figure arrived at by subtracting gross farm expenses from gross farm revenue (net income generated from the production and marketing activities of the operation).
371Net worth statement: Also called balance sheet; a listing of property owned (assets) and debts owed (liabilities).
372Nondepreciable asset: Thing that does not lose value (depreciate) or is not kept for more than one year, such as land, breeding livestock, and anything raised on the farm.
373Operating costs: Expenses such as repair and maintenance, fuel and lubrication, labor costs, and any other costs associated with the operation of machinery on a farm.
374Ownership costs: Depreciation, interest, taxes, and outlays for housing/storage and maintenance facilities.
375Partial budget: Measures the change in net farm income that can be anticipated from a projected change in a farming operation.
376Profitability: The difference between an operation’s income and its expenses.
377Repayment capacity: The adequacy of cash generated by the farm to pay the principal and interest on loans as they come due.
378Salvage value: The value of a piece of equipment once it has been fully depreciated.
379Solvency: Condition in which there is more than enough cash to cover all liabilities if all assets were converted to cash.
380Whole-farm planning: Also called comprehensive farm planning; a process used by the farm family to balance important life aspects, such as quality of life, with important business aspects, such as the farm’s resources, the need for production and profitability, and long-term stewardship.
381Working capital: The difference between current assets and current liabilities. This figure indicates the amount of cash available for meeting daily operating costs.
382
383
384Chapter 12: Production Economics
385	Vocabulary:
386Cost function: Formula providing valuable information that an agribusiness manager needs to determine the level of output for profit maximization.
387Demand: The amount of a product wanted at a specific time and price.
388Demand curve: A graphical illustration of the points within a demand relationship.
389Demand schedule: A table outlining the various price and quantity combinations that exist within a specific demand relationship.
390Economics: Many and varied definitions; most often defined as the science of allocating scarce resources (land, labor, capital, and management) among different and competing choices and utilizing those resources to best satisfy human wants and needs.
391Economies of scale: The most efficient production size.
392Efficiency: Ratio of output per unit of input.
393Elasticity: The price responsiveness of an item.
394Equilibrium price: The price in a market at which quantity supplied and quantity demanded are equal. See also point of equilibrium.
395Externalities: Factors beyond the control of an individual, group, or business.
396Isocost line: Illustrates the different combinations of two inputs that can be purchased with a specific amount of money; also shows the amount of one input that would cost the same if another unit of the other input was purchased.
397Isoquant curve: A graphical illustration of the principle of resource substitution. It shows the set of all pairs of inputs (X1 and X2), that can be used to produce a specific output (Y). Additionally, it indicates the amount of one input that can be replaced by another input, while sustaining the same level of output.
398Least-cost combination of inputs: Provides the decision rule for producers to decide what combination of inputs is most efficient in a particular production process. 
399Margin: In economics, an additional or incremental unit of something; in futures trading, the amount market participants must deposit into or have in their accounts when they place orders.
400Marginal product (MP): The change in total product associated with each additional unit of input.
401Market: The interaction between potential buyers and potential sellers of a good or service.
402Opportunity cost: The value of a service or product that must be given up or foregone to obtain another good or service. 
403Perfect complements: Exist when inputs cannot be substituted for each other; adding more of one input (X1) will not change or replace the amount of the other input (X2) used.
404Perfect substitutes: Exist when one input (X2) always replaces a consistent amount of another input (X2); one input (X1) always replaces a consistent amount of another input (X2).
405Point of equilibrium: Graphical point at which given a price and a quantity, the amount supplied equals the amount demanded; the point at which the demand curve intersects the supply curve for the same product. See also equilibrium price.
406Principle of diminishing returns-input basis: Concerned with varying the amount of one input while keeping all other inputs constant within the production process; takes into consideration the relationship among product curves, and assists producers in determining the most effective production level for their operation.
407Principle of resource substitution: Addresses two or more variable inputs within the production equation; determines the combination of two or more variable inputs (that can be substituted for each other in varying amounts) that will produce a specific amount of a given product with the least cost of production.
408Production function: The relationship between inputs and outputs.
409Profit: A valuable return.
410Quantity supplied: The amount of a good or service a supplier is willing to provide at a particular price.
411Resources: The means available for production; include land, labor, capital, fertilizer, chemicals, machinery, transportation, marketing, and the like.
412Scarcity: Economic term describing a situation in which there are not enough resources available to satisfy people’s needs or wants.
413Supply: Amount of a product available at a specific time and price.
414Total cost (TC): Sum of the fixed cost and the variable cost.
415Total fixed costs (TFC): Costs that do not change as level of production changes.
416Total product (TP): Represents the total amount of a product (corn, cotton, soybeans, etc.) produced in a given period of time with a given amount or group of resources.
417Total variable costs (TVC): Costs that change as production levels or amounts of use change.
418
419	Equations:
420Average fixed costs (AFC): Total fixed costs divided by the quantity.
421Average product (AP): Amount of output produced divided by the number of units of input; total product expressed relative to some level of input.
422Average total costs (ATC): Total fixed costs plus the total variable costs divided by the quantity.
423Average variable costs (AVC): Total variable costs divided by the quantity.
424Marginal costs (MC): The change in total cost associated with each additional unit of output.
425Marginal factor cost (MFC): The additional cost of adding one more unit of a variable input to the production process.
426Marginal rate of substitution (MRS): An equation to assist in making decisions regarding resource substitution; the amount of one input that is replaced by an additional unit of another input.
427Marginal revenue-marginal cost method: Based on the premise that for each unit sold, marginal profit equals marginal revenue minus marginal cost.
428Marginal value product (MVP): Demonstrates the change in total returns received through adding one more unit of input.
429Total revenue-total cost method: Based on the fact that total revenue minus total cost equals profit: TR – TC = Profit. Data plots effectively illustrate the relationships between revenue, cost, and profit.
430
431
432Chapter 13: Supplies, Machinery, and Equipment
433	Vocabulary
434Base mixes: A feed mixture produced by a feed manufacturer to which home-grown feed, such as corn, is added.
435Biopesticides: Effective pesticides that will not be harmful to water, air, soil, wildlife, humans, or the food supply.
436Broaches: A cutting tool for removing material from metal or plastic to shape an outside surface or hole.
437Bulk feed: Feed sold in large quantities.
438Castings: An impression taken from an object with a liquid or plastic substance, used to make a mold.
439Centralization: The placing of a complete line of farm production supplies and services in a central location.
440Complete feed: Feed given to animals without any additional preparation; accounts for 80 percent of feed produced.
441Complete fertilizer: One that contains nitrogen, phosphoric acid, and potash.
442Concentrates: Any feed high in energy (usually grain); stock feed low in fiber content and high in digestible nutrients.
443Consolidation: The process of bringing a complete line of farm production supplies and services together in a location.
444Cost-effective: Economical in terms of tangible benefits produced by money spent.
445Custom grinding: Grinding and mixing of feed for a certain person and use that produces a specified feed content mixture. It is mixed according to the farmer’s needs.
446Defoliants: A type of chemical that, when applied to a plant, causes the foliage to drop off.
447Desiccants: A type of pesticide that attempts to destroy pests by drying out or reducing water or moisture content.
448Economy of scale: The most efficient production size.
449Farm contracting: Services performed by individuals who use (and usually own) specialized equipment; services include clearing land, installing drainage systems, and aerial spraying.
450Forge shop: Place where heavy hammers pound red-hot steel billets into shape.
451Formulation: The product of a mixture, such as feed.
452Foundry: Place where molten iron is poured into molds to make castings.
453Full-line companies: Produce and sell tractors as well as a wide variety of other equipment.
454Fumigants: A type of pesticide used to control fungi and molds that attack plants and animals.
455Fungicide: A type of pesticide used to control fungi and molds that attack plants and animals.
456Hatcheries: Companies where eggs are incubated; usually a commercial establishment where newly hatched chicks or fish are sold.
457Herbicide: A type of pesticide used to control undesirable plants (weeds).
458Incomplete fertilizer: Fertilizer containing only two of the three necessary materials (nitrogen, phosphoric acid, and potash).
459Insecticide: Type of pesticide used to control various insects.
460Lathes: Machines in which work is rotated around a horizontal axis and shaped by a fixed tool.
461Long-line companies: Firms that produce and sell a wide variety of general farm equipment, including self-propelled combines, but no tractors.
462Machine shop: Place containing lathes, milling machines, cutters, planes, broaches, and automatically controlled machine tools.
463Milling machines: A machine tool on which work (usually of metal) secured to a carriage is shaped by rotating cutters.
464Nonruminant: An animal, such as a pig, without a functional rumen.
465Pesticide: Chemical used to control weeds, insects, and diseases that affect crops, livestock, or people. Pesticides include herbicides, insecticides, fungicides, nematocides, and rodenticides.
466Premix: Feed containing only vitamins and minerals. Premixes are added to feed grains and a protein source, such as cottonseed or soybean meal, to provide a complete ration; used at the rate of less than 100 pounds per ton.
467Roughages: A feed high in fiber and low in digestible nutrients, such as straw, hay, haylage, and silage.
468Ruminant: Any of a class of animals, including sheep, goats, and cows, that have multiple stomachs.
469Short-line companies: Produce highly specialized equipment such as planters and cultivators, forage equipment, and milking equipment.
470Straight fertilizer: Fertilizers containing only one of the three primary materials (nitrogen, phosphoric acid, and potash).
471Supplements: Formula feeds requiring the addition of grain to make a complete ration.
472Synthetic chemicals: Chemicals produced artificially; used to control weeds, insects, and diseases.
473Target customers: The intended client or consumer; for example, the full-time and part-time production agriculturalists whom farmer supply chain stores desire to serve.
474Vertically integrated: Status in which a single firm controls two or more stages in the chain of production, processing, and distribution.
475Wholegoods: Machinery or equipment in the completely assembled state.
476
477
478Chapter 14: Economic Activity and Analysis
479	Vocabulary
480Artificial insemination: The deposition of spermatozoa into the female genitalia by artificial rather than natural means.
481Astute: Crafty, shrewd, keen in judgment.
482Bank money: The bank credit that banks extend to their depositors.
483Barter: The exchange of goods or services for other goods and services, in which no money changes hands.
484Base year: Typical years of consumer prices used to help compile the consumer price index.
485Business cycle: The repeated rise and fall of economic activity over time.
486Cloning: A process through which genetically identical organisms are produced.
487Commodity money: A good the value of which serves as the value of money.
488Consumer price index (CPI): General measure of retail prices for goods and services usually bought by urban wage earners and clerical workers. It includes the prices of about 400 items, such as food, clothing, housing, medical care, and transportation.
489Contraction: A noticeable drop in the level of business activity, which indicates a slowdown in the growth of the economy.
490Deflation: A prolonged decline in the general price level.
491Depression: A severe drop in income and prices for an area or a nation.
492Discouraged workers: Workers who are not actively searching for jobs.
493Economic fluctuations: The ups and downs in economic activity.
494Economic indicators: Important data or statistics that measure economic activity and business cycles.
495Economic policy: A course of action that intended to influence or control the behavior of the economy.
496Economic recovery: A rise in business activity.
497Equal product curve: Graphic illustration of the concept whereby different resources can be substituted for one another in the production of a given product. There are numerous combinations of land, labor, capital that will produce the same amount of product.
498Federal Reserve System: A central banking system in the United States, created by the Federal Reserve Act of 1913 and designed to assist the nation in attaining its economic and financial goals.
499Fiat money: Money that has value because a government order (fiat) has established it as acceptable for payment of debts.
500Fiscal policy: Economic strategy designed to influence economic activity; involves using government spending and taxation to influence the economy.
501Gross domestic product (GDP): Total value of goods and services produced in a country in a given year.
502Hypothesis: A tentative assumption made so that its logical consequences can be identified or tested.
503Implicit GDP price deflator: Price index that removes the effect of inflation from GDP so that the overall economy in one year can be compared to another year. 
504Inflation: An increase in the volume of money and credit relative to available goods and services, resulting in a continued rise in the general price level.
505Law of increasing cost: States that to produce equal extra amounts of one product or service, an increasing amount of another product or service must be given up or foregone.
506Marginal analysis: Examination of the consequences of adding to or subtracting from the current state of affairs.
507Marginal benefit: The value of the additional goods or services that could be produced.
508Marginal cost: The change in total cost associated with each addition unit of output.
509Market basket: About 400 goods, which are sold in about 21,000 outlets, including food, housing, transportation, clothing, entertainment, medical care, and personal care; used to determine the consumer price index.
510Monetary policy: Management of the money supply and interest rates; government economic policy, designed to influence economic activity, that involves controlling the supply of money and credit to influence the economy.
511Opportunity cost: The value of a service or product that must be given up or foregone to obtain another good or service.
512Peak: Highest level of economic activity in a business cycle; indicates prosperity and means the economy is expanding rapidly.
513Producer price index: An index that shows the cost of resources needed to produce manufactured goods during the previous month.
514Production possibilities: A type of economic analysis in which the possibilities for the producer are determined by the type and amount of resources available in combination with a specific level of technology.
515Prosperity:  The condition of being successful.
516Recession: A period of reduced economic activity.
517Scenario: A synopsis of a possible course of events or actions.
518Standard of living: How well people are living in a particular nation; depends on the amount of goods and services available to the people of that nation. 
519Stock prices:  Cost of a share of ownership in the corporation that issued the stock.
520Trough: The lowest level of business activity in a particular business cycle.
521Value judgments: Used in normative economics to assess the performance of the economy and economic policies.
522Variables: Quantities that may assume any one of a set of values.
523
524
525Chapter 15: Agricultural Policy and Governmental Agribusiness Services
526	Vocabulary
527Agricultural policy: Outlines the steps that will be taken to reach certain goals in the food and fiber economy. Typically, such policies affect the resources, production, and markets related to agricultural products and services.
528Agricultural statistics: Facts and figures relating to the agricultural industry.
529Attaches: A person on the official staff of an ambassador or minister to a foreign country.
530Consortium: An agreement, combination, or group (as of companies) formed to undertake an enterprise beyond the resources of any one member.
531Distance learning: Communication technology in which services are delivered to people via satellite or internet from another location.
532Economic indicators: Important data or statistics that measure economic activity and business cycles.
533Economic policy: A course of action that is intended to influence or control the behavior of the economy.
534Eradicate: To do away with completely.
535Flex time: A system that allows employees to choose their own times for starting and finishing work within a broad range of available hours. 
536Germ plasm: The heredity material of the germ cells. It is the chromosomes in germ cells that transmit heredity characteristics to offspring.
537Grants: An award given for something deserved or merited after careful weighing of pertinent factors; usually public funds given to a school or individual for a specific project.t
538Income stabilization: Steps taken by the Farm Service Agency to stabilize the nation’s agricultural economy through price support loans and purchases. 
539Inflation: An increase in the volume of money and credit relative to available goods and services, resulting in a continued rise in the general price level.
540Initiatives: Programs and actions instituted to implement policy. 
541Interdisciplinary: Involving two or more academic, scientific, or artistic disciplines. 
542Liaison: A close bond or connection; a go-between.
543Policy: Set of specific rationales that will govern action, and will guide present and future decision making in achieving agreed-upon goals and objectives in a given environment.
544Policy analysis: Study from which forecasts are made that serve as a basis for economic decision making by production agriculturalists, consumers, and others.
545Price support: The price for a unit of a farm commodity that the government will support. These are determined by law and set by the Secretary of Agriculture.
546Production controls: Government policies that control production of agricultural commodities.
547Public policy: The steps the government will follow to achieve specific objectives or to solve pressing problems that affect the general public.
548Teleconferencing: Communication technology in which several people talk to each other on the same telephone line, as in a conference.
549
550
551Chapter 16: Private Agribusiness Services
552	Vocabulary
553Agriservices: Services offered to production agriculturalists by private firms, such as agricultural research, consulting, artificial insemination, veterinary, communications, and supply businesses. 
554Annuities: Sum of money payable yearly o at other regular intervals.
555Artificial insemination: The deposition of spermatozoa into the female genitalia by artificial rather than natural means.
556Collective bargaining: Negotiation between an employer and a labor union, usually concerning wages, hours, and working conditions.
557Default: Failure to pay financial debts.
558Delinquencies: Debts on which payment is overdue.
559Dividends: Money paid to a shareholder.
560Farm commodity: Agricultural product, such as wheat, corn, or cattle, that is raised on the farm.
561Fraternal: Of, relating to, or involving brothers.
562Glycerol: A substance obtained from fats used as a solvent and plasticizer; used as a semen extender.
563Holding action: A strategy used to try to improve farm prices. Prices usually increase for a short time after each action, but few long-term gains have been realized thereby.
564Homogenous: Of the same kind or a similar kind or nature. 
565Husbandry: The care of a household or scientific control and management of a branch of farming.
566Inseminate: To place semen in the vagina of a female animal.
567Nonrecourse loans: Loans designed to prevent farmers from having to sell their commodities immediately upon harvest, when prices are usually at their lowest seasonal level. 
568Open account: Trade credit account through which managers of agribusinesses charge purchases with a merchant. The balance on these purchases is normally due in 30 days.
569Physiologist: Person who is concerned with the functions and activities of life or of living matter.
570Policy statements: Pronouncements or publications dealing with issues that affect modern agriculture both directly and indirectly, including such areas as transportation, national welfare, conservation, foreign affairs, taxation, education, health and safety, and numerous other issues.
571Political power: Power relating to governmental procedures and administration of government policies.
572Prominent: Standing out or readily noticeable.
573Regulatory medicine: Government law and policy applicable to drugs and medicines.
574Resource specialization: The economic theory underlying production of a single agricultural commodity or resource rather than diversifying into two or more agricultural commodities.
575Rural sociology: Area of study dealing with the social relationships of country life and its people.
576Securities markets: Investments backed by some tangible asset that is pledged to the originator (inceptor) if the principal is not paid back (e.g., secured bonds).
577Semen: A fluid substance produced by the male reproductive system containing spermatozoa suspended in secretions of the accessory glands.
578Sodium citrate: A crystalline salt used chiefly as a buffering agent, emulsifier, or alkalizer; used as a semen extender.
579Viable:  Capable of working, functioning, or developing adequately.
580
581
582Chapter 17: Basic Principles of Agrimarketing
583	Vocabulary
584Agrimarketing: Those processes, functions, and services performed in connection with food and fiber from the farms on which they are produced until their delivery into the hands of the consumer.
585Allocation of resources: Land, labor, and equipment that are equally distributed to all segments of the economy.
586Auctioneer: The person who is conducting the sale at an auction market.
587Basis: The difference between the price of a commodity and the price of a related futures contract; for example, cash price minus futures price equals basis.
588Blocked currency: The idea that money could be exchanged only within the nation making the purchase when surpluses were sold to developing nations; used to support or enhance the economies of underdeveloped nations.
589Check-off program: A program in which the seller contributes a small amount for each unit sold to a money pool to be used to purchase advertising for the specific commodity.
590Commission: A fee the selling agent receives for work in selling (such as animals or futures contracts or options).
591Cotton gins: A machine used to separate the cotton seed from the lint; invented by Eli Whitney in 1793.
592Demand: The amount of a product wanted at a specific time and price. 
593Efficient economic system: System in which there is decision-making by consumers as to the who, what, and where of the economic system, and a pricing system that brings about an efficient allocation of resources; the maximization of consumer satisfaction; and the maximization of producers’ long-run profits.
594Emulsifier: Substances that aid in the uniform dispersion of oil in water.
595Free market economy:  Exists where consumers provide the answers to the questions of what to produce, how much to produce, when to produce, who should produce, and for whom goods should be produced.
596Futures contract: A legally binding agreement, made on the trading floor of a futures exchange to buy or sell something in the future. A futures contract specifies the quantity, quality, time and form of delivery, and a negotiated price.
597Futures options: Type of insurance to protect against price decline.
598Hedging: Buying or selling futures contracts to protect one’s profit margin against a possible price change of a cash commodity that he or she plans to buy or sell.
599Institutional advertising: Designed to create a favorable image of the firm or institution offerin the product or service.
600Market analysis: Collecting information to determine if a product will sell.
601Marketing: Process that starts with analyzing the market to see what is needed before beginning production, not just selling of the product.
602Marketing cooperatives: Organizations that assist production agriculturalists in marketing agricultural products by finding buyers who will pay the highest price.
603Merchandising: Sales promotion as a comprehensive function, including market research, development of new products, coordination of manufacturing and marketing, and effective advertising and selling. 
604Niche: A place or position in the community or industry suitable for a person or thing.
605Premium: The cost of providing insurance for a stored crop in the futures market; also, the cost of a futures option.
606Prerequisite: Something that is necessary to achieve an end or to fulfill a function.
607Pricing efficiency: How close an economic system comes to achieving the point when prices reflect the full value of resources and resources are allocated to their highest and best use.
608Product advertising: A way of advertising that focuses on the product itself, such as its usefulness, durability, price, value, and customer need for the item.
609Profitable: Yielding advantageous returns or results.
610Selling: Taking the farm product to the market and getting whatever the price is for that day.
611Spot price: Another name for the prevailing cash price.
612Supply: Amount of a product available at a specific time and price.
613Transformation: The act of changing one configuration or expression into another.
614Trichinae-safe pork: Pork that is safeguarded from trichinosis by means of irradiation and testing.
615Value adding: Increasing the value of a product through processing, packaging, or other improvement after the product leaves the site of production.
616Vertical integration: Operation in which several steps in production, marketing, and processing of animals are combined or joined together.
617Yardage fee: The fee a terminal market charges the seller for caring for animals until they are sold.
618 
619
620Chapter 18: Commodity (Futures) Marketing
621	Vocabulary
622Basis: The difference between the price of a commodity and the price of a related futures contract; for example, cash price minus futures price equals basis.
623Bear market: A period of declining market prices.
624Brokerage office: Most convenient outlet for futures transactions such as commission houses, wire houses, and futures commissions merchants. Such offices are located in most towns and cities throughout the United States.
625Bull market: A period of rising market prices.
626Call: An option that gives the option buyer the right (without obligation) to purchase a futures contract at a certain price on or before the expiration date of the option for a price called the premium; determined in open-outcry trading in pits on the trading floor.
627Cash market: Where actual commodities are bought and sold.
628Commodity: A transportable resource product with commercial value.
629Commodity (futures) exchanges: Central marketplaces with established rules and regulations where buyers and sellers meet to trade futures and options on futures contracts.
630Contract specifications: The specifics of an agreement, such as time and amount of delivery.
631Forward contracts: A cash contract in which a seller agrees to deliver a specific cash commodity to a buyer sometime in the future. These are privately negotiated and are not standardized.
632Futures contracts: A legally binding agreement, made on the trading floor of a futures exchange, to buy or sell something in the future. A futures contract specifies the quantity, quality, time and form of delivery, and a negotiated price.
633Futures market: Where traders buy and sell futures contracts.
634Futures options: Type of insurance to protect against price decline.
635Hedgers: Those who use the futures market to establish either a buying or selling price for a commodity they own or are expecting to own; those who manage price risk. Hedgers own or will own the actual cash commodity.
636Initial margin: The initial amount a market participant must deposit into his or her account when he or she places an order.
637Intrinsic value: The amount by which an option is in the money.
638Long hedge: Buying of a futures contract.
639Maintenance margin: The set, minimum margin in a customer’s account.
640Margin call: A request for additional money.
641Margining system: A system initiated to eliminate problems of buyers and sellers not fulfilling their contracts and obligations. It requires traders to deposit funds with the exchange or an exchange representative to guarantee contract performance.
642Minimum price fluctuations: The smallest price unit at which a futures contract trades. Sell also tick.
643Offset: Most common method of closing out an option position; done by purchasing a put or call identical to the put or call originally sold or by selling a put or call identical to the one originally bought.
644Open outcry: Method of public auction for making verbal bids and offers in the trading pits or rings of futures exchanges.
645Performance bond margin: A financial guarantee required of both buyers and sellers to ensure that they fulfill the obligation of a futures contract.
646Premium: The cost of providing insurance for a stored crop in the futures market; also, the cost of a futures option.
647Price discovery: The generation of information about future cash market prices through the futures markets.
648Put: An option that gives the option buyer the right (without obligation) to sell a futures contract a certain price on or before the expiration date of the option.
649Risk transfer: A concept used in futures trading to transfer the risk of the crop (hedger) to a speculator.
650Short hedge: Selling of a futures contract.
651Speculators: Those who are willing to accept price risk. They buy and sell futures contracts and hope to make a profit by correctly predicting future price movements.
652Ticks: The smallest price unit at which a futures contract trades. See also minimum price fluctuation.
653Time value: Also called extrinsic value; reflects the amount of money that buyers are willing to pay in hopes that an option will be worth exercising at or before its expiration date.
654Trading pit: The heart of the futures exchange, where buyers and sellers meet each day to conduct business.
655 
656
657Chapter 19: International Agriculture Marketing
658	Vocabulary
659Absurdities: Things that are meaningless, lacking order or value.
660Advocate: To plead in favor of.
661Commodity: A transportable resource product with commercial value.
662Common market: Same as a customs union, except that it includes the free mobility of factors of production.
663Currencies: Something (coins, treasury notes, bank notes, etc.) that is in circulation as a medium of exchange.
664Customs union: An economic and political organization between two or more countries abolishing trade restrictions among themselves and establishing a common uniform tariff for outsiders.
665Deficit: An excess of expenditure over revenue.
666Domestic: Of, relating to, or originating within a country.
667Economic isolation: Description of countries that do not trade with other countries.
668Economy of scale: The most efficient production size.
669Embargoes: Also called sanctions; bans that prohibit shipments of commodities to certain other countries.
670European Union (EU): Customs market comprising many European countries; top exporter of agricultural goods into the United States.
671Exchange rates: The ratio at which the principal unit of one currency may be traded for another currency.
672Exports: Shipments of commodities or products, such as agricultural commodities, to foreign countries.
673Free trade: Trade between businesses in different countries without restrictions from any governments.
674Free trade area: Group of nations that abolishes trade restrictions among themselves without also imposing common tariffs on other nations.
675Humanitarian: Philanthropic; having human attributes or qualities.
676Import quotas: Impose a limit on the amount of a good that may be imported in a given period.
677Imports: Shipments of commodities and products, such as agricultural commodities, from foreign countries for sale, use, or donation.
678Law of comparative advantage: Principle stating that producers tend to produce the product or products for which they have the highest economic advantage or the least disadvantage.
679Monetary policy: Management of the money supply and interest rates; government economic policy, designed to influence economic activity, that involves controlling the supply of money and credit to influence the economy.
680Opportunity cost: The value of a service or product that must be given up or foregone to obtain another good or service.
681Protectionism: The idea of establishing government economic protection for domestic producers through restrictions on foreign competitors.
682Sanctions: Embargoes that prohibit shipments of commodities to certain other countries.
683Subsidies: Government grants of money to aid or encourage a private enterprise that serves to benefit the public.
684Tariffs: Government taxes imposed on goods when those goods cross national boundaries.
685Trade barriers: Ways to protect or restrict trade.
686
687
688Chapter 20: Agrimarketing Channels
689	Vocabulary
690Agricultural commodities: Agricultural animals, crops, and vegetables in their original, unaltered state.
691Agricultural products: Agricultural commodities that have been altered from their original state; for example, butter made from milk.
692Agrimarketing channels: The paths that an agricultural product follows from “the farmer’s gate to the consumer’s plate.”
693Assemblers: Person who puts small lots of a commodity together to provide a larger, more economical unit.
694Blanching: Scalding in water or steam to remove the skin, whiten, or stop enzymatic action (as done to food before freezing).
695Broilers: Chickens from 8 to 12 weeks old, weigh 2 ½ or more pounds, sufficiently tender to be broiled.
696Chain store: The operation of 11 or more stores under a single owner.
697Commercial food establishment: Category of food service establishment that is open daily to the general public. Includes fast-food outlets, restaurants, and lodging places.
698Convenience stores: Type of retail grocery store that was intended to replace the “Ma and Pa” grocery stores in older communities. These stores usually sell necessities, including bread, milk, and eggs.
699Grading: The arranging of something, such as food, according to established standards and criteria for quality.
700Kilns: An oven, furnace, or large heated room for the curing of lumber, tile, or bricks.
701Merchandising: Sales promotion as a comprehensive function, including market research, development of new products, coordination of manufacturing and marketing, and effective advertising and selling.
702Noncommercial food establishment: Category of food service establishment in which meals and snacks are provided as a supportive service rather than as the primary service. These include educational facilities, extended care facilities, vending areas, plants, and office buildings.
703Perishable: Liable to spoil or decay, such as fruit, vegetables, butter, or eggs.
704Specialized food stores: Establishments that usually sell a single food category. Examples include retail bakeries; meat and fish markets; candy and nut stores; natural health and food stores; coffee, tea, and spice stores; and ice cream stores.
705Standardization: The establishment of set criteria (standards) for matters such as quality, size, weigt, and/or color.
706Superettes: A type of retail grocery store; usually a smaller grocery store that offers a variety of food and nonfood grocery products, and usually located in areas not adequately served by supermarkets.
707Supermarket: Type of retail grocery store that offers a full line of 10,000 to 15,0000 food items, plus many nonfood items.
708Superstores: Offer a greater variety of products than conventional supermarkets; constitute 25 percent of all supermarkets and result in 33 percent of supermarket sales.
709Warehouse/limited-assortment supermarket: Offers larger sizes of fewer items at lower prices than the typical supermarket.
710Wholesalers: Intermediary or middle person between producer and retailer; sells in large quantities to volume buyers and retail stores (Cliff Ricketts, 2009, 2001).
711
712References
713Cliff Ricketts, K. R. (2009, 2001). Agribusiness: Fundamentals and Applications, Second Edition. Clifton Park: Cengage Learning.