Document Type

Thesis - Open Access

Award Date

1971

Degree Name

Master of Science (MS)

Department

Economics

First Advisor

Leonard Benning

Abstract

South Dakota is currently witnessing a revolutionary change in its elevator-farm supply industry. Technology applied in all phases of the industry -- production, processing, and distribution -- has had an impact upon the structure of the industry. Some of the changes taking place within the industry have been fostered by changes in other sectors of the economy. Employment opportunities and increasing wage rates have provided many marginal firm operators more favorable alternatives outside the elevator-farm supply business. Simultaneously, economic growth has encouraged new investments in larger grain handling and farm supply firms, thus hastening the adoption of technological developments. These developments together with the trend toward fewer farms, new production and marketing methods, and a revised transportation system have resulted in a thirty-three percent decline in country elevators for the period 1960 to 1968. A continuation of these trends is expected with an eventual 2 need for only a third of the present number of elevators foreseen. Impending change is presaged by the nature of the industry and in the weakness of participant firms. Low margin commodities and a system of near perfect competition occasion impaired income potentials, susceptibility to market fluctuation, and diminished operating autonomy. Facilities are often obsolete and incapable of contending with peak harvest loads, though idle for non-harvest seasons. Many units survive only because of undepreciated capital or fail to possess the financial capital vital to a process of growth and modernization. What is apparent is a state of flux arising from the supplanting of small marginal units by fewer, large, sophisticated operations. Acquisition and dissolution are stimulating increased concentration of assets and providing for expanded volumes and varieties of services. The ultimate product of this process is a more complex and competitive firm which requires additional entrepreneurship [sic] but promises new efficiencies and qualities of service. Statement of the Problem Recognizing the imminent struggle for existence, the industry needs a quantitative model that could assist merging farm supply firms in selecting activity combinations. Objectives Given this problem, the study has a two-fold objective. First, it must determine the justification and merits of merger. Second, it must construct a model capable of assisting merging farm supply firms in designing services and allocating resources. The model is to be sufficiently flexible to be used throughout the State, by different enterprises, in different time periods. Employing data readily available in audits and interviews, it should be able to simulate revenue, cost, and profit responses to alternative business combinations and product offerings.

Library of Congress Subject Headings

Agriculture, Cooperative
Consolidation and merger of corporations

Format

application/pdf

Number of Pages

95

Publisher

South Dakota State University

Included in

Economics Commons

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