The agricultural production chain

The agricultural production chain is a set of interconnected processes that guarantee the quality and yield of various types of commodities, such as soy, corn and wheat. Each stage of the chain plays a fundamental role in the final result of the crops, directly impacting global food security, economic development and the commercial sustainability of countries. In 2021, for example, agriculture employed around 873 million people worldwide, or 27% of the global workforce. 

 To understand how this production system works, it is essential to analyze its phases, from planning to product delivery. Below, you’ll find details of each stage of the agricultural production chain and the main activities carried out. Have a good read! 

Stage 1: planning 

Planning is the first stage of the agricultural production process and one of the most important. This is when productivity and optimization strategies are analyzed to guarantee the financial and qualitative sustainability of the crops.  

Generally, this planning takes into account: 

• Results from previous harvests, analyzing previous production data; 

• Analysis of available resources (labor, land, capital and climatic and soil conditions); 

• The choice of crops to be planted; 

• Market and demand analysis; 

• Monitoring current prices; 

• The quantity of inputs in stock; 

• And the definition of the schedule of activities. 

The farmer is involved in this whole process and can count on the support of consultants, technicians and engineers, as well as the help of cooperatives. In many cases, technology is also used to monitor economic and production indicators, facilitating decision-making.  

 Read also: 

• The role of cooperatives in the development of the Brazilian agricultural market 

Stage 2: soil preparation 

Proper soil preparation is an important step in the agricultural production chain as it influences plant growth and health. As well as adjusting and restoring post-harvest characteristics, well-prepared soil makes it easier for plants to take root, absorb water and nutrients and control pests and diseases.  

This stage usually involves the help of agronomy professionals, fertilizer specialists and agricultural machinery companies.  

 Main activities of this stage: 

• Chemical and physical analysis of the soil; 

• Acidity correction; 

• Fertilizer application – if necessary; 

• Plowing and harrowing techniques. 

Stage 3: cultivation 

This is the start of the planting process, involving choosing seeds, preparing seedlings and irrigation. In addition, continuous control of common pests is also carried out during the initial development of the plants. At this stage, the ideal planting dates for each crop, the temperature of the environment and the humidity of the soil are taken into account.  

This stage is handled by the farmers themselves, seed and pesticide companies, technicians specializing in planting, irrigation and efficiency.  

Stage 4: plant growth and development 

In the fourth phase, the plants are constantly monitored to ensure that the crop is developing properly. At this stage, pest control and fertilization are also carried out, as well as identifying possible problems for early resolution.  

This analysis involves collecting data on planting, growth rate, crop health, assessing the need for inputs and more. The information collected helps farmers monitor crop development and adjust their practices as necessary.  

On many farms, technology is once again the farmer’s partner. It is possible to monitor crops using drones, find anomalies using satellite images and monitor the weather with advanced meteorological data.  

Crop calendar: planting and harvest times for the world’s main commodities 

Stage 5: harvesting 

This stage is extremely important for the farmer because it is at this stage that the results of the work carried out can be assessed. When the crops have reached the best point of ripeness, harvesting is carried out using agricultural machinery such as harvesters. This machinery is widely used in agriculture to speed up the process and reduce crop losses. Some farmers also harvest manually or semi-mechanized.  

Among the main points to consider at this stage are: 

• Size of the planted area; 

• Expected harvest dates; 

• Ideal climate for harvesting; 

• Amount of machinery or workers; 

• Moisture content of the ground; 

• Date for crop delivery. 

Stage 6: post-harvest 

Quality control goes beyond planting care: it is also part of the post-harvest process. Here, the aim is to maximize yield, reduce spoilage and ensure greater economic return.  

The activities in this stage include: 

• The crops go through cleaning processes; 

• Drying the materials; 

• Proper storage of products. 

Improper storage can result in significant losses, especially in tropical countries. In these places, humidity can favor the appearance of fungi and pests. In many crops, this is also the stage when the soil is prepared again (stage 2) for the next crop.  

Read also: 

• Grain storage in Brazil: understand the problem 

Step 7: processing (if applicable) 

Some agricultural products go through processing processes before they can be sold. This is when grain is milled, fruit is graded and products are packaged for the end consumer. 

Products such as coffee, wheat and soy, for example, often go through these stages to add value and facilitate marketing. 

Step 8: distribution 

Distribution is an important step in the agricultural production chain. This phase requires efficient logistics to control transportation costs for harvested products and ensure that they reach their destination on time and with the expected quality.   

Main activities: 

• Efficient stock handling and management; 

• Logistics between carriers and retailers; 

• Transport to markets and distribution centers. 

Read also: 

• Understand the importance of logistics in agribusiness 

Stage 9: trading 

The tranding of agricultural products is carried out during all stages of production, on an ongoing basis. From the very beginning, producers already negotiate possible contracts, analyze market prices and check expectations about demand. This process involves hedging through futures contracts, selling in advance and more.  

Because they are commodities, the prices of agricultural products vary according to supply and demand. With this prior marketing, rural producers can guarantee the sale of their products and minimize the financial risks that could affect their business as a result of market volatility.  

After distribution, the physical delivery of goods already traded is carried out, as well as the marketing of possible stocks that have not yet been purchased.  

Step 10: export 

Many agricultural products are sold across national borders. Commodities are shipped internationally, usually by sea or air.  

In this case, the raw materials marketed need to comply with a list of sanitary and bureaucratic requirements, as well as undergo specific packaging processes for shipment.  

At this stage, hedging products are also used to protect the producer from price fluctuations in the exchange rate. As the value of currencies changes constantly, these tools are widely used in agricultural exports.  

Main activities of this phase: 

• Compliance with international standards; 

• Preparation of documentation; 

• Shipping abroad.

Companies involved: 

• Exporters; 

• Freight forwarders. 

• Customs authorities; 

• Countries with trade agreements; 

• Exporting companies. 

Read also: 

• Brazil’s role in China’s food security: a 50-year partnership
  

The importance of hedging in the agricultural production chain  

As we have seen, rural producers go through countless stages of production until they finalize the delivery of their crop. At every stage, these farmers are exposed to price volatility on the commodities market. Any change in values can have an impact on the economic yield of the work done in the fields.  

Hedging helps mitigate financial risks related to commodity price fluctuations and exchange rate variations. This tool helps protect your business, both for farmers, processors, distributors and exporters.  

Get in touch and talk to a Hedgepoint professional!