This industry encompasses establishments primarily engaged in mechanical harvesting, picking and combining of crops, and related activities, using machinery provided by the service firm. Crops undergoing mechanical harvesting include berries, fruit, cotton, grain, nuts, sugar beets, sugarcane, and vegetables. Companies that provide threshing, combining, silo filling, and hay mowing and baling services are also included in this classification. Farm labor contractors providing personnel for manual harvesting are classified in SIC 0761: Farm Labor Contractors and Crew Leaders.
Crop Harvesting, Primarily by Machine
This industry is comparatively small, and it is dominated by family-owned companies. Crop harvesters, both manual and mechanical, are directly reliant on the economic fortunes of the American farming community, the sole client of the harvesters.
American agribusiness is a huge, diversified industry and encompasses several specialized sectors. Besides the farmer (also called the grower), who manages the land and cultivates the crops, there are industries based around companies that harvest, process, distribute, and transport farm products and farm supplies. There are also industries based around companies that supply materials and services to the farmer. Contract or custom harvesters are part of the former group.
It is increasingly common for farmers to enter into contracts to sell their produce before it has matured. Contract farming is an arrangement with a buyer, such as a food processor or marketer, to sell and ship the produce to the buyer upon harvesting. The custom harvesting company may bean intermediary part of this arrangement. If the company has been contracted to do the harvesting, it may also make the arrangements for selling and shipping the product to the buyer on thegrower's behalf.
The farmer agrees to a price at the time of the contract. This arrangement can benefit either the grower or the harvester/buyer, depending upon supply and demand of the particular type of crop at harvest time. If there is a nationwide bumper crop of green beans, and the farmer is selling green beans, the farmer may get a higher price for the crops with a contract than if he or she waited for the harvest and bid with many other farmers waiting to sell their beans. If crop production is low, creating high demand, the buyer comes out ahead because the farmer could have sold for a higher price, had he or she known there would be a smaller supply. The custom harvester, having agreed to buy a crop at a certain price before it has matured, is subject to similar losses or gains.
The custom harvester contracts production with the food processor. The contract will specify the delivery of tons of produce per day, which will fluctuate according to weather conditions or other variables. The custom harvester also contracts with the grower to produce the crop. The harvester begins working with the grower when it is time to plant the crop. The harvester's field representative works with the grower to coordinate...