Stakeholders
Stakeholders are individuals and institutions that
contribute factors of production (land, labor and capital) to
farming operations for a rate of return fixed in advance of its
use in production. Land is rented from landlords, laborers are
paid a wage, and interest is paid on money borrowed from lenders.
In each case the earnings are agreed upon in advance, so the contributor
bears no risks of the uncertainties inherent in production and
marketing of the output.
Farm Operators
Farm operators, contractors, partners and others
investors also contribute factors of production but are distinguished
from stakeholders because they do so in order to share in the
profits and thereby assume the risks of production and markets.
Profits are determined as the residual after payment for purchased
inputs, to stakeholders and making allowances for replacing the
capital consumed in the production processes. Managerial skills
in production and marketing are a fourth factor contributed by
this group of participants that affects the profits and thus earnings
of this group.
Prominent among other investors are family members
– parents and siblings, who have an ownership interest in
the farm or family corporation but don't perform the management
functions of the principal operator. They may manage a particular
function (bookkeeping, fieldwork, tending to the livestock, etc.),
work only in critical stages in production, or work off-farm fulltime
and contribute only their owned capital. The remuneration for
their contributions of land, labor and/or capital will be a share
of the profits (if any) that are not known until production processes
and marketing are completed.
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