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Agribusiness is the
industry Industry may refer to: Economics * Industry (economics), a generally categorized branch of economic activity * Industry (manufacturing), a specific branch of economic activity, typically in factories with machinery * The wider industrial sector ...
, enterprises, and the field of study of value chains in
agriculture Agriculture or farming is the practice of cultivating plants and livestock. Agriculture was the key development in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that enabled people t ...
and in the bio-economy, in which case it is also called bio-business or bio-enterprise. The primary goal of agribusiness is to maximize profit while
sustainably Specific definitions of sustainability are difficult to agree on and have varied in the literature and over time. The concept of sustainability can be used to guide decisions at the global, national, and individual levels (e.g. sustainable livin ...
satisfying the needs of consumers for products related to
natural resources Natural resources are resources that are drawn from nature and used with few modifications. This includes the sources of valued characteristics such as commercial and industrial use, aesthetic value, scientific interest and cultural value. ...
such as
biotechnology Biotechnology is the integration of natural sciences and engineering sciences in order to achieve the application of organisms, cells, parts thereof and molecular analogues for products and services. The term ''biotechnology'' was first used ...
,
farm A farm (also called an agricultural holding) is an area of land that is devoted primarily to agricultural processes with the primary objective of producing food and other crops; it is the basic facility in food production. The name is used ...
s, food,
forestry Forestry is the science and craft of creating, managing, planting, using, conserving and repairing forests, woodlands, and associated resources for human and environmental benefits. Forestry is practiced in plantations and natural stands. ...
, fisheries, fuel, and
fiber Fiber or fibre (from la, fibra, links=no) is a natural or artificial substance that is significantly longer than it is wide. Fibers are often used in the manufacture of other materials. The strongest engineering materials often incorpora ...
— usually with the exclusion of
non-renewable resource A non-renewable resource (also called a finite resource) is a natural resource that cannot be readily replaced by natural means at a pace quick enough to keep up with consumption. An example is carbon-based fossil fuels. The original organic mat ...
s such as
mining Mining is the extraction of valuable minerals or other geological materials from the Earth, usually from an ore body, lode, vein, seam, reef, or placer deposit. The exploitation of these deposits for raw material is based on the economic ...
. Studies of business growth and performance in farming have found successful agricultural businesses are cost-efficient internally and operate in favorable economic, political, and physical-organic environments. They are able to expand and make profits, improve the productivity of land, labor, and capital, and keep their costs down to ensure market price competitiveness. Agribusiness is not limited to farming. It encompasses a broader spectrum through the agribusiness system which includes input supplies, value-addition,
marketing Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emph ...
,
entrepreneurship Entrepreneurship is the creation or extraction of economic value. With this definition, entrepreneurship is viewed as change, generally entailing risk beyond what is normally encountered in starting a business, which may include other values t ...
,
microfinancing Microfinance is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; savings ...
, and
agricultural extension Agricultural extension is the application of scientific research and new knowledge to agricultural practices through farmer education. The field of 'extension' now encompasses a wider range of communication and learning activities organized for r ...
. In some countries like the
Philippines The Philippines (; fil, Pilipinas, links=no), officially the Republic of the Philippines ( fil, Republika ng Pilipinas, links=no), * bik, Republika kan Filipinas * ceb, Republika sa Pilipinas * cbk, República de Filipinas * hil, Republ ...
, creation and management of agribusiness enterprises require consultation with registered agriculturists above a certain level of operations, capitalization, land area, or number of animals in the farm.


Evolution of the agribusiness concept

The word "agribusiness" is a
portmanteau A portmanteau word, or portmanteau (, ) is a blend of wordsCanadian Almanac & Directory Grey House Publishing is an American publisher of directories and other reference books in business, health, education and other areas. Its corporate headquarters are in Amenia, New York. It also has a Canadian office in Toronto. In 2013, Grey ...
published in 1847. Although most practitioners recognize that it was coined in 1957 by two Harvard Business School professors, John Davis and Ray Goldberg after they published the book "''A Concept of Agribusiness''."
"Agribusiness is the sum total of all operations involved in the manufacture and distribution of farm supplies; production operations on the farm; and the storage, processing, and distribution of farm commodities and items made from them." (Davis and Goldberg, 1956)
Their book argued against the New Deal programs of then U.S. President Franklin Roosevelt as it led to the increase in agricultural prices. Davis and Goldberg favored corporate-driven agriculture or large-scale farming to revolutionize the agriculture sector, lessening the dependency on state power and politics. They explained in the book that vertically integrated firms within the
agricultural value chain Agricultural value chain is the integrated range of goods and services (value chain) necessary for an agricultural product to move from the producer to the final consumer. The concept has been used since the beginning of the millennium, primarily b ...
s have the ability to control prices and where they are distributed. Goldberg then assisted in the establishment of the first undergraduate program in agribusiness in 1966 at the UP College of Agriculture in Los Baños, Philippines as
Bachelor of Science in Agriculture The Bachelor of Science in Agriculture (BSAg) or the Bachelor of Agriculture (BAg) is the undergraduate academic degree awarded by tertiary faculty of agriculture. The program is typically four years of study at postsecondary level. In Canada, t ...
major in Agribusiness. The program was initially a joint undertaking with the UP College of Business Administration in
Diliman, Quezon City Quezon City (, ; fil, Lungsod Quezon ), also known as the City of Quezon and Q.C. (read in Filipino as Kyusi), is the List of cities in the Philippines, most populous city in the Philippines. According to the 2020 census, it has a populatio ...
until 1975. Dr. Jose D. Drilon of the
University of the Philippines The University of the Philippines (UP; fil, Pamantasan ng Pilipinas Unibersidad ng Pilipinas) is a state university system in the Philippines. It is the country's national university, as mandated by Republic Act No. 9500 (UP Charter of 20 ...
then published the book "''Agribusiness Management Resource Materials''" (1971) which would be the foundation of current agribusiness programs around the world. In 1973, Drilon and Goldberg further expanded the concept of agribusiness to include support organizations such as
governments A government is the system or group of people governing an organized community, generally a state. In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government is a ...
, research institutions, schools, financial institutions, and cooperatives within the integrated Agribusiness System. Mark R. Edwards and Clifford J. Shultz II (2005) of Loyola University Chicago reframed the definition of agribusiness to emphasize its lack of focus on farm production but towards market centricity and innovative approach to serve consumers worldwide.
"Agribusiness is a dynamic and systemic endeavor that serves consumers globally and locally through innovation and management of multiple value chains that deliver valued goods and services derived from sustainable orchestration of food, fiber and natural resources." (Edwards and Shultz, 2005)
In 2012, Thomas L. Sporleder and Michael A. Boland defined the unique economic characteristics of agribusiness supply chains from industrial manufacturing and service supply chains. They have identified seven main characteristics: #
Risk In simple terms, risk is the possibility of something bad happening. Risk involves uncertainty about the effects/implications of an activity with respect to something that humans value (such as health, well-being, wealth, property or the environm ...
s emanating from the biological nature of agrifood supply chains # The role of buffer stocks within the supply chain # The scientific foundation of innovation in production agriculture having shifted from chemistry to
biology Biology is the scientific study of life. It is a natural science with a broad scope but has several unifying themes that tie it together as a single, coherent field. For instance, all organisms are made up of cells that process hereditary i ...
# Cyberspace and
information technology Information technology (IT) is the use of computers to create, process, store, retrieve, and exchange all kinds of Data (computing), data . and information. IT forms part of information and communications technology (ICT). An information te ...
influences on agrifood supply chains # The prevalent market structure at the farm gate remains
oligopsony An oligopsony (from Greek ὀλίγοι (''oligoi'') "few" and ὀψωνία (''opsōnia'') "purchase") is a market form in which the number of buyers is small while the number of sellers in theory could be large. This typically happens in a mark ...
# Relative
market power In economics, market power refers to the ability of a firm to influence the price at which it sells a product or service by manipulating either the supply or demand of the product or service to increase economic profit. In other words, market powe ...
shifts in agrifood supply chains away from food manufacturers downstream to food retailers #
Globalization Globalization, or globalisation (English in the Commonwealth of Nations, Commonwealth English; American and British English spelling differences#-ise, -ize (-isation, -ization), see spelling differences), is the process of foreign relation ...
of agriculture and agrifood supply chains In 2017, noting the rise of genetic engineering and
biotechnology Biotechnology is the integration of natural sciences and engineering sciences in order to achieve the application of organisms, cells, parts thereof and molecular analogues for products and services. The term ''biotechnology'' was first used ...
in agriculture, Goldberg further expanded the definition of agribusiness which covers all the interdependent aspects of the food system including medicine, nutrition, and health. He also emphasized the responsibility of agribusiness to be environmentally and socially conscious towards sustainability.
"Agribusiness is the interrelated and interdependent industries in agriculture that supply, process, distribute, and support the products of agriculture." (Goldberg, 2017)
Some agribusinesses have adopted the triple bottom line framework such as aligning for fair trade, organic,
good agricultural practice Good agricultural practice (GAP) is a certification system for agriculture, specifying procedures (and attendant documentation) that must be implemented to create food for consumers or further processing that is safe and wholesome, using sustaina ...
s, and B-corporation certifications towards the concept of
social entrepreneurship Social entrepreneurship is an approach by individuals, groups, start-up companies or entrepreneurs, in which they develop, fund and implement solutions to social, cultural, or environmental issues. This concept may be applied to a wide range of ...
.


Agribusiness System


Inputs Sector


Agricultural supplies

An agricultural supply store or agrocenter is an agriculturally-oriented shop where one sells agricultural supplies—inputs required for
agricultural production Agriculture or farming is the practice of cultivating plants and livestock. Agriculture was the key development in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that enabled people to ...
such as pesticides, feed and
fertilizer A fertilizer (American English) or fertiliser (British English; see spelling differences) is any material of natural or synthetic origin that is applied to soil or to plant tissues to supply plant nutrients. Fertilizers may be distinct from ...
s . Sometimes these stores are organized as
cooperatives A cooperative (also known as co-operative, co-op, or coop) is "an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically-control ...
, where store customers aggregate their resources to purchase agricultural inputs. Agricultural supply and the stores that provide it are part of the larger Agribusiness industry.


Agricultural labor


Irrigation


Seeds


Fertilizers


Production Sector


Farming


Farm Mechanization


Processing Sector


Primary Processing


Secondary Processing


Marketing Sector


Farmers' Market


Support Sector


Education


Cooperatives


Governments


Professionals


Studies and Reports

Studies of agribusiness often come from the academic fields of agricultural economics and
management studies Management (or managing) is the administration of an organization, whether it is a business, a nonprofit organization, or a government body. It is the art and science of managing resources of the business. Management includes the activities ...
, sometimes called agribusiness management. To promote more development of food economies, many government agencies support the research and publication of economic studies and reports exploring agribusiness and agribusiness practices. Some of these studies are on foods produced for export and are derived from agencies focused on food exports. These agencies include the
Foreign Agricultural Service The Foreign Agricultural Service (FAS) is the foreign affairs agency with primary responsibility for the United States Department of Agriculture's (USDA) overseas programs – market development, international trade agreements and negotiations, ...
(FAS) of the U.S. Department of Agriculture,
Agriculture and Agri-Food Canada Agriculture and Agri-Food Canada (AAFC; sometimes Ag-Canada; french: Agriculture et Agroalimentaire Canada)''Agriculture and Agri-Food Canada'' is the applied title under the Federal Identity Program; the legal title is Department of Agriculture ...
(AAFC),
Austrade The Australian Trade and Investment Commission, or Austrade ( ), is the Australian Government's trade, investment and education promotion agency which was also given responsibility for tourism policy, programs and research from 2013. Austrade ...
, and
New Zealand Trade and Enterprise New Zealand Trade and Enterprise (NZTE) is New Zealand's economic development and trade promotion agency. It offers strategic advice, access to networks and influencers, research and market intelligence, and targeted financial support to help bus ...
(NZTE). The Federation of International Trade Associations publishes studies and reports by FAS and AAFC, as well as other non-governmental organizations on its website. In their book ''A Concept of Agribusiness'', Ray Goldberg and John Davis provided a rigorous economic framework for the field. They traced a complex value-added chain that begins with the farmer's purchase of seed and livestock and ends with a product fit for the consumer's table. Agribusiness boundary expansion is driven by a variety of
transaction cost In economics and related disciplines, a transaction cost is a cost in making any economic trade when participating in a market. Oliver E. Williamson defines transaction costs as the costs of running an economic system of companies, and unlike pro ...
s. As concern over
global warming In common usage, climate change describes global warming—the ongoing increase in global average temperature—and its effects on Earth's climate system. Climate change in a broader sense also includes previous long-term changes to E ...
intensifies, biofuels derived from crops are gaining increased public and scientific attention. This is driven by factors such as oil price spikes, the need for increased
energy security Energy security is the association between national security and the availability of natural resources for energy consumption. Access to (relatively) cheap energy has become essential to the functioning of modern economies. However, the uneven d ...
, concern over
greenhouse gas emissions Greenhouse gas emissions from human activities strengthen the greenhouse effect, contributing to climate change. Most is carbon dioxide from burning fossil fuels: coal, oil, and natural gas. The largest emitters include coal in China and ...
from fossil fuels, and support from
government subsidies A subsidy or government incentive is a form of financial aid or support extended to an economic sector (business, or individual) generally with the aim of promoting economic and social policy. Although commonly extended from the government, the ter ...
. In Europe and in the US, increased research and production of biofuels have been mandated by law.


See also

* Agrarian law *
Agrarian reform Agrarian reform can refer either, narrowly, to government-initiated or government-backed redistribution of agricultural land (see land reform) or, broadly, to an overall redirection of the agrarian system of the country, which often includes land ...
*
Agricultural machinery industry The agricultural machinery industry or agricultural engineering industry is the part of the industry, that produces and maintain tractors, agricultural machinery and agricultural implements used in farming or other agriculture. This branch is cons ...
*
Agricultural marketing Agricultural marketing covers the services involved in moving an agricultural product from the farm to the consumer. These services involve the planning, organizing, directing and handling of agricultural produce in such a way as to satisfy farm ...
*
Agricultural value chain Agricultural value chain is the integrated range of goods and services (value chain) necessary for an agricultural product to move from the producer to the final consumer. The concept has been used since the beginning of the millennium, primarily b ...
*
Agroecology Agroecology (US: a-grō-ē-ˈkä-lə-jē) is an academic discipline that studies ecological processes applied to agricultural production systems. Bringing ecological principles to bear can suggest new management approaches in agroecosystems. Th ...
* Animal–industrial complex * Biofuel *
Contract farming Contract farming involves agricultural production being carried out on the basis of an agreement between the buyer and farm producers. Sometimes it involves the buyer specifying the quality required and the price, with the farmer agreeing to deliv ...
* Energy crop *
Environmental impact of agriculture The environmental impact of agriculture is the effect that different farming practices have on the ecosystems around them, and how those effects can be traced back to those practices. The environmental impact of agriculture varies widely based on p ...
* Factory farming *
Industrial agriculture Industrial agriculture is a form of modern farming that refers to the industrialized production of crops and animals and animal products like eggs or milk. The methods of industrial agriculture include innovation in agricultural machinery and f ...
*
Land banking Land banking is the practice of aggregating parcels of land for future sale or development. While in many countries ''land banking'' may refer to various private real estate investment schemes, in the United States it refers to the establishme ...
* Agribusiness in Kenya


References


Citations


Cited sources

*


Further reading

* *Gitta, Cosmas and South, David (2012).
Southern Innovator Magazine Issue 3: Agribusiness and Food Security
': United Nations Office for South-South Cooperation. ISSN 2222-9280 *https://web.archive.org/web/20160304034828/http://www.ifama.org/files/IS_Ledesma_Formatted.pdf {{Authority control Agricultural economics Business Agriculture