What is Agribusiness?

agribusiness, agro-industry, agriculture
Agribusiness is the human activities that use natural resources to fullfill their needs of their life. Agribusiness is a broad concept used to describe corporate agricultural enterprises individually and collectively. Agribusinesses are companies involved in one or more stages of the production of crops and livestock. In other words agribusiness is an economic perspective for agricultural activities.

In agriculture, agribusiness is a generic term for the various businesses involved in food production, including farming and contract farming, seed supply, agrichemicals, farm machinery, wholesale and distribution, processing, marketing, and retail sales. The term has two distinctly different connotations depending on context.

Within the agriculture industry, agribusiness is widely used simply as a convenient portmanteau of agriculture and business, referring to the range of activities and disciplines encompassed by modern food production. There are academic degrees in and departments of agribusiness, agribusiness trade associations, agribusiness publications, and so forth, worldwide. Here, the term is only descriptive, and is synonymous in the broadest sense with food industry. The UN's Food and Agriculture Organization, for example, operates a section devoted to Agribusiness Development, which seeks to promote food industry growth in the Third World.

Among critics of large-scale, industrialized, vertically integrated food production, the term agribusiness is used negatively, synonymous with corporate farming. As such, it is often contrasted with smaller family-owned farms. Negative connotations are also derived from the negative associations of "business" and "corporations" by critics of capitalism or corporate excess. As concern over global warming intensifies, biofuels derived from food crops quickly emerged as a practical answer to the energy crisis. Adding corn ethanol to gasoline or using palm oil for biodiesel makes the fuel burn more cleanly, stretches oil supplies, and perhaps most attractive to some politicians, provides a nice boost to big agribusiness. In Europe and in the US, increasing biofuels was mandated by law. Rising fuel costs are increasingly adding financial burdens on the day-to-day running of agricultural companies.

Examples of agribusinesses activities include :
  • research and development of new agricultural resources and methods
  • ownership or management of agricultural production facilities such as farmlands and livestock facilities
  • manufacture or distribution of agricultural supplies and equipment such as machinery, feed, and fertilizers
  • processing or distribution of agricultural products

Providing food or fibers is the ultimate product of all agribusiness operations. As such, the economic impact of agribusiness is significant; agribusiness is almost two times as large as the sum of all manufacturing enterprises (measured in total assets); it represents 40 percent of all consumer spending; and it employs 37 percent of the labor force.

The term "agribusiness" was coined in the 1950s by John Herbert Davis and Ray A. Goldberg to reflect the two-way interdependence between businesspeople and farmers in the dual roles of suppliers and purchasers. Business firms that serve agriculture rely on farmers for their markets and for some of their supplies. By the same token, farms could not operate without businesses that manufacture farm supplies and those that store, process, and merchandise farm commodities.


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