Agribusiness is the business of agricultural production. It
includes agrichemicals, breeding, crop production (farming and contract
farming), distribution, farm machinery, processing, and seed supply, as well as
marketing and retail sales.
Ray A. Goldberg coins the term agribusiness together with
coauthor John H. Davis. They provided a rigorous economic framework for the
field in their book A Concept of Agribusiness (Boston: Division of Research,
Graduate School of Business Administration, Harvard University, 1957). That
seminal work traces 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.
The discipline of agribusiness is changing to market
centric. All agents of the food and fiber value chain and those institutions
that influence it are part of agribusiness system.
Agribusiness boundary expansion is driven by a variety of
transaction costs. Nobel Prizes Ronald Coase and Oliver Williamson showed how
transaction costs push firms to innovate due to the increased costs of
resources used for the creation of goods.
Argentine economist Manuel Alvarado Ledesma (CEMA
University) explains the implications of institutions on agribusiness. He
emphasizes that weak institutional environment allows for capricious tax,
trade, pricing and investment policies by all governments to the point of
creating business uncertainty. He also provides a thorough review of the
empirical literature on contract farming, paying attention to broad
implications for economic development. Alvarado Ledesma states that the
discipline of agribusiness should contribute to the conservation of natural
resources and biodiversity.
Within the agriculture industry, "agribusiness" is
used simply as a 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.
The UN's Food and Agriculture Organization (FAO) operates a
section devoted to Agribusiness Development which seeks to promote food
industry growth in developing nations.
In the context of agribusiness management in academia, each
individual element of agriculture production and distribution may be described
as agribusinesses. However, the term "agribusiness" most often
emphasizes the "interdependence" of these various sectors within the
production chain.
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.
Examples
Examples of agribusinesses include seed and agrichemical
producers like Dow AgroSciences, DuPont, Monsanto, and Syngenta; AB Agri (part
of Associated British Foods) animal feeds, biofuels, and micro-ingredients,
ADM, grain transport and processing; John Deere, farm machinery producer; Ocean
Spray, farmer's cooperative; and Purina Farms, agritourism farm.
As concern over global warming 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, concern over greenhouse gas emissions from fossil fuels, and support
from government subsidies. In Europe and in the US, increased research and
production of biofuels has been mandated by law.
Studies and reports
Studies of agribusiness often come from the academic fields
of agricultural economics and management studies, 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 (FAS) of the
U.S. Department of Agriculture, Agriculture and Agri-Food Canada (AAFC),
Austrade, and New Zealand Trade and Enterprise (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.
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