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 Prize recipients 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. The term transaction cost is frequently thought to have been coined by Ronald Coase, who used it to develop a theoretical framework for predicting when certain economic tasks would be performed by firms, and when they would be performed on the market.
According to Williamson, the determinants of transaction costs are frequency, specificity, uncertainty, limited rationality, and opportunistic behavior.
Argentine economist Manuel Alvarado Ledesma (CEMA University) explains the implications of institutions on agribusiness and writes that institutions are sets of rules, regulations, guidelines, codes and implied and express traditions which prevail in a society, which govern the relations among citizens, and also the relationship between the citizens with the government. 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.
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 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.
Notes and references
- "AGS: Agribusiness development". Fao.org. Retrieved 2013-05-02.
- Ng, Desmond; Siebert, John W. (2009). "Toward Better Defining the Field of Agribusiness Management". International Food and Agribusiness Management Review 12 (4).
- "Backpedaling on Biofuels". Wild.org. 2008-08-01. Retrieved 2013-05-02.
- "fita.org". fita.org. Retrieved 2013-05-02.
- John Wilkinson. "The Globalization of Agribusiness and Developing World Food Systems". Monthly Review.