Intro
What is Agribusiness?
Agribusiness is doing business with agricultural products. Agribusiness is a term that bridges Agriculture and Business.
Agribusiness includes all business entities that buy from or sell to farmers. The transaction can include a product, a commodity or a service and involves products such as feed, crop, fertilizer facilities, electricity, machinery, etc. Agricultural goods, such as food and fibre, etc. Facilitative services, such as loans, marketing of insurance, storage, manufacturing, transport, packaging, distribution, etc.
Agribusiness relates to industries that are engaged in farming or that produce farm inputs. Examples of agribusiness include farm machinery manufacturing, seed supply, and agrichemicals.
In common usage, the term "agribusiness" usually refers to large agricultural companies in comparison with small, independent farms. However, agribusiness companies can be large or small, corporate or independent. Learn more about agribusiness to understand the business of food production, processing, and distribution. Agribusiness is basically a way of describing companies and enterprises that are related to cultivating and processing food and other agricultural products.
Agribusiness also is used to describe businesses that are involved in the marketing and distribution of farm products. These businesses include warehouses, wholesalers, processors, retailers, and more. Any company that participates in the production, marketing, safety, and distribution of food is involved in agribusiness.
Use of the term "agribusiness" by critics of corporate farming has created an aura of negativity around the concept, associating it with large corporations and companies that produce environmentally questionable, nonorganic products while ensuring that smaller, potentially sustainable farms fail to turn a profit. But the industry encompasses small- and medium-sized businesses as well as global conglomerates.2
It's possible to major or minor in agribusiness at a variety of different colleges and universities across the U.S., including Cornell University in Ithaca, NY, and Iowa State University. Degrees focus on the economics of farm management and the science of agricultural management. Graduates may go on to pursue careers in agricultural finance, supply, merchandizing, and farm operations, among other professional areas.
SOURCE | The balance SMB
Types of Agribusiness Companies
Not all agribusiness companies are involved directly in food production. Take Deere & Company, which makes John Deere equipment and may be one of the best-known examples of a classic agribusiness company.
Deere & Company doesn't own farms or produce food products, but nearly every farmer owns a John Deere tractor, baler, or some other piece of the iconic green and gold farm equipment.
Bayer, which acquired The Monsanto Company in 2018 and manufactures the herbicide Roundup (glyphosate) and various Roundup Ready genetically modified seeds, is another example of a company that engages in agribusiness. Another agribusiness company, Corteva Agriscience, an independent company that was previously a wholly owned subsidiary of Dow AgroSciences LLC, makes pesticides, herbicides, and fungicides, in addition to marketing seeds.
The Archer-Daniels-Midland Company, or ADM, processes oilseeds like canola and soy; processes corn into ingredients such as corn syrup, dextrose, and starch; and transports crops both nationally and internationally.
The term agribusiness generally isn't used to refer to individual farms, although Smithfield Foods Inc., the largest U.S. producer of pork, owns and runs its farms. Smithfield is owned by Chinese company WH Group (formerly Shuanghui International), which is the largest pork producer in the world and the largest meat producer in China.
SOURCE | The balance SMB
Agribusiness vs. Organic Farming
In the United States, you'll often hear agribusiness used in contrast to organic agricultural businesses. For example, many people when talking about large-scale commercial agricultural operations will use the term agribusiness, but you won't hear the term used in relation to small-scale, organic farms.
Small family farms, smaller organic agriculture companies, and organic farmers often feel they have to compete with giant agribusiness companies when looking to gain a place in the agricultural marketplace. There's a persistent feeling among family farmers that they're an endangered species, due to the encroachment of agribusiness and corporate farms.
However, small-scale farms are also business concerns. For example, the U.S. Department of Agriculture (USDA) advises new farmers to begin by writing a business plan. The USDA also recommends that new farmers determine the business structure of their farm, e.g., a limited liability company (LLC), corporation, cooperative, etc.
Small organic farms often use agribusiness products like John Deere tractors. Also, small organic farms aren't necessarily competing with larger, corporate-owned farms for the same market. For example, a customer who prefers to buy pastured pork because it's humanely produced is unlikely to view conventionally produced, store-bought pork as an acceptable substitute.
SOURCE | The balance SMB
🔎 KEY TAKEAWAYS
Agribusiness relates to farming.
Agribusiness companies produce, market, and distribute agricultural products and supports.
Some agribusiness companies manufacture farming equipment, agrichemicals, or other farm products.
In the U.S., the term agribusiness is most often used in opposition to small, organic farms. However, even small farms are businesses.
SOURCE | The balance SMB
Importance of Agribusiness
Agribusiness is a sector that supports the growth of the agricultural industry, which is pivotal to economic growth. It also continues to play a crucial role in the growth of developing countries. Agribusinesses can potentially improve agricultural productivity, which is why governments often offer subsidies to agricultural businesses.
Agricultural activities also contribute to an improved system of food security and sustainable food production, as well as income for a majority of the poor in developing countries. However, the activities increase the emission of greenhouse gases and contribute to global warming – which is why innovation is important to the sector to address such problems.
SOURCE | Corporate Finance Institute
Innovation in Agribusiness
Innovation is a continuing endeavor among agribusinesses, as the industry seeks improved and efficient methods of production and processing. For example, many companies now offer drone surveillance of farms, which gives the farmer/owner insights on the health of crops and helps them to create stock projections and plan for the future.
In addition, new and improved types of machinery are being engineered and manufactured on a large scale, such as robotic harvesters, automated pesticide sprayers, and driverless tractors.
Ultimately, the aim of innovation in agribusiness is to improve agricultural productivity and make agricultural activities easier for farmers. It aims to lower the costs of production and increase profitability for farmers, who often endure volatile market conditions as crop prices fluctuate with changing economic conditions.
SOURCE | Corporate Finance Institute
Read more
You probably know what agriculture is, and you probably know what business is. But when you put them together to create agribusiness – what exactly does that all entail? What’s the definition of agribusiness?
Is agribusiness the all-encompassing word for agricultural production? Or is agribusiness only a portion of the agriculture industry?
Read full article | SOURCE | AdvisoryHQ
According to the Food and Agriculture Organization of the United Nations (FAO), over 70 percent of the world’s food needs are met by small farmers.
Agriculture is the economic sector that employs the most people in the world, and the main source of food and income for many people living in poverty. Thus, investing in agriculture is not only one of the most effective strategies to improve food security and promote sustainability, it is also essential to many countries’ economic development.
Read full article | SOURCE | BBVA (Banco Bilbao Vizcaya Argentaria)
Modern farming, including raising crops for food and fuel, and raising animals for food, wool, and more, is a complex industry. As farmers learn to compete and remain viable in a global marketplace, they draw upon business principles and a complex network of agriculture and business professionals. This includes taking advantage of new advances in farming, such as bioengineering, mechanization, and new breeding practices, deciding how to sell crops, whether locally or on a commodities exchange, and managing and insuring land in the most profitable manner. As an agricultural business professional, you might work in any of these areas, either as a farmer or as a business professional supporting farmers.
Read full article | SOURCE | Learn.org
According to the Food and Agriculture Organization of the United Nations (FAO), over 70 percent of the world’s food needs are met by small farmers.
Agriculture is the economic sector that employs the most people in the world, and the main source of food and income for many people living in poverty. Thus, investing in agriculture is not only one of the most effective strategies to improve food security and promote sustainability, it is also essential to many countries’ economic development.
SOURCE | BBVA (Banco Bilbao Vizcaya Argentaria)
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