Agribusiness – Meaning - Definition – Structure of Agribusiness (Input sector, Farm sector and Product sector) – Importance of Agribusiness in Indian Economy.
Agri-business as a concept was born in Harvard University in 1957 with the publication of a book “A concept of Agri-business”, written by John David and A. Gold Berg. It was introduced in Philippines in early 1966, when the University of the Philippines offered an Agri-business Management (ABM) programme at the under-graduate level. In 1969, the first Advanced Agri- business Management seminar was held in Manila.
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Definition of Agri-business:
“Agri-business is the sum total of all operations involved in the manufacture and distribution of farm supplies, production activities on the farm, storage, processing and distribution of farm commodities and items made from them” (John David and Gold Berg)
Agri-business involves three sectors:
1. Input sector: It deals with the supply of inputs required by the farmers for raising crops, livestock and other allied enterprises. These include seeds, fertilizers, chemicals, machinery and fuel.
2. Farm sector: It aims at producing crops, livestock and other products.
3. Product sector: It deals with various aspects like storage, processing and marketing the finished products so as to meet the dynamic needs of consumers.
Therefore, Agribusiness is sum total of all operations or activities involved in the business of production and marketing of farm supplies and farm products for achieving the targeted objectives.
Importance of Agri-business:
1. It deals with agricultural sector and also with the portion of industrial sector, which is the major source of farm inputs like fertilizers, pesticides, machines, processing and post harvest technologies.
2. It suggests and directs the government and private sectors for development of sub sectors.
3. It contributes a good part of the national economy.
Dimensions of Agri-business:
1. It deals with different components of both agricultural and industrial sector, their inter- dependence and influence of one sector on other.
2. It deals with decision making process of farm either private or government in relation to production and selling aspects.
3. It deals with strengths and weaknesses of a project and thereby their viability in competing enterprises.
4. Agri-business is always market oriented.
5. Structure of Agri-business is generally vertical and it comprises the following
a. Govt. policies and programmes regarding raising of crops or taking enterprises etc.,
b. Research and extension programmes of the Govt.
c. Farm supplies or inputs
d. Agricultural production
e. Processing
f. Marketing of agricultural products
Scope of Agri-business:
1) Our daily requirements of food and fiber products at desired place at required form and time come from efficient and hard working of many business personnel in input, farm and food production and also in marketing them. The entire system in brief is called Agri- business.
2) Agribusiness, of late, is combining the diverse commercial enterprises, using heterogeneous combination of labour, materials, capital and technology.
3) It is a dynamic sector and continuously meets current demands of consumers in domestic and world markets.
4) Agri-business establishment leads to strengthening of infrastructural facilities in that area, expansion of credit, raw materials supply agencies, adoption of modern technology in production and marketing of agricultural products.
5) Agri-business provides crucial forward and backward linkages.
(Backward linkage include supply of inputs, credit, production technologies, farm
services etc.,
A forward linkage includes storage, processing, transportation and marketing aspects.)
6) Agri-business generates potential employment opportunities.
7) It adds value to products and thereby increases the net profits.
Structure of Agri-business:
As mentioned earlier agri-business sector provides crucial backward and forward linkages. It involves two important sectors.
1. Farm input sector: It deals with agro-based industries providing seeds, fertilizers, feed, chemicals etc., The industries supplying machinery or equipment, implements and petroleum etc are also important in this regard.
2. Farm product sector: It deals with production and distribution of farm commodities. Large co- operative bodies also exist in Agri-business, but they are few in number, whereas small scaled agro- industries are large in number. The vertical integration of a farm is very common in poultry, fruit and vegetable farms.
(Horizontal integration: If one firm assumes the functions of other firm is called the horizontal integration Ex: Co-operative marketing societies, Co-operative farming societies.
Vertical integration: If one firm assumes other functions which are having close relationship.
a. If one firm assumes other functions (succeeding) related to consumption function is called forward
integration.
Ex: A wholesaler firm assuming the function of a retailer.
b. If one firm assumes the other functions (proceeding) related to the production function is called backward integration.
Ex: A wholesaler firm assumes the functions such as assembling, processing, packing etc.,
Conglomerate integration: If one firm assumes several functions which do not have any relationship.
