PGDM (AgriBusiness Management)

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V V I S M - Vishwa Vishwani Institute Of Systems & Management

Agribusiness

The word agriculture indicate plowing a field, planting seed, harvesting a crop, milking cows, or feeding livestock. Until recently, this was a fairly accurate picture. But to days’ agriculture is radically different.

Agriculture has evolved in to agribusiness and has become a vast and complex system that reaches for beyond the farm to include all those who are involved in bringing food and fiber to consumers. Agribusiness include not only those that farm the land but also the people and firms that provide the inputs (for ex. Seed, chemicals, credit etc.), process the output (for ex. Milk, grain, meat etc.), manufacture the food products (for ex. icc cream, bread, breakfast cereals etc.), and transport and sell the food products to consumers (for ex. restaurants, supermarkets).

Agribusiness system has undergone a rapid transformation as new industries have evolve and traditional farming operations have grown larger and more specialized. The transformation did not happen over night, but came slowly as a response to a variety of forces. Knowing something about how agribusiness came about makes it easier to understand how this system operates today and how it is likely to change in the future.

Initially agriculture being the major venture it was easy to become a farmer, but productivity was low. Average farmer produced enough food to feed just four people. As a consequence most farmers were nearly totally self-sufficient. They produced most of the inputs they needed for production, such as seed, draft animals, feed and simple farm equipment. Farm families processed the commodities they grew to make their own food and clothing. They consumed or used just about everything they produced. The small amount of output not consumed on the farm was sold for cash. These items were used to feed and cloth the minor portion of the country’s population that lived in villages and cities. A few agricultural products made their way into the export market and were sold to buyers is other countries.

Farmers found it increasingly profitable to concentrate on production and began to purchase inputs they formerly made themselves. This trend enabled others to build business that focused on meeting the need for inputs used in production agriculture such as seed, fencing, machinery and so on. These farms involved into the industries that make up the “agricultural inputs sector”. Input farms are major part of agribusiness and produce variety of technologically based products that account for approximately 75 per cent of all the inputs used in production agriculture.

At the same time the agriculture input sector was evolving, a similar evaluation was taking place a commodity processing and food manufacturing moved off the farm. The form of most commodities (wheat, rice, milk, livestock and so on) must be changed to make them more useful and convenient for consumers. For ex. consumers would rather buy flour than grind the wheat themselves before backing a cake. They are willing to pay extra for the convenience of buying the processed commodity (flour) instead of the raw agriculture commodity (wheat).

During the same period technological advance were being made in food preservation method. Up until this time the perishable nature of most agriculture commodities meant that they were available only at harvest. Advance in food processing have made it possible to get those commodities all throughout the year. Today even most farm families use purchased food and fiber products rather than doing the processing themselves. The farms that meet the consumers demand for greater processing and convenience also constitute a major part of agribusiness and are referred to as the processing manufacturing sector.

It is apparent that the definition of agriculture had to be expanded to include more than production. Farmers rely on the input industries to provide the products and service they need to produce agricultural commodities. They also rely on commodity processors, food manufactures, and ultimately food distributors and retailers to purchase their raw agricultural commodities and to process and deliver them to the consumer for final sale. The result is the food and fiber system.

The food and fiber system is increasingly being referred to as “agribusiness”. The term agribusiness was first introduced by Davis and Goldberg in 1957. it represents three part system made up of (1) the agricultural input sector (2) the production sector and (3) the processing-manufacturing sector. The capture the full meaning of the term “agribusiness” it is important to visualizes these there sectors as interrelated parts of a system in which the success of each part depends heavily on the proper functioning of the other two.