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L 07. Agribusiness – Importance, Opportunities and Challenges

Agriculture is the science or practice of farming, including preparation of the soil for growing
crops and the rearing of animals to provide food, wool, and other products.
Business is an economic or commercial activity. It is an organization or economic system where
goods and services are exchanged for one another or for money. Every business requires some
form of investment and enough customers to whom its output can be sold on a consistent basis
in order to make a profit.
Agribusiness is a business that earns most or all of its revenues from agriculture. It combines
the words agriculture and business and it involves a range of activities and methods used
involving modern food production. This involves farming, seed supply, agrichemicals, farm
machinery, wholesale and distribution of products, processing, marketing, and retail sales etc.
Agribusiness
Agribusiness as a concept was born in Harvard University in 1957 with the publication of a
book “A concept of Agri-business”, written by John Davis 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
Agribusiness Management seminar was held in Manila.
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 Davis and Gold Berg).
Agri-business involves three sectors/components:
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/Production Sector: It aims at producing crops, livestock and other products.
3. Processing 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
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objectives. It is important to visualizes these three sectors as interrelated parts of a system in

which the success of each part depends heavily on the proper functioning of the other two.
Agribusiness, as a concept, encompasses the whole range of activities from agro input
manufacturing to marketing the processed food for the ultimate consumer.

Importance of Agri-business:
 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.
 It suggests and directs the government and private sectors for development of sub sectors.
 It contributes a good part of the national economy.
Opportunities of the Agribusiness enterprises

Agro based industries are the important element in the rural economy of the country.
These industries particularly have the following opportunities.
 Increasing market span: Initially only local market is available for the
agribusiness enterprises but at present market span for agribusiness enterprises
has increased. It is not necessary agro based industry is depend only to the local
market it can be move outside market. Increasing market span creating huge
opportunities for the agro based industry.
 Export: The Agribusiness enterprises are able to export his product to the
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international market like cashew kernel, sugar, cloth, milk product, etc. This is
creating big opportunities for this industry which providing valuable foreign
exchange to the country. It is now set the international platform for the Indian
agribusiness sector.
 Value addition: The agribusiness sector can make value addition product like
reprocessing on milk, reprocessing on sugar, reprocessing on cashew kernel etc.
This is area where agro based industry has considered big opportunities
 Entrepreneurship development in the rural area: This industry is belonging to the
rural area of the country; success of this industry is boost the new people to established
the new industries in the rural area.

 More employment generations: The agro based industry can able to create the more
employment generations in the rural area, this may also considered as one of the
opportunities for this industry.
 Proper utilization of natural resources: The Indian agribusiness sector is entirely
depends on the agriculture resources. India is very rich with their huge natural
resources. To utilize the proper natural resources is big opportunities for the agro
based industry in India.
Challenges of the Agribusiness sector

The following factors are creating threats for the agro based industry.

 Global competition: This sector is facing know the global competition. It is very
difficult to agribusiness enterprises to run a business in the high competitive area with the
low profile.
 Unorganized market: It is very difficult to found the well-organized market for
agribusiness enterprises product; good market is the necessary for to have the appropriate
price for the final product. Problem of the marketing is considered one of the important
threats for this industry.
 Bad trade practices: In order to maintain the sustainable development of any
industry good trade practices are necessary. In case of agro based industry lack of
good trades practices like quality of product, weight, packaging etc. are create the
problem of this industry.
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 Price fluctuations: Because of the price fluctuations it is very difficult to maintain the
pricing strategy some time company may have loss, this losses agribusiness firms could
not bare
 Political biasness: This sector is having somehow political bias, interfering the
major decision on the company which is not good for the agro based industry for
acquiring the predetermined goal.
 Huge Cost of modern technology: The cost of modern technology is always high it is very
difficult to purchase this machinery for small organization in India. The high cost of
machinery is creating threats for the agro based industry