1st Lecture: CONCEPT OF AGRIBUSINESS:

Agriculture is being done in India since ancient time which is considered as the backbone of our
economy. Indian agriculture contributes approximately 13.9 per cent of the country’s GDP. The term
Agri business is a combination of two words viz. agriculture and business. However, both agriculture
and business are theoretically different from each other. 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-gradute level. In
1969, the Advance Agri-business Management seminer was held in Manila. Interpretation of the term
agribusiness is apparently diverse, there exists lot of thoughts regarding “what Agribusiness means”
among fieldworkers, executors, researchers, scientists and others.

Agribusiness:

Meaning and Definition

Agriculture indicates ploughing a field, sowing seed, harvesting a crop, milking cows, or feeding
livestock. Until recently, this was a fairly accurate picture but now days’ agriculture is radically
different. Agriculture has evolved in to agribusiness and has become a vast and complex system that
reaches far beyond the farm to include all those who are involved in bringing food and fibre to
consumers. Agribusiness include not only those who cultivate the land but also the people and firms
that provide the inputs (seed, chemicals, credit etc.), process the output (milk, grain, meat etc.),
manufacture the food products (ice cream, bread, breakfast cereals etc.), transport and sell the food
products to consumers (restaurants, supermarkets). Agribusiness management is nothing but the
application of management principles in agriculture.

Agribusiness has been defined by many scientists in different ways due to its dynamic and
complex nature. Agribusiness definitions share a common emphasis for the interdependence of the
various sectors of the agri-food supply chain that work towards the production, manufacturing,
distribution and retailing of food products and services. Agribusiness is a concept of economics which
includes the sum total of all operations involved in the manufacturing and distribution of farm
supplies, production operation on the farm, and the storage, processing and distribution of farm
commodities and items made from them (Davis and Goldberg, 1957).

According to chain (2014), “agribusiness is referred to agriculturally related businesses including

warehouses, wholesalers, processors, retailers and more”.

According to David van fleet (2016), “clearly agribusiness involves multiple supply or value chains from
production to distribution, marketing and consumption. More specifically it involves four ‘f’ s –food,
fiber, forest (products), and (bio) fuel”, food is the central point.

American heritage dictionary says about agribusiness –”farming engaged in as a large scale business
operation embracing the production, processing and distribution of agricultural products and the
manufacture of farm machinery, equipment and supplies.

To sum up, agribusiness encompasses all economic activities within the meaning of agricultural food
and natural resources farm/ industry involved in the production of food , fiber, bio fuel, farm
machinery, chemicals including sale of items , marketing , transportation, processing , storage and
distribution of agricultural products and also providing services to other agricultural businesses and
stakeholders.
 Agribusiness can also be defined as science and practice of activities with backward and
forward linkage related to production, processing, marketing and trade, distribution of raw and
processed food, feed, fiber including supply of inputs and service for these activities. Every company
that is doing business transactions with farmers come under the Agri business sector. These
transactions may be either in the form of products or even services. Similarly, suggestions for
agriculture, seeds, pesticides, agricultural equipment’s all come under Agri business. In the same way
providing loans to agriculture, agriculture insurance, stocking Agri products, transportation, packing,
processing, and distribution also comes under this.

Agricultural economists defined agribusiness as “All business enterprises that buy from or sell to
farmers. The transaction may involve items such as (a) productive goods/services (feed, seed,
fertilizers, equipment, energy, machinery (b) agricultural commodities (food and fibre) and (c)
facilitative services (credit insurance, marketing, storage, processing, transportation, 5 packaging,
distributions). Edwards and Shultz (2005) defined that agribusiness management is a dynamic and
systemic endeavour that serves consumers locally and globally through innovation and
management of multiple value chains that deliver valued goods and services derived from the
sustainable orchestration of food, fiber, and natural resources.

Structure of Agribusiness:

Agribusiness is a market oriented and generally has vertical structure because agri-business provides
crucial backward and forward linkages. Structure of Agri-business is generally vertical and it comprises
the (a) govt. policies and programmes regarding raising of crops or taking enterprises (b) research and
extension programmes of the government (c) farm supplies or inputs (d) agricultural production (e)
processing and (f) marketing of agricultural products. It involves three important 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 (output) sector – it deals with production of farm commodities. 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.
Types of Integration
1. 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.

2. Vertical integration – if one firm assumes different functions at a marketing sequence which
are having close relationship. 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. If one firm assumes the other functions (preceeding) related to the
production function is called backward integration. Ex: A wholesaler firm assumes the
functions such as assembling, processing, packing etc.

3. Conglomerate integration – if one firm assumes several functions which do not have any
relationship. Ex: Hindustan Lever Ltd.
 TRANSFORMATION OF AGRICULTURE INTO AGRIBUSINESS

What is transformation?

Transformation simply means change of character / change of nature/ change of status of any
material for economic use or benefit to satisfy human need.
Transformation of agriculture into agribusiness simply means transformation of agricultural
inputs / activities / operations into business for economic benefit. Transformation of country’s
agriculture sector can create jobs, raise income, reduce malnutrition and kickstart the
economy on middle income growth. Our government is also seeking agricultural
transformations that meet multiple goals in addition to traditional economic development
and poverty reduction goal. Principle and concept of transformation provides opportunities
to the professionally educated persons to avail themselves of agribusiness opportunities.
In practice, drivers of agricultural transformation are multidimensional and interrelated which
need to be organized to provide better opportunities.
Agricultural transformation plan mainly depends on 10 main factors:
I. Identification, prioritization and differentiation of strategies
II. Market driven opportunities for farmers
III. identification of change agents,
IV. motivation
V. finding the right starting point
VI. pragmatic approach
VII. investor mind set
VIII. policy decisions
IX. willing to change
X. leadership skills
STAKEHOLDERS AND COMPONENTS

Stakeholder simply means is a person / party that has interest in a company / unit /
establishment and can affect or be affected by the business. the primary stake holders in a
typical corporate are its investors, employees, customers, holders and suppliers. however,
with the increase of attention on Corporate Social Responsibilities (CSR) the concept has been
extended to include communities, govt. And trade associations.

Components of agribusiness – in course of discussion of the concept of agribusiness the areas

/lobbies/ fields of various activities and performers have been identified –say farmers and
their agents, agricultural input suppliers and services providers, manufacturers, processors
and product suppliers and intangible component management --all such activities carried out
are identified as components of agribusiness.

Example: who are the stake holders of the business?

The growers who grow potatoes, going back the suppliers of seed, the persons involved in
cultivating the crop from sowing seeds up to the stage of harvesting of crop, persons involved in
carrying potatoes from fields say transports, storage of the crop, persons involved in arranging
storage facilities, electricians, maintenance persons, administrative staff involved directly and
indirectly.

Persons/ employees engaged in maintaining required temperature for proper storage

 Persons engaged for marketing of the potatoes in time, market study and sale following govt.
Orders
Persons engaged for assessment and study of profit based on investment.
The retailers who sell potatoes in the market for profit considering the demand of the consumers.
Lastly the ultimate buyers/ consumers of potatoes.
Govt. Authorities who are responsible for controlling the price of potatoes in the market following
CSR (corporate social responsibilities) policy of the govt.
Examples of stakeholders ;
type example ---involvement
1.Farmer farm works
2. Suppliers supply of seeds, fertilizers
3. Storage cold storage,
4. Manufacturer manufacture of agri-related Items
5. Marketing agents marketing of agri-products
6. Government policy makers, control
7. Companies, firms business jobs, participation societies and NGOs
8. Financiers: provides funds, pay back
9. Benefits : benefits out of deployment of fund
10. Responsibilities: Improper functioning
11. Impact analysis : Success / failure

Related Link:

https://www.youtube.com/watch?v=_UulgefyYvY

https://www.youtube.com/watch?v=2LbmxkVDKQg