What is agribusiness? Several people define this term using different words but they all try to explain the same thing. Agribusiness is simply the business sector of agriculture or the business sector of agricultural production. It covers different aspects such as production (allocation of human labor, agricultural production, livestock, etc.), breeding, distribution and marketing, agrochemicals and agricultural machinery. It involves all the steps necessary to bring an agricultural good to market.
Agribusiness breakdown
However, this term does not always correlate with actual farms / farm activities. Instead, it is used to commonly refer to a business related to agriculture that is engaged in supplying agricultural inputs such as machinery, seeds, agrochemicals, etc.
The term agribusiness is also used to describe companies / businesses that are mainly involved in the marketing activities of products related to agriculture, such as processors, wholesalers, warehouses, retailers, etc.
Agribusiness takes the different aspects of agricultural production as an integrated system. For example, farmers produce fruits and vegetables and also raise livestock using sophisticated techniques that include the use of GPS to direct harvest operations. Processing plants make sure to use the best methods for cleaning and packaging processed food and livestock, while manufacturers continue to build machinery that increases efficiency on the farm.
Agribusiness performance is also greatly affected by market forces. The prevailing market forces determine the price of products, as well as their demand and supply. For example, a negative change in consumer taste and preference for consuming red meat will negatively affect the price and supply of it. This is because there will be a drop in demand, which will cause a drop in product prices. Therefore, agribusiness companies may be forced to sell their products abroad to ensure that they remain in business, but if they fail to overcome the various challenges, they may soon be out of business.
Organic farming vs agribusiness
Many people use the term agribusiness in relation to large-scale commercial agricultural operations, but they will rarely use it in contrast to small-scale organic farms. in fact, small-scale family farmers feel that they are in a hugely competitive business with large-scale corporations and this makes them feel endangered and less competitive in the market.
However, the case is not true, small organic companies often use agro-industrial products, for example tractors, and do not necessarily compete with large farms owned by companies in the market. For example, a consumer may decide to buy free range pork from a small organic farmer (because it has a higher nutrient content) compared to conventionally produced pork.
Finally, agribusiness is a dynamic and ever-changing environment and people wishing to venture into this field must be willing to learn new ways to overcome ever-prevailing challenges in order to see their business succeed.