Agribusiness is the business of agricultural production. It includes agrichemicals, breeding,
crop production, distribution, farm machinery, processing, and seed supply, as well as marketing
and retail sales. Ray A. Goldberg coins the term agribusiness
together with coauthor John H. Davis. They provided a rigorous economic framework for
the field in their book A Concept of Agribusiness. That seminal work traces a complex value-added
chain that begins with the farmer's purchase of seed and livestock and ends with a product
fit for the consumer's table. The discipline of agribusiness is changing
to market centric. All agents of the food and fiber value chain and those institutions
that influence it are part of agribusiness system.
Agribusiness boundary expansion is driven by a variety of transaction costs. Nobel Prizes
Ronald Coase and Oliver Williamson showed how transaction costs push firms to innovate
due to the increased costs of resources used for the creation of goods. The term transaction
cost is frequently thought to have been coined by Ronald Coase, who used it to develop a
theoretical framework for predicting when certain economic tasks would be performed
by firms, and when they would be performed on the market.
According to Williamson, the determinants of transaction costs are frequency, specificity,
uncertainty, limited rationality, and opportunistic behavior.
Argentine economist Manuel Alvarado Ledesma explains the implications of institutions
on agribusiness and writes that institutions are sets of rules, regulations, guidelines,
codes and implied and express traditions which prevail in a society, which govern the relations
among citizens, and also the relationship between the citizens with the government.
He emphasizes that weak institutional environment allows for capricious tax, trade, pricing
and investment policies by all governments to the point of creating business uncertainty.
He also provides a thorough review of the empirical literature on contract farming,
paying attention to broad implications for economic development. Alvarado Ledesma states
that the discipline of agribusiness should contribute to the conservation of natural
resources and biodiversity. Within the agriculture industry, "agribusiness"
is used simply as a portmanteau of agriculture and business, referring to the range of activities
and disciplines encompassed by modern food production. There are academic degrees in
and departments of agribusiness, agribusiness trade associations, agribusiness publications,
and so forth, worldwide. The UN's Food and Agriculture Organization
operates a section devoted to Agribusiness Development which seeks to promote food industry
growth in developing nations. In the context of agribusiness management
in academia, each individual element of agriculture production and distribution may be described
as agribusinesses. However, the term "agribusiness" most often emphasizes the "interdependence"
of these various sectors within the production chain.
Among critics of large-scale, industrialized, vertically integrated food production, the
term agribusiness is used negatively, synonymous with corporate farming. As such, it is often
contrasted with smaller family-owned farms.
Examples Examples of agribusinesses include seed and
agrichemical producers like Dow AgroSciences, DuPont, Monsanto, and Syngenta; AB Agri animal
feeds, biofuels, and micro-ingredients, ADM, grain transport and processing; John Deere,
farm machinery producer; Ocean Spray, farmer's cooperative; and Purina Farms, agritourism
farm. As concern over global warming intensifies,
biofuels derived from crops are gaining increased public and scientific attention. This is driven
by factors such as oil price spikes, the need for increased energy security, concern over
greenhouse gas emissions from fossil fuels, and support from government subsidies. In
Europe and in the US, increased research and production of biofuels has been mandated by
law. Studies and reports
Studies of agribusiness often come from the academic fields of agricultural economics
and management studies, sometimes called agribusiness management. To promote more development of
food economies, many government agencies support the research and publication of economic studies
and reports exploring agribusiness and agribusiness practices. Some of these studies are on foods
produced for export and are derived from agencies focused on food exports. These agencies include
the Foreign Agricultural Service of the U.S. Department of Agriculture, Agriculture and Agri-Food
Canada, Austrade, and New Zealand Trade and Enterprise. The Federation of International
Trade Associations publishes studies and reports by FAS and AAFC, as well as other non-governmental
organizations on its website. See also
Notes and references
Further reading John Wilkinson. "The Globalization of Agribusiness
and Developing World Food Systems". Monthly Review.