MGMT 102

Introduction to Agribusiness Management

Module 1:
Hadasha Navarra Bongat
Learning Objectives:
❑ Origin and definition
❑ Nature and importance of agribusiness
❑ Agribusiness concepts and principles
❑ Features of agribusiness
Myths of Agribusiness
 Agribusiness is an agricultural production through farming
▪ Agribusiness is not equivalent to farming (e.g. agri-business)
 Agribusiness is big business
▪ Agribusiness originated from the West where agribusiness is
composed of large farms
 Agribusiness is purely a private-sector undertaking
▪ Agribusiness is not limited to profit-seeking organizations but
applies to rural development projects by public sectors
 What is an
AGRIBUSINESS???
What is an AGRIBUSINESS???
Agribusiness
❑ Agribusiness involves multiple activities in the
agricultural sector.
❑ It integrates agriculture and business principles.
❑ It aims to optimize efficiency, profitability, and
sustainability.
❑ Activities include farming, food processing, marketing,
distribution, and retailing.
The origin and development of agribusiness can
be traced through various stages in history:

Early Ancient Industrial Contemporary

Agriculture Civilization Revolution Agribusiness

Various dates, but

approximately
Late 18th to 19th
Pre-historic Time 3000 BCE to 2000 Present time
centuries CE
BCE for Egypt and
Mesopotamia

Approximately Approximately
10,000 BCE 20th century
5th to 15th
centuries CE
Agricultural Medieval and
Revolution 20th Century
Feudal Systems
What is Agribusiness?
What is Agribusiness?
The sum total of all operations involved in the
manufacture and distribution of farm supplies;
production activities in the farm; and the storage,
processing, and distribution of farm commodities
and items made from them (davis and goldberg
1975 as cited by drilon 1977)

- this connotes a whole range of possibilities from

the production of farm inputs until commodities, in
their various forms, until the end consumers.
What is Agribusiness?
"Agribusiness is the coordinating science of
supplying agricultural production inputs and
subsequently producing, processing, and
distributing food and fiber.”

- Roy (1980)
What is Agribusiness?
"Agribusiness includes the total input-farm-product
sectors that supply farm inputs; are involved in
production; and finally handle processing,
distributing, wholesaling, and retailing of the
product to the final customer.“

- Downey and Trocke (1981)

What is Agribusiness?
"Agribusiness in the new millennium evolved as a
dynamic and systemic endeavor that serves
consumers globally and locally through innovation
and management of multiple value chains that
deliver valued goods and services derived from
sustainable orchestration of food, fiber, and natural
resources.“

- Edwards & Shultz II (2005)

Author(s) Definition of Agribusiness
Davis and Goldberg (1975) "The sum total of all operations involved in the manufacture
and distribution of farm supplies; production activities in the
farm; and the storage, processing, and distribution of farm
commodities and items made from them." (as cited by
Drilon, 1977)
Roy (1980) "Agribusiness is the coordinating science of supplying
agricultural production inputs and subsequently producing,
processing, and distributing food and fiber."
Downey and Trocke (1981) "Agribusiness includes the total input-farm-product sectors
that supply farm inputs; are involved in production; and
finally handle processing, distributing, wholesaling, and
retailing of the product to the final customer."
Edwards & Shultz II (2005) "Agribusiness in the new millennium evolved as a dynamic
and systemic endeavor that serves consumers globally and
locally through innovation and management of multiple
value chains that deliver valued goods and services derived
from sustainable orchestration of food, fiber, and natural
resources."
Illustration of Agribusiness as a “Process”

Processing

Farm Commodities
Distribution

Storage
Distinctive features of agribusiness
management
Long Production Cycles
Seasonal Nature

Resource Intensity Sustainability Focus

Rural Focus Interdisciplinary Knowledge

Supply Chain Complexity Consumer Trends/ Global Trade

Market Volatility Regulatory Environment/

Government Support
Risk Management
Commodity and Specialty Markets
Technological Innovation
Family Farming
Features of ABM
Seasonal Nature:
Agricultural production is often highly seasonal, with
planting and harvesting cycles determined by weather
conditions and natural factors. Agribusiness managers
must plan and allocate resources accordingly, taking into
account these seasonal variations.
Features of ABM
Resource Intensity:
Agriculture relies heavily on
natural resources, including land,
water, and soil.
Effective resource management
and conservation are critical in
agribusiness to ensure
sustainability and long-term
productivity.
Features of ABM
Rural Focus:
❑ Many agribusiness operations are
located in rural areas, which may
present unique challenges
related to infrastructure, labor
availability, and access to
markets.
❑ Agribusiness managers need to
consider rural-specific factors in
their decision-making.
Features of ABM
Supply Chain Complexity:

Agribusiness involves a complex supply chain that

includes input suppliers, farmers, processors,
distributors, wholesalers, retailers, and consumers.
Managing this intricate network efficiently is a key
challenge.
Features of ABM
 Features of ABM

Market Volatility:

Agricultural markets can be highly

volatile, with prices and demand
affected by factors like weather
events, global trade dynamics, and
changes in consumer preferences.
Agribusiness managers must navigate
market uncertainties and fluctuations.
Features of ABM
Regulatory Environment:
❑ Agribusiness is subject to
various regulations related
to food safety,
environmental standards,
labeling, and trade.
❑ Compliance with these
regulations is a significant
aspect of agribusiness
management.
Features of ABM
Technological Innovation:
❑ Advances in technology, such
as precision agriculture,
biotechnology, and data
analytics, have transformed
agribusiness management.
❑ Managers need to stay
updated on the latest
innovations & adopt relevant
technologies to improve
productivity and efficiency.
Features of ABM
Risk Management:
❑ Agribusiness managers face
unique risks, including crop
failures, disease outbreaks,
and supply chain disruptions.
❑ Effective risk management
strategies, including
insurance and diversification,
are essential.
Features of ABM
Long Production Cycles:
❑ Some agricultural
products, like fruit trees or
perennial crops, have long
production cycles that
span multiple years.
❑ Agribusiness managers
must plan for long-term
investments and returns.
Features of ABM
Sustainability Focus:
There is an increasing
emphasis on sustainability in
agribusiness management,
including environmentally
responsible farming practices,
resource conservation, and
the reduction of carbon
emissions.
Features of ABM
Interdisciplinary Knowledge:

❑ Agribusiness managers often need expertise in various

fields, including agriculture, economics, marketing, finance,
and environmental science. An interdisciplinary approach is
essential for effective decision-making.

❑ Interdisciplinary knowledge refers to the integration of

concepts, methods, and insights from multiple academic
disciplines or fields of study to address complex problems or
explore topics that cannot be adequately understood within
the confines of a single discipline.
Features of ABM
Consumer Trends:

Agribusiness managers
must keep abreast of
consumer preferences and
trends, such as the
demand for organic
products, locally sourced
foods, and sustainable
agriculture.
Features of ABM: Consumer Trends

Plant-based diets

Changing Dietary patterns

Features of ABM
Government Support:

Government policies,
subsidies, and incentives can
significantly impact
agribusiness. Managers may
need to navigate government
programs and regulations to
optimize their operations.
Features of ABM
Commodity and Specialty
Markets:

Agribusiness includes both

commodity production and specialty
markets. Managers must decide
whether to focus on high-volume,
low-margin commodities or niche,
high-value products.
Features of ABM
Family Farming:

Many agribusinesses are

family-owned and operated.
Family dynamics and
succession planning are
important considerations in
agribusiness management.
Features of ABM
Global Trade:

Agribusiness is often
involved in international
trade, necessitating an
understanding of global
market dynamics, trade
agreements, and
export/import regulations.
Agribusiness as a Structure
Components
Related to one another
Vertical structure of agribusiness
Agribusiness is market-oriented
Agribusiness as a Structure
◦Satisfaction of customers’ needs
◦Produce marketable products
◦Produce market for products without
market
How do the components of Agribusiness
operate?
Coordinators
◦ Managers
◦ Government officers
◦ Educators
◦ Researchers
Well-informed actors
Ability and willingness of participants to
interact
 Agribusiness as a Sector
 Includes the whole
agriculture sector, including Agribusiness
fishery and forestry Sector
 Portion of the industrial
sector (manufacturers and
input suppliers)
 Portion of
Commercial/
commercial/services sector Industrial
Service
which provides transport or Sector
distribution, financing,
Sector
other services
Agribusiness: An Open System
❑ Composed of distinct but interdependent parts that
function towards a common goal
❑ It is affected by the developments in its external
environment
❑ The viability of the whole agribusiness system depends on
the vitality of each subsystem, the synchronized operation
of the subsystems, and its ability to adapt to changes in
the environment.
Agribusiness: Subsystem
Input subsystem – composed of firms that
provide the farm production sector with feeds,
seeds, fertilizers, machinery, chemicals, and
other inputs; also include human and animal
resources
Agribusiness: An Open System
Farm production subsystem – consists of individuals and
enterprises engaged in the production and propagation of
◦ Animals and animal products
◦ Plant products
◦ Forest and forest products
◦ Aquatic products
For direct consumption and/or as intermediate products for
processing
Agribusiness: An Open System

Processing subsystem – all firms engaged in

the primary and final transformation of the
raw material output
Agribusiness: An Open System

Marketing subsystem – all individuals and

firms involved in the distribution of agro-
based products
◦ Assemblers
◦ Wholesalers
◦ Retailers
◦ Exporters
◦ Importers
Agribusiness: An Open System
Facilitating/Support subsystem – government,
nongovernment agencies, associations, organizations,
institutions that directly or indirectly affect the
agribusiness system
◦ Logistics Information
◦ Coordination Policies
◦ Financing Programs
◦ Human resources Incentives
◦ Technology Other Services
Agribusiness: As a Value Chain Network
❑ Composed of distinct but interdependent
segments that function towards a common goal
(meeting market requirements)
❑ It is affected by the developments in its
external/internal environment
❑ The viability of the whole agribusiness VC
depends on the vitality of each segment.
Agribusiness: The Engine for Growth
Agrifood Transformation: The Rapid Changes Ahead
• The agrifood industry is undergoing rapid changes driven
by urbanization, globalization, and diet diversification.
• As more people move to cities, the demand for food
increases, leading to a need for more efficient and
coordinated value chains. Globalization has brought
about new challenges and opportunities, with increased
competition and access to new markets.
• Diet diversification is also changing the way we produce
and consume food, with a growing demand for plant-
based proteins and alternative sources of nutrition.
• To keep up with these changes, there is a need for
agrifood value chain coordination and institutional
settings that can support innovation and collaboration.
• This requires a focus on building partnerships between
different stakeholders in the value chain, including
farmers, processors, distributors, retailers, and
consumers.
• It also requires investment in research and development,
technology adoption, and skills training to ensure that the
industry can adapt to changing consumer preferences and
market demands.
The Role of Agribusiness in the Agrifood
Industry
• One of the key benefits of agribusiness is
its ability to generate employment,
income, and food security.
• By linking agriculture and manufacturing
sectors, agribusiness can create new
opportunities for economic growth and
development, particularly in rural areas.
Additionally, agribusiness can have a
positive impact on poverty reduction and
women's empowerment by providing
access to markets and resources.
 End of Topic 1
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