Agribusiness is the
business of agricultural production. It includes
agrichemicals,
breeding,
crop production (
farming and
contract farming), 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 (Boston: Division of Research, Graduate
School of Business Administration, Harvard University, 1957). 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 Prize recipients 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 (CEMA University)
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 (FAO) operates a section devoted to Agribusiness Development
[1] 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.
[2]
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.