What is Agribusiness?

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Agribusiness: This article takes a look at the various explanations of some reputable blogs about Agribusiness and tries to compare their definitions and other basic facts about the subject matter.

Wikipedia defines Agribusiness as the business of agricultural production which involves the production, protection, sales and marketing of the product to satisfy the customers need. The term is a portmanteau of agriculture and business and was coined in 1957 by John Davis and Ray Goldberg. It includes agrichemicals, breeding, crop production (farming or contract farming), distribution, farm machinery, processing, and seed supply, as well as marketing and retail sales. All agents of the food and fiber value chain and those institutions that influence it are part of the agribusiness system.

Within the agriculture industry, “agribusiness” refers to the range of activities and disciplines encompassed by modern food production. There are academic degrees specializing in agribusiness, departments of agribusiness, agribusiness trade associations, and agribusiness publications.

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.

James Chen defines Agribusiness as the business sector encompassing farming and farming-related commercial activities.


  • Agribusiness is a combination of the words “agriculture” and “business” and refers to any business related to farming and farming-related commercial activities.
  • Agribusiness involves all the steps required to send an agricultural good to market, namely production, processing, and distribution.
  • Companies in the agribusiness industry encompass all aspects of food production.
  • Climate change has placed intensifying pressure on many companies in the agribusiness industry to successfully adapt to the large-scale shifts in weather patterns.

Understanding Agribusiness

Agribusiness involves all the steps required to send an agricultural good to market, namely production, processing, and distribution. This industry is an important component of the economy in countries with arable land since agricultural products can be exported.

Agribusiness treats the different aspects of raising agricultural products as an integrated system. Farmers raise animals and harvest fruits and vegetables with the help of sophisticated harvesting techniques, including the use of GPS to direct operations. Manufacturers develop increasingly efficient machines that can drive themselves. Processing plants determine the best way to clean and package livestock for shipping. While each subset of the industry is unlikely to interact directly with the consumer, each is focused on operating efficiently in order to keep prices reasonable.

Market forces have a significant impact on the agribusiness sector, as do natural forces, such as changes in the earth’s climate.

  • Changes in consumer taste alter what products are grown and raised. For example, a shift in consumer tastes away from red meat may cause demand—and therefore prices—for beef to fall, while increased demand for produce may shift the mix of fruits and vegetables that farmers raise. Businesses unable to rapidly change in accordance with domestic demand may look to export their products abroad. If that fails, they may not be able to compete and remain in business.
  • Climate change has placed intensifying pressure on many companies in the agribusiness industry to remain relevant, and profitable, while adapting to the threats posed by large-scale shifts in weather patterns.

Agribusiness Challenges

Countries with farming industries face consistent pressures from global competition. Products such as wheat, corn, and soybeans tend to be similar in different locations, making them commodities. Remaining competitive requires agribusinesses to operate more efficiently, which can require investments in new technologies, new ways of fertilizing and watering crops, and new ways of connecting to the global market.

Global prices of agricultural products may change rapidly, making production planning a complicated activity. Farmers may also face a reduction in usable land as suburban and urban areas expand into their regions.

Use of New Technology

The use of new technology is vital to remain competitive in the global agribusiness sector. Farmers need to reduce crop costs and increase yield per square acre to remain competitive.

New drone technology is at the cutting edge of the industry. An article published in 2016 by the Massachusetts Institute of Technology (MIT) identified Six Ways Drones Are Revolutionizing Agriculture. These techniques, including soil and field analysis, planting, and crop monitoring, will be key to improving crop yields and moving the agribusiness sector forward.

Key areas of concern for the use of drone technology remain the safety of drone operations, privacy issues, and insurance-coverage questions.

Agribusiness Examples

Because agribusiness is a broad industry, it incorporates a wide range of different companies and operations. Agribusinesses include small family farms and food producers up to multinational conglomerates involved in the production of food on a national scale.

Some examples of agribusinesses include farm machinery producers such as Deere & Company, seed and agrichemical manufacturers such as Monsanto, food processing companies such as Archer Daniels Midland Company, as well as farmer’s cooperatives, agritourism companies, and makers of biofuels, animal feeds, and other related products.

According to Corporate Finance Institute, Agribusiness is a term used to describe the sector that encompasses all economic activities that are related to farming, i.e., chemicals, breeding, crop production/farming, farm machinery, distribution, marketing, and sales.

Components of Agribusiness

Some of the components of the agribusiness sector are described below:

1. Agrichemicals

Agrichemicals or agrochemicals are the pesticides, fertilizers, and growth chemicals used in the agricultural process. Today, many agrochemical companies, such as Corteva Agriscience and DuPont, work to supply the agriculture industry with chemicals and other innovative solutions.

2. Breeding

Breeding refers to the branch of agriculture that focuses on raising animals for food products and/or the breeding of plant species to produce a genetically-enhanced crop seed.

3. Machinery and Equipment

The machinery and equipment segment of agribusiness is one of the biggest, and it refers to all types of farm machinery – ranging from hand tools, such as shovels, to tractors. One of the largest agricultural machinery companies is John Deere, which specializes in providing farming and gardening equipment.

Importance of Agribusiness

Agribusiness is a sector that supports the growth of the agricultural industry, which is pivotal to economic growth. It also continues to play a crucial role in the growth of developing countries. Agribusinesses can potentially improve agricultural productivity, which is why governments often offer subsidies to agricultural businesses.

Agricultural activities also contribute to an improved system of food security and sustainable food production, as well as income for a majority of the poor in developing countries. However, the activities increase the emission of greenhouse gases and contribute to global warming – which is why innovation is important to the sector to address such problems.

Innovation in Agribusiness

Innovation is a continuing endeavor among agribusinesses, as the industry seeks improved and efficient methods of production and processing. For example, many companies now offer drone surveillance of farms, which gives the farmer/owner insights on the health of crops and helps them to create stock projections and plan for the future.

In addition, new and improved types of machinery are being engineered and manufactured on a large scale, such as robotic harvesters, automated pesticide sprayers, and driverless tractors.

Ultimately, the aim of innovation in agribusiness is to improve agricultural productivity and make agricultural activities easier for farmers. It aims to lower the costs of production and increase profitability for farmers, who often endure volatile market conditions as crop prices fluctuate with changing economic conditions.

Agribusiness in the United States

In the United States, agribusinesses are referred to as large agricultural corporations that are vertically amalgamated and participate in many activities in the agricultural value chain. Such companies tend to employ their own production, processing, and sales units, as opposed to organic farms that are small and focused on crop production and use products from other agribusinesses.

In conclusion, Agribusiness is the business of Agriculture. As certain principles guide secular business, one must ensure that the principles discussed in this article are applied to the business of agriculture to record outstanding success.

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At Sabiagrik, we're dedicated to bridging the knowledge gap in the agriculture sector, helping enthusiasts transform their passion into thriving businesses.