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Chapter 1 - The Business of Agribusiness

Agribusiness involves all operations related to farm supplies, farm production, processing, transportation, financing, and marketing of farm products. It includes businesses that provide inputs to farms, produce raw agricultural commodities, and process and distribute farm outputs. Management in agribusiness oversees key functions like marketing, finance, supply chain, and human resources. The agribusiness sector encompasses production agriculture, food processing and marketing, and input supply industries. It is a diverse, complex system that transforms raw materials into consumer goods through thousands of businesses ranging from small farms to large multinationals.

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553 views17 pages

Chapter 1 - The Business of Agribusiness

Agribusiness involves all operations related to farm supplies, farm production, processing, transportation, financing, and marketing of farm products. It includes businesses that provide inputs to farms, produce raw agricultural commodities, and process and distribute farm outputs. Management in agribusiness oversees key functions like marketing, finance, supply chain, and human resources. The agribusiness sector encompasses production agriculture, food processing and marketing, and input supply industries. It is a diverse, complex system that transforms raw materials into consumer goods through thousands of businesses ranging from small farms to large multinationals.

Uploaded by

Bill AL
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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The Business of Agribusiness

Introduction
Every body come across with
agribusiness sector

Producer
Trader
Consumer
AGRIBUSINESS
“Agri-business is the sum total of all operations involved in
the manufacture and distribution of farm supplies, production
activities on the farm, storage, processing and distribution of
farm commodities and items made from them.”
“Agribusiness includes all those business and management
activities performed by firms that provide inputs to the farm
sector, produce farm products, and/or process, transport,
finance, handle or market farm products.”
AGRIBUSINESS MANAGEMENT
Supply inputs to farm/production sector

Produce raw food and fiber products

Transform raw agricultural products into final


products desired by consumer

Move final products through food and fiber


system to ultimate consumer
Nature of Agribusiness Sector
Exciting, Diverse, Efficient and Complex
Vast and Fascinating
Comprised of thousands of businesses
ranging from small businesses to large
multinationals
Input businesses (pesticides, fertilizer, seed)
Farming and Processing
Distribution (wholesalers, retailers, hotels,
restaurants)
Management
Derives and directs firms, farms and food companies
to come together in food production and marketing
system.

Managers
Responsible for assuring victorious completion of
functions, tasks and activities.
Key Functions of Management
 Responsibilities of managers highly varied
and range from
 Ordering inputs
 Hiring and firing individuals
 Decisions to sell or buy business interests

 As CEO responsible for overall activities


 As Team Manager responsible for specialized
areas
 On a smaller farm business, one individual may
assume multiple roles – CEO, Manager, Labour
Key Functions of Management
 Four key management functions to create
and sustain viable business

 Marketing Management

 Financial Management

 Supply Chain Management

 Human Resource Management


Marketing Management
Involves understanding consumer
needs and effectively positioning and
selling products and services in the
market place

Focused on careful and planned


execution of how, why, where, when
and who sells a product or service
and to whom it is sold

Decisions include
what products to produce
what services to offer
what information to provide
what price to charge
how to promote the product
how to distribute the product
FINANCIAL MANAGEMENT
“Profit” is driver of agribusiness
 FM is carefully managing the financial
resources, includes:
 Generating data to make good decisions
 Using tools to analyze alternatives
 Managing assets, liabilities & owner’s investment
in the firm
 Financial information helps understand health
of business
 Balance Sheets & Income Statements
 Financial analysis tools
 Budgeting, ratio analysis, financial forecasting and
break even analysis
SUPPLY CHAIN MANAGEMENT
Provides the tools managers need to meet the
operations and logistical challenges
Operations Management
Strategic use and movement of resources to
produce goods and services
Focuses on the direction and the control of the
processes used to produce goods and services
that we buy and use each day
Logistics Management
New ways to lower costs, by finding better ways to
ship & store the products
Involves the set of activities around storing and
transporting goods and services from manufacture
to buyer
Human Resource Management
Management is about people
Encompasses managing two
areas
Mechanics of personnel
administration
Motivating people to offer and
contribute their maximum potential
Decisions include
how to organize the firm
where to find people
how to hire them
how to compensate them
how to evaluate them
UNIQUE DIMENSIONS OF THE FOODS
& AGRIBUSINESS MARKETS

Factors form distinguishing features:


1. Food as a product
2. Biological nature of production
3. Seasonal nature of business
4. Uncertainty of the weather
5. Types of firms
6. Variety of market conditions
7. Rural ties
8. Government involvement
Agribusiness
Sectors

Production
Input Supply
Food Sector Agriculture
Sector
Sector
Food Production & Marketing
System
“Encompasses all economic activities
that support farm production and
conversion of raw farm products to
consumable goods.”
Food Sector: “Wide range of firms
including processors, manufacturers,
wholesalers and retailers.”
Production Agriculture Sector:
“Farms and ranches that produce crop
and livestock products that provide
inputs to food and fiber sector.”
INPUT SUPPLY SECTOR
“Firms that manufacture & distribute
myriad of inputs that fuel production
agriculture sector.”
Manufacturing: Trucks, tractors,
combines are all examples of
manufactured products supplied to
farmers through input supply sector.
Distributing: Farm production moved
from manufacturer through variety of
sales, marketing & channels.
Agricultural Services & Financing:
Farm management services,
veterinary care, consulting business &
farm lending just to name fewer types
of business involved in this area.

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