Monday, May 20, 2024
General Agriculture

Definition and Scope of Agribusiness

Agribusiness is a large and growing segment of any particular rural economy. Agribusiness operations need adequate planning, production management, and marketing beyond those of conventional farming systems.

Agribusiness describes all economic activities that involve the distribution and or transformation of the raw materials that are from agricultural sector and non-agricultural sector; whose final products could be used for agricultural purposes and agro-allied enterprises.

Agricultural business refers to a set of farm business and management activities that involve the production of food, provision of agricultural products within and outside a country.

Agricultural business also embodies wood and plant production all other forestry activities including fisheries.

David and Goldberg (1987) in his definition perceived agribusiness to mean the sum total of all operations involved in the production of enterprises on the farm, the manufacturing and distribution of farm supplies and the equalization as well as dispersion services (such as storage, processing, standardization, grading, pricking, transportation and distribution)of farm products.

Agribusiness can therefore operate as formal and non-formal levels depending on the desired goals of its originator.

The characteristics of this economic sector is fast changing especially with the current move towards more certification of some of the component fields of agriculture.

Read Also : Meaning and Functions of Agribusiness Management

Scope of Agribusiness

Agribusiness is a large and diverse sector that witness economics activities that ranges from culturing, processing, extracting and distribution.

Ebong (2007) in his review of the scope of the agribusiness, perceived agricultural business in three independent sectors, which are the Input sector, the Farm Production, and the Output (product) sector;

1. Input Sector

This includes all resources that serve as building units that are required to service a transformation process in order to achieve one or more products.

The input sector supplies agribusiness production with the needed inputs in the production process. The cost of acquisition of inputs has influence on the financial health of the input sector which directly impact on the wellbeing of the production sector in general.

As inputs prices increase and farm income remains relatively stable, producers will reduce their utilization of the more expensive inputs and substitute other resources inputs for them.

This is termed production substitution effect, for instance, if the more expensive inputs is machinery, farm form will use less of it and substitute manual labour for it.

This explains the downward sloping nature of the demand curve for tractors of agricultural production.

The farm firm business covers such areas as Agrochemical input supplies e.g fuel, fertilizer, pesticides, herbicides and veterinary, feed machinery and equipment supplies e.g tractor wheel barrow, spade, matches, tyres etc., agricultural Financing from formal and non-formal sources and labour supplies both skilled and unskilled

2. Farm Production Sector

The farm production sector of agribusiness covers such areas as the aquaculture, forestry, crop production and livestock. As this sector grows in size, level of out and efficiency, the other sector of agribusiness are affected.

The success of this sector has a vital and direct impact on the financial stand of the input supply and the product sectors of the agribusiness. The increase in the scale of production leads to more of the output being made available to the product sector for onward processing and distribution.

Definition and Scope of Agribusiness

As farm prices remain fairly stable expenses increase, pressure is exerted on farm, firms and ranchers to improve efficiency. Today the cost price squeeze is so serious that products are unable to cut cost or improve production efficiency to the extent necessary to deal with the problem. This explains why small farms continue to cut down production while larger farms become larger.

3. Output Sector

Accepts diverse economics activities that could be directly identified within the agriculture domain or from a related fields which otherwise called agro-allied sector.

The output sector is also referred to as the product sector and is the final sector in agribusiness production and distribution system.

The output sector is the largest of the agribusiness sectors as its functions range from product processing to marketing and distribution of these products to various consumers either as raw materials for further production or final consumption.

Read Also : Agribusiness Marketing Management Guide

Notable examples of the product processing include, Food processing into garri, bread, cornflakes, tomato, foofoo, beef, custard, semovita, cerelac etc Beverage manufacturing: cocoa drinks, softdrinks, beer and Nescafe.

Confectional processing such as sugar, chocolate, cake, biscuits, sweets, etc. Food packaging and canning such as tomato can beef, can beans and other quality foods.

Tobacco processing into snuff and treated leafs, cigarettes etc., wood processing and furniture making, Cotton processing into textiles, hide and skin processing example smoked, canned and frozen fish.

Another important function of the product sector is the marketing and  distribution of the outputs from the production sector and the processed products to final consumers.

This function is performed by the middlemen who include wholesalers, the producers / processors / manufacturers themselves, retailers and commodity board and co- operatives agents.

The importance of this sector can be further highlighted by showing that even when food is abundant, faulty handling and distribution can make it unavailable to the consumers and therefore result in food and nutritional insecurity.

Read Also ; Cod Liver Oil Capsules: All You Need to Know About

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Benadine Nonye is an agricultural consultant and a writer with over 12 years of professional experience in the agriculture industry. - National Diploma in Agricultural Technology - Bachelor's Degree in Agricultural Science - Master's Degree in Science Education - PhD Student in Agricultural Economics and Environmental Policy... Visit My Websites On: 1. - Your Comprehensive Practical Agricultural Knowledge and Farmer’s Guide Website! 2. - For Effective Environmental Management through Proper Waste Management and Recycling Practices! Join Me On: Twitter: @benadinenonye - Instagram: benadinenonye - LinkedIn: benadinenonye - YouTube: Agric4Profits TV and WealthInWastes TV - Pinterest: BenadineNonye4u - Facebook: BenadineNonye

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