Meaning, Types and Forms of Agriculture, Business and Agribusiness
The word agriculture indicates plowing a field, planting seed, harvesting a crop, milking cows, or feeding livestock. Until recently, this was a fairly accurate picture. But today‘s agriculture is radically different.
Agriculture has evolved in to agribusiness and has become a vast and complex system that reaches for beyond the farm to include all those who are involved in bringing food and fiber to consumers.
Agribusiness include not only those that farm the land but also the people and firms that provide the inputs-seed, chemicals, credit etc. process the output e.g. milk, grain, meat etc. manufacture the food products e.g. ice cream, bread, breakfast cereals etc. and transport and sell the food products to consumers e.g. restaurants, supermarkets.
Initially when agriculture was the major venture in agribusiness, it was easy to become a farmer, but productivity was low. Most farmers produced at subsistent level, which is producing what is enough for them and their families with little or nothing to sell. The implication of this was that most farmers were nearly self-sufficient.
They produced most of the inputs they needed for production, such as seed, draft animals, feed and simple farm equipment. Farm families processed the commodities they grew to make their own food and clothing.
They consumed or used just about everything they produced. The small amount of output not consumed on the farm was sold for cash. These items were used to feed and clothe the minor portion of the country‘s population that lived in villages and cities.
Meaning of Agriculture, Business and Agribusiness
A good understanding of the meanings of agriculture and business is a veritable tool for adequate knowledge in agribusiness because agribusiness derives its name from agriculture and business.
Agriculture can be defined as the production of food, feed, fibre and other products by the systematic growing and harvesting of plants and rearing of animals to sustain life. Agriculture deals with farming and/or raising livestock.
Definition of Business
In simple words ― business means the state of being busy‖. Broadly, business involves activities connected with the production of wealth. It is an organized and systematized human activity involving purchase of goods and services with the object of selling them at a profit.
Business is involved with buying and selling goods, manufacturing goods or providing services in order to earn profit.
If we combine the definitions of agriculture and business together, Agribusiness can therefore be defined as the organized and systematic ways of food, feed and fibre productions and rearing of animals to sustain life.
Classification of Business
A business can be classified based on the basis of
- Forms of ownership
- Sole proprietorship
- Partnership
- Corporation
- Cooperative
Types of Small Businesses
With the exception of Government, most of the small businesses can be classified as the following types;
- Production
- Retailing
- Distribution
- Personal services
- Professional services
- Financial
- Franchising
Production: This classification includes all types of production including agricultural production of crops and livestock, as well as forestry.
Distribution: This classification refers to those businesses, which do not make anything but which bring the goods and services to the consumer or user.
This includes such activities as packaging, labeling, transporting, refrigerating, freezing, processing, storing, and performing any service necessary to prepare the goods or to provide the service to eventual consumer.
Retailing: Although often included as a phase of distribution, retailing is listed as a separate category because there are a large number of persons employed in retailing.
Obviously it represents one of the best opportunities for the potential entrepreneur. Retailing is that stage of distribution, which deals with the consumers. Examples of retailers are grocers, self-service stores, florists, agricultural input retailing.
Personal services: The service business is those; which do not primarily supply goods to the public, but instead perform a service.
Goods may be used to perform the service but they are of secondary importance. Examples of personal service are hotels, restaurants, agro-service centers.
Professional services: Some type of services, in order to protect the public, requires considerable training on the part of those offering the service.
Usually those professional services must have a formal education and rigid examinations before receiving licenses to offer their services to the public.
Examples of those offering services are investment brokers, insurance agents etc.
Financial: Financial businesses are usually service-oriented but since they deal primarily with the loaning or investing of money or the equivalents of money (stocks, bonds, property rights, etc.) a separate category describes them best.
Examples of financial services are commercial banks, insurance companies, thrift and loan societies etc.
Franchising: Franchising is a system for selectively distributing goods or services through outlets owned by the franchisee.
Basically, a franchise is a patent or trademark, license, entitling the holder to market particular products or services under a brand name or trademark according to prearranged terms and conditions.
The franchiser is the owner of his or her own business (the franchisee) is likely to be more diligent and strive harder for success than the hired manager of a company-owned outlet.
Since franchising is form of selective distribution, the typical franchise agreement prohibits the franchise from setting up competing outlets within the franchise area.
Examples of franchise services are diet services, quick-service food-drive inns like fried chicken.
Read Also : MonoCulture: Types, Advantages and Disadvantages
Forms of the Business Organizations
There are three basic forms of business organization methods: the sole proprietorship, the partnership, and the corporation. With only a few limited exceptions, any type of business venture can use any form of business organization.
The factors that will affect the business form chosen are:
- Ease of formation
- Exposure to financial risk
- Ability to raise capital
- Tax treatment of income
- Continuity of business upon the death of owner.
Roles of Entrepreneur
Many economic theories emphasize the significant role played by individual entrepreneurs as they combine talents, abilities and drive to transform resources into profitable undertakings.
Joseph Schumpeter was the first major writer to highlight the human agent in the process of economic development. He believed that the economy was propelled by the activities of persons who wanted to promote new goods and new methods of productions or to exploit a new source of materials or new market not merely for profit but also for the purpose of creating.
Likewise, Arthur W. Lewis contended that economic growth was bound to be slow unless there was an adequate supply of entrepreneurs looking out for new ideas, and willing to take the risk of introducing them.
The relation between self-sustained growth of an economy and entrepreneurship was further discussed by W.W. Rostow when he claimed that, economic growth was the result of an interesting process involving the economic, social and political sectors of society, including emergence of corps of entrepreneurs who are psychologically motivated and technologically prepared regularly to lead the way in introducing new production functions in the economy‘‘.
As it is, experts as have variously described the entrepreneur;
- A person who innovates
- One who allocates and manages the factors of production and bears risk
- One who has ability to perceive latent economic opportunities and devise their exploitation
- An individual, who conceives the ideas of business, design the organization of firms, accumulates capital, recruits labour, establishes relations with supplier, customers and the government and converts the conception into a functional organization.
- The supplier of resources, supervisor and coordinator and ultimate decision maker.
In summary, agriculture is defined as the production of food, feed, fibre and other products by the systematic growing and harvesting of plants and rearing of animals to sustain life.
Business is involved with buying and selling goods, manufacturing goods or providing services in order to earn profit.
Forms of business ownership are sole proprietorship, partnership, corporation and cooperative. The roles of entrepreneur include innovation, coordination of other factors of production, bearing of risks and decision making.
Read Also : Fly Ash Complete Management Guide
