Agriculture has evolved into a big business; what is Agribusiness?


Agriculture was often thought of as,

’Cows, Sows, and Plows’,

‘Weeds, Seeds, and Feeds’

but this notion has changed.

Agriculture has evolved into a big business. It has gone from plowing fields, planting seeds, harvesting crops, milking cows and feeding livestock, into a business that extends far beyond the farms, to include all the activities and people involved in processing agricultural produce into finished products for consumption. This range of business activities, practiced from the agricultural-input stage of farming, to the final stage of sales and delivery of such products to consumers, is known as Agribusiness.

Over the years, farmers have discovered that it is increasingly profitable to concentrate on the business of crop and livestock production. Farmers now purchase or hire inputs that they formerly provide themselves such as seeds, fingerlings, day-old chicks, fencing, fertilizers, machinery etc. commodity processing, distribution and sales have been moved into farm estates and are being integrated into farming business.

Agribusiness is a broad concept that covers input supply, Agro-processing, trade, exportation and retail. Agribusiness provides input to farmers and connects them to consumers, through the financing, managing, processing, storing, transporting, marketing and distributing of Agro-industry products. Agribusiness can be divided into several sectors and industries which include:

Agricultural Input

This sector involves Agricultural banks/cooperatives that give loans and credits to farmers, Seed suppliers (businesses that supply seeds to farmers for planting), Agrochemicals (businesses that produce and supply chemicals such as fertilizers, herbicides, vitamins etc. that are used in agricultural production), Farm machinery (businesses that sell or lease tractors, plows, harrows, silos, irrigation and processing equipment to farmers).

Agricultural Production

This sector involves Crop production (breeding and cultivation of crops) and Animal husbandry (breeding and cultivation of livestock), aquaculture (breeding and cultivation water animals).

Agro-processing & -manufacturing

This sector comprises of all the post-harvest activities that are involved in the transformation, preservation and preparation of agricultural produce for consumption as food and non-food products. Agro-processing is a subset of manufacturing that processes raw materials and intermediate products, derived from the agricultural sector. The Agro-processing industry involves transformation of products that originate from agriculture, forestry and fishery. This sector consists of Food and Beverages, Tobacco, Paper and Wood products, Textiles, Footwear and Apparel, Leather products, Rubber products etc.

Food processing dominates the Agro-industry in Africa and is grouped into three categories:

Primary processing – This involves the basic processing of natural produce e.g. cleaning, grading, de-husking etc.

Secondary processing – This involves simple or elementary modification of natural produce e.g. hydrogenation of edible oils and milling of cereals.

Tertiary processing – This includes some form of advanced modification to the natural produce, such as making them into edible products like Tomatoes into ketchup, Dairy products into cheese etc.

Processing and Storage Equipment Industry

They provide machines and equipment for post-harvest activities such as; processing equipment (drying machines, milk pasteurizers, Fiber spinners, Grain destoners etc.) and Storage equipment (Silos, Refrigerated trucks, Cold-store facilities, Stainless Tanks etc.).

Storage and Distribution Industry

This includes businesses that operate cold-storage facilities, silos and warehouses where farm produce and products are stored and preserved; distribute farm products from farms to processing and manufacturing factories, restaurants, supermarkets etc. to meet consumers’ demands; and transport agricultural produce or products between farms, factories and stores or ports.

Restaurants, fast-food businesses, supermarkets, convenient stores, boutiques, commodity markets are also part of agribusiness industry. The package and deliver finished and processed agricultural products to the final consumers in the form of food, drink, wears etc.

Agribusiness provides people with many opportunities to earn good income as it is directly related to industry, commerce and trade.

Note:

The Agro-industry is concerned with the production of agricultural commodities and materials. Commerce and trade is concerned with the distribution of these commodities and materials.

The whole range of goods, services, businesses and value-adding activities that are necessary for an agricultural product to move from the farm to a consumer is known as Agricultural Value-Chain.

All the activities in Agribusiness belong to an interrelated part of a value-chain system, where the success of each business, depends heavily on the proper functioning of others.

Understanding the value-chain system in Agribusiness is one of the fundamental requirements in becoming a successful entrepreneur in this sector of the economy.