Agribusiness Defined?

This invites comments on the definition of agribusiness. It is important because agribusiness is the world’s largest industry. We all eat, this is the industry that feeds us 24/7.

Discussion

There are many views about what ‘Agribusiness’ really means; it has both good and not-so-good aspects to consider. Agribusiness Global Allies (AG) welcomes all definitions, because it is the commonly held perceptions about agribusiness that is relevant to its acceptance throughout the world (i.e. it means different things in different parts of the world. The main two notions are:

• In the context of agribusiness management in academia, each individual element of agriculture production and distribution may be described as agribusiness. However, the term “agribusiness” most often emphasises the “interdependence” of these various sectors within the production chain; and
• Among critics of large-scale, industrialised, 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.

The root definition of the words, ‘farming‘ and  ‘agriculture‘ mean exactly the same thing. So it is also important to note that agribusiness is neither dependent nor independent upon farming or agriculture, rather it is interdependent to it. Agribusiness operates entirely separately from farmers and yet cannot work without farming. Agribusiness includes, but is not limited to farming or production agriculture.

Like many definitions on Wikipedia, the definition of ‘agribusiness’ is subject to change. For example, much depends upon the last author writing the Wikipedia ‘agribusiness’ entry. Wikipedia authors tend to derive definitions based upon their own experiential observations supplemented by supporting references. The definition of ‘Agribusiness’ within Wikipedia changes so do check it each time you need to reference it (it has changed several times since 2000).

Like many words in the English language, the definition of ‘agribusiness’ also changes with common day use. This includes changing definitions put forward by various academics since 1956, when the term ‘Agribusiness’ was first coined.

Definition

AG adopts the definition of agribusiness as follows…

Agribusiness refers to the whole constellation of activities and supporting institutions that are involved in the world’s complex food and fiber system.”

Source: Ray Goldberg, Harvard University (1997)

As with many languages, the actual meaning and usage of any word can vary over time, and also vary in meaning between different countries, cultures, and communities. For example, commonly the words agribusiness and agriculture are assumed to have the same meaning, particularly as used by many outside the industry.

Agribusiness is the world’s largest industry, it is complex, and so too are the variants of the word and its meaning in use. Thus, it is helpful to understand the word ‘agribusiness’ by also considering the meaning of other words involved in the root derivation or genesis of it. Some examples are:

• Agrarian (& Agrarianism)
• Agribusiness System
• Agriculture (& farming)
• Agricultural Industry
• Ag-Industry
• Farm Sector
• Food Security
• Food System

Agribusiness: Value-Chain Concepts

The concept of Agribusiness is further explained by the notion of business ‘wealth-creating’ value-chains as outlined by Professor Michael E. Porter of Harvard University in his 1985 book “Competitive Advantage: Creating and Sustaining Superior Performance“.

Rather than outline those in detail here, there are two key points that can greatly assist in understanding the wider significance of agribusiness, they are:

1. Sequential Business Activities: Like a chain, an industry has many businesses linked. To create value, a sequential series of steps needs to be taken to create something of value, i.e. one thing must happen before another can proceed. This is the dominant view of agribusiness working in the food supply chain today, but it is more aptly described by the term ‘Ag-industry’ since it does not really convey the totality of whole agribusiness sector which includes even more (as described in point 2 below).
2. Supporting Business Activities: These are businesses that provide vital support to the value-chain sequential business activities (as described in point 1 above). Supporting businesses like banks, financial companies, buying services, export agents, accountants, lawyers, communications, etc.

In reality the whole agribusiness sector, consisting of both sequential and support businesses, behaves more like a living organism, it is a whole system of interdependent structures. Hence, the rise of terms like ‘food system’, the ‘agribusiness system’, etc.

Definitions: Suggestions for Improvement

AG welcomes comments about improving upon these definitions (in the comments below).