Agribusiness is a broad concept used to describe corporate agricultural enterprises individually and collectively. Agribusinesses are companies involved in one or more stages of the production of crops and livestock. Examples of agribusiness activities include
- research and development of new agricultural resources and methods
- ownership or management of agricultural production facilities such as farmlands and livestock facilities
- manufacture or distribution of agricultural supplies and equipment such as machinery, feed, and fertilizers
- processing or distribution of agricultural products
Providing food or fibers is the ultimate product of all agribusiness operations. As such, the economic impact of agribusiness is significant; agribusiness is almost two times as large as the sum of all manufacturing enterprises (measured in total assets); it represents 40 percent of all consumer spending; and it employs 37 percent of the labor force.
The term “agribusiness” was coined in the 1950s by John Herbert Davis and Ray A. Goldberg to reflect the two-way interdependence between businesspeople and farmers in the dual roles of suppliers and purchasers. Business firms that serve agriculture rely on farmers for their markets and for some of their supplies. By the same token, farms could not operate without businesses that manufacture farm supplies and those that store, process, and merchandise farm commodities.
Agribusiness consists of several million farm units and several thousand business units, each an independent entity, free to make its own decisions. Agribusiness is the sum total of hundreds of trade associations, commodity organizations, farm organizations, quasi-research bodies, conference bodies, and committees, each concentrating on its own interests. The U.S. government also is a part of agribusiness to the degree that it is involved in research, the regulation of food and fiber operations, and the ownership and trading of farm commodities. Land-grant colleges, with their teaching, experiment stations, and extension functions, form another sector of agribusiness. In summary, agribusiness exists in a vast mosaic of decentralized entities, functions, and operations relating to food and fiber.
The evolution from agriculture to agribusiness has brought with it numerous benefits. These include reduced drudgery for laborers; the release of workers for nonagricultural endeavors; a better quality of food and fibers; a greater variety of products; improved nutrition; and increased mobility of people. The release of farm manpower and the creation of new, off-the-farm jobs have been the basis for the country’s economic growth and development for the last 150 years. The key to this growth and development has been increased worker productivity, which in turn spurs creativity, new products and wealth. This translates into risk capital, new factories, new jobs, and increased consumer purchasing power.