Agribusiness Management - Scope, Functions, and Tasks PDF

# AGRIBUSINESS MANAGEMENT ## Keith Salunga ## Chapter 1 ### Scope, functions, and tasks ## What do You Imagine When You Hear the Word "Agriculture"? ## From Farming to Agribusiness - Agriculture - the science and art of cultivating useful plants and raising livestock to meet human needs. - It...

# AGRIBUSINESS MANAGEMENT ## Keith Salunga ## Chapter 1 ### Scope, functions, and tasks ## What do You Imagine When You Hear the Word "Agriculture"? ## From Farming to Agribusiness - Agriculture - the science and art of cultivating useful plants and raising livestock to meet human needs. - It is concerned with plants and animals, production for food and fiber, the provision of agricultural supplies and services, and the processing, marketing, and distribution of agricultural products. ## Definitions of Agribusiness - The term 'agribusiness' was coined by two Harvard Economists, Johan Davis and Ray Goldberg in 1957. - They defined agribusiness as "the sum total of all operations involved in the manufacture and distribution of farm supplies; production operations on the farm; and the storage, processing and distribution of farm commodities and items made from them." - Ewell Roy (1980) defined agribusiness as the "the coordinating science of supplying agricultural production inputs, and subsequently producing, processing and distribution food and fiber." ## Let's Discuss! - Agribusiness is concisely defined as "a generic term that refers to the various businesses involved in food and fiber production (including farming), seed supply, agrichemicals, farm machinery, wholesale and distribution, processing, marketing, and retail sales." ## Is Agribusiness a Science or Art? - As a field of study, agribusiness is both an art and a science of managing an agricultural business enterprise. ### As an Art - Agribusiness puts together the various skills of an individual or organization, in running a profitable venture. ### As a Science - Risk-taking is backed up by an objective gathering and analysis of data and information. - Agribusiness consists of a body of knowledge, which is borrowed from various disciplines. ## Agribusiness Management - Management is a built-in function of agribusiness. - Management is essentially a decision-making process based on information and experience, in order to achieve desired goals and objectives. - Agribusiness management therefore is a dynamic decision-making process revolving around an agricultural business enterprise. - The term 'agribusiness management' refers to the management of any firm involved in the food and fiber production and marketing system. ## The Agribusiness System - Input Sector - Production Sector - Processing and Manufacturing Sector ## The System of Agribusiness - Inputs Subsystem - Production Subsystem - Processing Subsystem - Marketing Subsystem - Support Subsystem ## Input Subsystem - This is the first subsystem from which all other agribusiness subsystems emanate. - Here, all inputs (e.g. fertilizers, seeds, machineries, etc.) are manufactured, imported or distributed. ## Production Subsystem - Inputs are directly used for the production of an agricultural commodity as end-product in itself or as a raw material for the production of other products. ## Processing Subsystem - The commodities from the production subsystem are transformed into various products. - The levels of transformation depend upon the level of processing, which can be as simple as washing and grading to as complex as chemical alteration. ## Marketing Subsystem - This subsystem is concerned with the transfer of goods from source to end user. - It includes all handling procedures and infrastructures that move the commodities from one point to another. - The marketing subsystem may take the following routes: - transfer of agricultural inputs from manufacturers to farm input users; - transfer of commodities from production site to processing site; and - transfer of commodities from processing site to end consumers. ## Support Subsystem - This consists of all the key players that provide services, however, optional, but crucial to the success of an agribusiness venture. - These services are provided by institutions such as government agencies, commercial associations, credit and financing, research organizations and co-operatives. ## The Food System - A food system encompasses the ecosystems and all of the activities required for the production, processing, transportation and consumption of food, including the inputs needed and outputs generated by each of these activities. ## Three Primary Sectors of the Food System - Food Sector - Production Agriculture Sector - Input Supply Sector ## Food Sector - This is the sector in which food processing, marketing, and distribution occurs. ## Production Agriculture Sector - Here, the purchased inputs, natural resources, and managerial talent are combined to produce crop and livestock products. ## Input Supply Sector - This sector is responsible for providing the thousands of different inputs - both products and services - to production agriculture. ## Food System - A diagram of a circle divided into three sections, with the top section "Food sector", the middle section "Production agriculture sector" and the bottom section "Input supply sector". Arrows point down from food to production, and production to input, and up from the input to production. ## Key Functions of Management in Agribusiness - Marketing Management - Supply Chain Management - Financial Management - Human Resource Management ## Marketing Management - Marketing Management involves understanding customer needs and effectively positioning and selling products and services in the marketplace. - Function of management that is most closely focused on the end-user, or the consumer/customer of the product or service produced. ## Financial Management - Financial Management is involved in generating the data needed to make good decisions, using the tools of finance to make effective decisions, and managing the assets, liabilities, and owner's investment in the firm. ## Supply Chain Management - Supply chain Management focuses on the push for quality, the drive for lower costs, changes in the supply chain and general pressures to be more efficient in meeting consumer demands are swiftly altering the production and distribution activities of agribusiness. - It also provides the tools managers need to meet these operations and logistical challenges. ## Human Resources Management - Human resources encompasses managing two areas: the mechanics of the personnel administration, and the finer points of motivating people to offer and contribute their maximum potential. ## Thank You