Agribusiness

All economic activities that are related to farming, i.e., chemicals, breeding, crop production/farming, farm machinery, distribution, marketing, and sales

What is Agribusiness?

Agribusiness is a term used to describe the sector that encompasses all economic activities that are related to farming, i.e., chemicals, breeding, crop production/farming, farm machinery, distribution, marketing, and sales.

 

Agribusiness

 

Components of Agribusiness

Some of the components of the agribusiness sector are described below:

 

1. Agrichemicals

Agrichemicals or agrochemicals are the pesticides, fertilizers, and growth chemicals used in the agricultural process. Today, many agrochemical companies, such as Corteva Agriscience and DuPont, work to supply the agriculture industry with chemicals and other innovative solutions.

 

2. Breeding

Breeding refers to the branch of agriculture that focuses on raising animals for food products and/or the breeding of plant species to produce a genetically-enhanced crop seed.

 

3. Machinery and Equipment

The machinery and equipment segment of agribusiness is one of the biggest, and it refers to all types of farm machinery – ranging from hand tools, such as shovels, to tractors. One of the largest agricultural machinery companies is John Deere, which specializes in providing farming and gardening equipment.

 

Importance of Agribusiness

Agribusiness is a sector that supports the growth of the agricultural industry, which is pivotal to economic growth. It also continues to play a crucial role in the growth of developing countries. Agribusinesses can potentially improve agricultural productivity, which is why governments often offer subsidies to agricultural businesses.

Agricultural activities also contribute to an improved system of food security and sustainable food production, as well as income for a majority of the poor in developing countries. However, the activities increase the emission of greenhouse gases and contribute to global warming – which is why innovation is important to the sector to address such problems.

 

Innovation in Agribusiness

Innovation is a continuing endeavor among agribusinesses, as the industry seeks improved and efficient methods of production and processing. For example, many companies now offer drone surveillance of farms, which gives the farmer/owner insights on the health of crops and helps them to create stock projections and plan for the future.

In addition, new and improved types of machinery are being engineered and manufactured on a large scale, such as robotic harvesters, automated pesticide sprayers, and driverless tractors.

Ultimately, the aim of innovation in agribusiness is to improve agricultural productivity and make agricultural activities easier for farmers. It aims to lower the costs of production and increase profitability for farmers, who often endure volatile market conditions as crop prices fluctuate with changing economic conditions.

 

Agribusiness in the United States

In the United States, agribusinesses are referred to as large agricultural corporations that are vertically amalgamated and participate in many activities in the agricultural value chain. Such companies tend to employ their own production, processing, and sales units, as opposed to organic farms that are small and focused on crop production and use products from other agribusinesses.

 

Additional Resources

CFI offers the Certified Banking & Credit Analyst (CBCA)™ certification program for those looking to take their careers to the next level. To keep learning and developing your knowledge base, please explore the additional relevant resources below:

  • Basic Materials Sector
  • Non-Renewable Resource
  • Oil & Gas Primer
  • Research & Development (R&D)

Financial Analyst Certification

Become a certified Financial Modeling and Valuation Analyst (FMVA)® by completing CFI’s online financial modeling classes and training program!