The Agribusiness system comprises the three sectors. We’ve to know these 3 sectors are discussed below:
3 sectors in agribusiness system
- The agricultural input sector
- The production sector
- The processing-manufacturing sector
1. The agricultural input sector
The agricultural input sector is a major part of agribusiness. It provides farmers with the feed, seed, credit, machinery, fil, chemicals, etc., that they need to operate. It is generally felt that the improvement in the quality of these purchased inputs has been a significant source of productivity guns for the entire system. Input suppliers provide producers with substantial quantities of purchased inputs.
The total level of purchased inputs devoted to agriculture has changed now a day. An example of a purchased input whose use has changed drastically is energy. The list change in energy use came with the shift from human to animal power and mechanical power, especially internal combustion engines and electric motors.
The second shift occurred as farmers moved to more fuel-clinician equipment in response to rising energy prices. This movement kept on-farm energy consumption nearly constant over the last decade despite increasing production. AL the distribution level, the agricultural input sector comprises many small, independent, locally-owned businesses. In particular input industries such as chemicals and machinery, a few companies handle most of the business at the production level.
The trend toward greater use of specialized purchased input is expected to continue and should be an ongoing source of productivity gains for agricultural production. However, it is essential to remember that this increasing dependence on purchased inputs uses agricultural producers more sensitive to changes in agribusiness and the general economy.
2. The agricultural production sector
The middle part of agribusiness is the production sector. It is composed of approximately 3 million farmers who operate about 2.2 million farms in America. These farms use approximately I billion acres of land, nearly half of all the land in America. The trend in this sector has been toward more extensive and specialized farms.
By specializing production efforts in one or two crops or types of livestock, producers have been able to increase the efficiency of their operations. This increase in efficiency shows the total level of inputs remaining nearly constant while output has expanded. As a result, the gross farm income, which is influenced by commodity prices, government payment to farmers, and the level of agricultural commodity exports, tends to vary more.
The production sector has been at the core of much of the change in agribusiness. Some individual producers have grown larger and more efficient by specializing in the production of agricultural commodities and letting others supply the inputs and process the outputs. However, for producers to continue to progress, they must recognize the changing nature of agricultural markets and improve their marketing efforts.
3. The agricultural processing-manufacturing sector
The processing-manufacturing sector includes all the individuals and firms that process agricultural commodities (turn wheat into flour), manufacture food products (Turin flour, eggs, and other inputs into bread), and distribute the retail food products to the final consumers.
The business in the processing-manufacturing sector acquires raw agricultural commodities from producers, then processes them into food products that are sold at times, at a place, and in the desired forms by consumers.
Many of the better-known agribusiness firms are found in food manufacturing. They produce heavily advertised consumer food products like Coca-Cola, Campbell’s Soup. H.J. Heinz, general mills, etc. While most large agribusiness firms are primarily involved in just one part of the industry, many have subsidiaries in other parts of the system. These diversified Terms often do business in a variety of areas., For example, Cargill is a privately owned firm.
