Agro-business concept describes the approach of applying methodologies of business in the agricultural sector. It deals with market forces which affect agricultural operations, for example, marketing of outputs, contract farming, advertisement, and agricultural industrialization. According to Barrett, Carter, and Peter (2010), agribusiness arose because of two factors which are direct and indirect. The direct reason was due to increase value addition activities off the farm and improvement in agricultural input and food processing sectors. The second factor is the indirect one which links the birth of agribusiness to the emergence in precision farming and biotechnology which created the need for expansion in research activities in the field. There are also other corridors in farm practices which depend on business concepts such as innovation in food science, development of trade, resources, and environment, and joint production (Altieri and Nicholls, 2008).
Alene and Coulibaly (2009) argued that the activities of agro-business are necessary for simplifying the complex system of agricultural production by forming an interlinked network of farmers, consumers, suppliers, and other facilitators like financial institutions providing finance and infrastructure support. On the side of the input, agribusiness plays an important role in providing agricultural chemicals, pesticides, and seeds. The availability of marketing infrastructure, policy environments which are favorable, transport, and credit facilitates the production of crops. From the views of Altieri and Nicholls (2008), it is seen that the growth of agribusiness makes farmers shift from using locally purchased or previous harvests seeds. The agro-industries have the ability to exploit large economies and therefore exposing farmers to a variety of markets.
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Farmers operating on a small scale are forming a partnership with medium enterprises in agribusiness to create a supply chain and knowledge network which strengthens collaboration and communication. Nonetheless, the integration generated by these entities leads to the expansion in material and environmental biodiversity in the supply chain for both primary and secondary agribusiness vendors to enhance support and application accepted the international certification of farm commodities (Alene and Coulibay, 2009).
In developing countries, the rising demand for biofuels and animal proteins provides investment opportunities for private market segments to profitably engage in growing no-food plants and sugarcane for biofuels and grains to feed the livestock (The World Bank, 2010) . This development of harnessing the private sector is more effective in promoting sustainable food production. Other private players such as multilateral banks for development and bilateral agencies have invested in agribusiness as suppliers of inputs or processors, traders and retailers of the end products of the agricultural value chain. They also provide support services such as research and development in agriculture and knowledge which is often non-excludable and non-rival (Barrett, Carter, and Peter, 2010).
Forces resulting from globalization, liberalization, and urbanization expand opportunities in the market and leads increased in incentives for agricultural production. However, the new markets established demand for timely delivered and quality products. Also, smallholders in farm outputs are limited in competing in these growing markets due to high costs of transacting, insufficient supply of credit, extensions, and inputs. Furthermore, the need food safety training and international standards on sanitary aspects adversely affect the small scale farmers. As a result of the above challenges, the need for agribusiness practices developed to help bridge the gap and support farmers both on the small scale and large scale overcome the increasing obstacles (Altieri and Nicholls, 2008).
There is increased in the training of agribusiness experts such as farm economists, accountants, and technical experts to increase agribusiness related skills and competencies. These experts form the highly dedicated and skilled specialists who develop intellectual leadership in agribusiness research and come up with sustainable programs (Alene and Coulibaly, 2009). In fact, the effectiveness of the agribusiness expertise leads to design and implementation of quality programs. For instance, they formulate irrigation projects using advanced technologies in riskier and drier environments to improve productivity. According to the World Bank (2010) report, the expenditure on agribusiness advisory services is on the increase in areas like export programs, land reform, agricultural entrepreneurship, and traceability in the supply chain to improve food safety.
Currently, the concept of agribusiness is significantly emphasized in farm practices to enhance agricultural productivity and growth and meet the global food demand and reduce poverty. The report by the World Bank indicates that heavy emphasis in agribusiness has led to increased production of food in transition economies like China, India, and Latin America (The World Bank, 2010) .
Agribusiness is emphasized with the intention of promoting efficiency and increasing food production in the environment characterized by scarce resources. According to Altieri and Nicholls (2008), various stakeholders such as World Bank are working on initiatives to ensure farmers across the globe access credit efficiently to improve land operations by buying inputs and engaging in research. Moreover, the support activities have gone to the extent of developing accessibility and marketing infrastructure for farmers in inaccessible regions as illustrated by Altieri and Nicholls (2008).
The sector has received a lot of attention especially financial support from many world players. However, The World Bank (2010) report indicates that some areas such as Sub-Saharan have not shown impressive results in agribusiness due to inconsistent commitment, weak capacity, internal coordination and staffing constraints and thus limiting the effectiveness of the efforts. Accordingly, the areas receive insufficient findings from the government which adversely impacts financial sustainability and maintenance of agricultural infrastructure and services (Altieri and Nicholls, 2008).
References
Alene, A., & Coulibaly, O. (2009). "The Impact pact of Agricultural Research on Productivity and Poverty." Food Policy, 34 (2), 198-209.
Altieri, M., & Nicholls, C. (2008). "Scaling Up Agroecological Approaches for Food Sovereignty in Latin America." Development, 51 (4), 472-480.
Barrett, C., Carter, M., & Peter, C. (2010). “A Century-Long Perspective on Agricultural Development.”. American Journal of Agricultural Economics, 92 (2), 447-68.
The World Bank. (2010). Growth and Productivity in Agriculture and Agribusiness. Wahington D.C: The World Bank.
