Course Pack for Introduction to Agribusiness Management | 2020 1

INTRODUCTION TO AGRIBUSINESS MANAGEMENT

Course Overview

Reasonable efforts have been played by the writers of this course pack to
provide inputs and reliable information about agribusiness as being defined as the
sum total of all activities conducted by the different industries of producing,
processing, transporting, and marketing of agricultural products and services putting
farmers, processors, manufacturers, distributors, and consumers within a system.

To achieve what is expected for this course, this course pack focuses on the
discussion of the following;

Module 1: Agribusiness Management in Perspective

Module 2: The Agribusiness Commodity System

Module 3: Planning and Organizing an Agribusiness

Module 4: Supply Chain Management for Agribusiness

After completing the course, the students are expected to:

• Describe agribusiness concepts and principles related to the operation and

management of agribusiness ventures,

• Discuss the basic frameworks in analyzing the logic, structure, conduct and
behavior of agribusiness commodity system, and;

• Develop the analytical and decision-making skills through agribusiness cases

and management games.

To facilitate student’s learning, you are advised to go through all the modules,
and honestly answer all the activities provided for each module.

Read more the succeeding page of this course pack to find out how interesting
and attractive Agribusiness Management is.

Good Luck!

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 MODULE 1

Agribusiness Management in Perspective

Module Overview:

What are we going to talk about?

In this module we are to tackle the following lessons:

Lesson 1: The Agribusiness Concepts and Dimensions

Lesson 2: The Management Functions in Agribusiness

Agribusiness is an industry which is very important to human survival. From

the time we wake up in the morning until we close our eyes at night, agribusiness
plays a very important role in our day to day living. From the food we eat, the clothes
we wear, and our shelter and think about the different activities every day from
growing of different farm products, harvesting, processing, manufacturing,
transporting, and distributing products until it reaches the final consumers whose
needs are being satisfied. Management of these agribusiness activities are highly
observed everyday by the key players within an organization, to which management
are responsible for assuring successful completion of the functions, task, and activities
that will determine the agribusiness success.

After the completion of this module, you will be able to:

1. Demonstrate an understanding of and appreciation of the importance

of the impact of agribusiness in an organization and diversity in
modern agribusiness sectors.

2. Provide an overview of functional responsibilities of management in

agribusiness.

If you are ready?

Then continue reading the next pages.

Enjoy learning!

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MODULE 1

LESSON 1

The Agribusiness Concepts and Dimensions

Objectives:

• Demonstrate an understanding of the importance of the impact of

agribusiness, and;
• Appreciate agribusiness impact in an organization and diversity in
modern agribusiness sectors.

Introduction:

Welcome learners! To help us understand better and appreciate agribusiness

that it is more than agriculture and that it spans the entire supply chain from seed to
shelf, or from pasture to plate. This lesson revisits the concepts and dimensions of
agribusiness.

Activity:

What you see is what you get!

Did you see a PIZZA? Now, identify the agricultural products contained in
that PIZZA. Then, think and list all the type of agribusiness companies involved in
getting the pizza ready for our consumption.

Analysis:

1. How do you think does agribusiness affect our daily lives?

_______________________________________________________________
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 2. How does this agribusiness companies manage to provide us these agricultural
products and satisfies us?
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_______________________________________________________________

3. Based on the activity, did you appreciate the vastness, diversity and closeness
of agribusiness to our everyday human life? Yes, or No and Why?
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Abstraction:
CONCEPTS OF AGRIBUSINESS

Agribusiness is all operations involved in the manufacture and distribution of

farm supplies; production operation on the farm, and the storage, processing and
distribution of the resulting commodities and items. (Davis and Goldberg, 2016).

This concept evolved giving the origin to “Agribusiness Systems Analysis”

rooted in two elements:
• First, agriculture treated as an isolated sector, became part of specialized
interdependent system of agents that operate in interconnected industries.
• Second relevant aspect proposed by Goldberg is that the value added at the
farm level tends to decline through time as a share of the total value of
production, with serious strategic consequences.

Here are other definition from other sources:

Agribusiness includes the total input – farm – product sectors that supply
farm inputs; are involved in production: and finally, handle processing,
distributing, wholesaling, and retailing of product o the final customer
(Downey and Trocke, 1987).

Agribusiness is the coordinating science of supplying agricultural production inputs

and subsequently producing, processing, and distributing food and fiber (Roy, 1977)

Similar definition of agribusiness describes it as “any profit-motivated enterprise that

involves in providing agricultural supplies and/or the processing, marketing,
transporting, and distributing of agricultural materials and consumer products”

An inclusive definition of Agribusiness was provided by the Australian Department of

Agriculture, Fisheries and Forestry, (DAFF) called the agribusiness sector as

A “Chain” of industries directly or indirectly involved in the

production, transformation, or provision of food, fiber, chemical and
pharmaceutical substrates.

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“Links” in the agribusiness chain include:

1. Primary production of raw materials “commodities” such as unprocessed

food, fiber and substrates
2. Tertiary transformation of commodities into value-added products where
the value is derived from the process of transformation
3. Supply of inputs to the primary and tertiary sectors.
4. Wholesale and retail provision of processed and unprocessed foods, fibers
and related products to the customers.
5. Provision of educational, financial and technical services to all sectors

Therefore, agribusiness encompasses all activities that takes place in the

production, manufacturing, distribution, and wholesale and retail sales of agricultural
commodities for achieving the targeted objectives.

In effect, agribusiness is more than agriculture. It spans the entire supply chain
from seed to shelf, or from pasture to plate.

Importance of agribusiness:

1. It deals with agricultural sector and also with the portion of industrial
sector, which is the major source of farm inputs like fertilizers, pesticides,
machines, processing and post-harvest technologies.
2. It suggests and directs government and private sectors for development of
sub-sectors.
3. It contributes a good part of the national economy.

Objectives of agribusiness:

The following are the objectives of Agribusiness;

1. Develop a competitive and sustainable private sector led agribusiness sector
2. Increase productivity / reduce yield gaps
3. Promote commercially oriented agriculture activity
4. Commercialization of Agriculture
5. Advance high potential sectors: horticulture, livestock and fisheries
6. Use of modern technologies
7. Reducing cost of production
8. Value addition
9. Export agriculture
10. Higher farm income

DIMENSIONS OF AGRIBUSINESS

The following covers various ways by which agribusiness can be perceived, as

a structure, sector, system and as field of study.

Agribusiness Structure

Structure of Agribusiness is generally vertical structure composed of inputs

suppliers, farmers, processors, wholesalers, retailers and consumers (fig. 1). These
components participate in the movement of the commodity from the producer down
to final consumers.

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 Consumers

Retailers

Wholesaler Managers
Gov’t. Offices
Educators
Researchers

Processors

Farmers

Figure 1. Vertical structure and coordinates

of agribusiness
(Source: Readings in Agribusiness)
Suppliers

Agribusiness is market oriented. This means that the components must

function in a way that will lead to the satisfaction of consumers’ needs. Market
orientation advocates that markets be developed for the products that the industry
produces or that no product should be produced unless it is marketable.

The entire agribusiness is made to work by coordinators, which are the

managers, government officers, educators and researchers.

• Managers are the one who are administrators of the firms.

• Government officers whose functions are related to government programs and
projects
• Educators who train the manpower needed to lead and operate these firms

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 • Researchers who provide technical knowledge that is important in the
coordination between components of the vertical structure.

Agribusiness as a sector

To capture the full meaning of agribusiness it is important to visualizes its

sectors through the following:
• The whole agricultural sector (including forestry and fishery)
• That portion of the industrial sector which is composed of manufacturers or
suppliers of inputs (i.e., for the farm, processing plants, and marketing firms)
and processors of farm products; and
• That portion of the commercial/services sector which provides transport or
distribution, financing, and other services (Fig. 2)

Agricultural Sector

Commercial/Service Sector Industrial Sector

Figure 2. Agribusiness Sector

Figure 2 clearly shows the interrelated parts of the agribusiness sector in

which success of one part depends heavily on the proper functioning of the other two.

Agribusiness as an Open System

A system has an interrelated part that function together towards a common

goal. Agribusiness as an open system is composed five sub-systems namely – input,
production, processing, marketing, and support subsystems. The functions of these
five subsystems are interconnected and that each viability relies on each other.

1. Input sub-system are firms that provide the farm production sector with
inputs needed for operation including human resources.
2. Farm production sub-system are individuals and enterprises directly
engaged in agriculture-based products.
3. Processing sub-system are firms engaged in the primary and final
transformation of the input (raw materials) to output (finished products).
4. Marketing sub-system are individuals and firms involved in the
distribution of agriculture-based products. Marketers usually have direct
links with the end-consumers.
5. Support sub-system are organizations and institutions and other entities
directly and indirectly affecting the agribusiness system through provision
of services, logistics and coordination of services from technology,
information, programs and incentives to the system.

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Agribusiness as a Field of Study

As a field of study, agribusiness is founded on management. Although it has

been practiced for thousands of years, management as a formal discipline is still
relatively young.

Management is an integrative field of study that draws concepts from different

disciplines like economics, psychology, sociology, statistics, mathematics, political
science, and engineering. Among others. In addition to said fields, agribusiness
management also integrates the relevant aspects of agricultural disciplines such as
horticulture, agronomy, animal sciences, aquaculture, and forest science.

There are also debate whether management is an art or science. It is actually

both. For example, the field manager is confronted with problems dealing with
material things like crop production failure, this situation would allow him or her to
use systematic methods in analyzing the problem to come up with a rational solution
or use generally acceptable techniques to solve the problem. It is an art however,
when situation factors affecting problem are beyond the manipulation of the manager.
Such as problem dealing with people like interpersonal conflicts, to which the
manager may be required to address the issue as an art by using more of his
qualitative judgment, intuition, or gut feeling

Application:

You are now encouraged to spare more of your time and answer the following activities:

1. List at least 3 distinct features of agribusiness from other businesses?

Agribusiness Other Businesess

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 2. From Farm to Table!

It takes several steps to get fresh fruits and vegetables to your dinner table.
Can you put these scenes in their correct order by placing the correct number under
each one?

Fresh fruits and vegetable Fresh fruits and vegetable

are now in the store are picked and put into
_____ basket _____

Fruits and vegetable from

the farm are now ready for Seeds are planted _____
market _____

Fruits and vegetable are Fruits and vegetable are

growing _____ ripe and ready for picking
_____

Good Job! You have successfully completed lesson 1 of this module.

I presumed, that you have now appreciated the effects of agribusiness
in our daily lives. You are now ready to proceed learning the
functions of management in agribusiness.

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MODULE 1

LESSON 2
The Management Functions in Agribusiness

Objectives:

• Provide an overview of functional responsibilities of management

in agribusiness, and;
• Describe management’s role in agribusiness.

Introduction:

Welcome learner you are now on lesson 2 of module 1! This lesson tells you
that management is dynamic by nature and evolves by which people working together
in a group to efficiently accomplish the agribusiness objectives. In this lesson you are
expected to understand the Management – nature, task and responsibilities, the key
functions of management in agribusiness and the role of the agribusiness manager.

Activity:

From our previous discussion, we have learned that agribusiness system

covers all those working in the inputs, farming, processing and distribution sector.
Now, think of yourself as an agribusiness manager and answer the following analysis.

Analysis:

As an agribusiness manager…

1. What do you think is your scope and responsibility?

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2. How would you relate the functions of management to key functions of
management in agribusiness?

3. What would be your vital adjustment in coping with the heightened

competition in globalization?

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Abstraction:

MANAGEMENT – Nature, Task and Responsibility

Efficient and effective handling of farm business is certainly the goal of the
farmers. The nature of the management decision made is an important factor for the
farm business to survive. In this modern world it is a challenge for practical managers
to continually look for management resources and information to improve their
decision.

Traditionally, management is conceptualized as to getting things done through

other people. In modern view, it covers the wide range of business-related activities
and considered as a process, activity, a discipline and effort to control and direct
individual and group towards achieving goals of the business.

Managers performance indicates actions, these actions are specific steps and
tasks necessary to produce desired results. 3G learning provided the managers as
follows;

1. Providing purposeful direction to the firm

2. Managing survival and growth
3. Maintaining farm’s efficiency
4. Meeting the challenge of increasing competition
5. Managing for innovation
6. Coping with growing technological sophistication
7. Maintaining relation with various society segments.

As social institution, agribusiness existence is dependent upon its harmonious

relationship with various segments in the society. This relationship started from the
farm’s positive responsiveness to the various segments and is closely associated with
the tasks a farm manager is performing. Developing relationship between agribusiness
and virous interest groups starts with recognizing the existence and responsibilities of
manager. These responsibilities are towards consumers, input suppliers, distributors,
financers, government and even the society.

KEY FUNCTIONS OF MANAGEMENT IN AGRIBUSINESS

As explained earlier managers responsibilities are highly different and can
range from looking for inputs to be used for the whole operation, hiring and firing of
workers, to making complex decision.
Theoretically, the functions of management which are planning, organizing,
staffing, directing, and controlling are usually discussed sequentially, but may vary
from one manager to another.

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 1. Planning is the ongoing process
of developing the business’s
mission and objectives and
determining how they will be
accomplished 1 2. Organizing is an essential
function of management. It is the
process of accumulating
resources from different sources
in order to work according to the
plans laid out by the management
5 2
5. Controlling is a systematic
function called as a process of
checking actual performance
against the standards or plans with
a view to ensure adequate progress
and also recording such 3. Staffing refers to the
experience gained for possible continuous process of finding,
future needs. selecting evaluating and
4 3 developing a working
relationship with current or
4. Directing is a continuous future employees.
managerial process or technique
of instructing, guiding, inspiring,
counselling, overseeing and
leading people towards the
accomplishment of
organizational goals.

Figure 3. The Management Functions

For us to understand better the form and process by which managers perform
their task they are required to create and sustain a feasible agribusiness, the practice of
management in agribusiness is broken down to four key functions;

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 Marketing Financial Supply Chain Human
Management Management Management Resources
Management

Focuses on
deriving lower cost
Focused on the Involves the and pushing
Encompasses
process by which activities of quality to
managing two
products flow procuring data efficiently meeting
areas: the
through the food needed to make consumers demand
mechanics of the
system from good decisions, and provide tools
personnel
processor or using tools of needed by the
administration,
producer to final finance to make manager to meet
and the finer points
consumer. effective operations and
of motivating
decisions, and logistical
It also involves the people to offer and
managing the challenges. As a
physical and contribute their
assets, liabilities, result, SCM has
economic maximum
and owner’s come the forefront
activities potential.
investment. as key
performed in
management
moving products.
function for
Agribusiness
manager.

Figure 4. Key Functions of Management in Agribusiness

THE ROLE OF THE AGRIBUSINESS MANAGER

In the previous discussion we have learned so far that agribusiness covers

relatively large scope. It can be viewed as a system, a vertical structure, or a sector in
the economy. As a field of study, it is anchored on management. “Doing things
through other people,” one of the simplest definitions of management, summarizes the
essence of being an agribusiness manager.

Generally, it is our knowledge that manager’s job has been describe as

“creating an environment wherein groups of people can work effectively and
efficiently for the achievement of the organizational objective.”

But what exactly are the distinct role of agribusiness managers and what
makes them different from their counterparts in other sectors.

1. The nature of business

Is one of the differentiating factors. Agribusiness managers must be a
good and practical decision maker, for agribusiness relies heavily to farming for
its raw materials that is expose to inherent risks. Factors like planting season,
natural calamities, peace and order, pest infestation can greatly affect the
industry’s volume of production and farmers who are located at the community

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 – oriented rural areas have a significant impact not only on how agribusiness
is organized, but also on the leadership style of the agribusiness manager.

2. The nature of products manufactured and sold

Remember that most of the agricultural products are staples that people
buy in a wide range of retail stores, such us grocery stores and wet markets.
Staple product satisfies our basic needs and does not change much over time,
their stability encourages competition, which results to low profit margins.
Agribusiness role to this is to achieved better inventory management and
eliminate unnecessary tasks and procedures across the participants in the
commodity system.

3. Vertical coordination/information
Due to the number of players in the agribusiness system effective
vertical coordination or information is very important to coordinate works
among agribusiness manager, and to ensure that the volume, quality, and time
by which agricultural products are moved is all in synchrony to ensure
customer satisfaction.

4. Globalization
With an inevitable march to globalization, Asian Agribusiness firms
must not only learn to overcome competition in their backyards, but also to
take advantage of opportunities beyond the region. Thus, agribusiness
manager must work to improve linkages from other firms, also current
economic structure requires him to be outward-looking and responsive to the
developments in the global arena.

Application:

Select one agribusiness farm in your area and make a report on the selected
farm highlighting the key functions of management to agribusiness and the primary
role of agribusiness.

Congratulations! You have just learned the functions of management in

agribusiness and completed module 1. You may now proceed to the
next module in which you are expected to learn what is an agribusiness
commodity system.

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References:

Agribusiness Management. (2014). 3G Elearning FZ LLC.

Berlin, James G., Scheeberger, Kenneth C., and Osburn, Donald D. (1986).
Principles of Agribusiness Management. Prentice Hall, New Jersey
Briones, R. (2013). “Agriculture, Rural Employment and Inclusive Growth.
Philippine Institute for Development Studies

Downey, W. David and Trocke, John K. (1981). Agribusiness Management.

McGraw Hill Kogakusha, Tokyo

Drillon, J. et al. (2008). “Agribusiness Management Systems Approach”.

SEAMEO SEARCA, College Loz Banos, Laguna

Dy, Rolando t., Garcia, Primo G., Lim, Manuel Q., Manalili, Nerlita M..
(2003). Agribusiness Management: Systems Approach. Los Baños,
Laguna, Philippines: SEAMEO SEARCA

Freddie L. Barnard, J. T. (2016). Agribusiness Management. New York:

Routledge.

Jamandre, W. (2011). “Agribusiness: A perspective. Retrieved from:

www.openuni-clsu.edu.ph

Garcia, P. G. (n.d.). Agribusiness Concepts, Dimensions, and Dynamics.

Ricketts, Cliff and Ricketts, Kristina (2013). Agribusiness Fundamentals and

nd
Applications. 2 Edition. Philippine Reprint: CENGAGE Learning.

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Agribusiness marketing- what is it?
- It can best be defined as series of services involved in moving a product from
the point of production to the point of consumption.
- It is a series of inter-connected activities involving: planning production,
growing and harvesting, grading, packing, transport, storage, agro-and food
processing, distribution and sale.
Agribusiness is the largest industry in most developed nations, and marketing
is its largest segment. More than 80 % of those involved in agribusiness are employed
in marketing.

Producers try to… Consumers try to…

Maximize the satisfaction they
Maximize profit over the long receive from the products they buy
term with their limited incomes

Buy small quantities of many

Sell large quantities of fewer
products
products
Obtain the lowest prices
Obtain the highest prices

Conflicting Needs of Producers and Consumers

bridging the gap between the differing

needs of producers and consumers

helps producers to decide what products to

produce and when to produce them

helps consumers by letting them know

what products are available at what price

Greater satisfaction for consumers and higher

profits for producers.

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Role of Marketing in the Agribusiness System

Marketing -bridging the gap between

Producers and Consumers

In any economic system there are always barriers between producers and
consumers that prevent producers from efficiently meeting consumer needs. These
include separations of space, time, information and ownership. The role of marketing
system is to overcome these separations by building a bridge between producers and
consumers.
Functions of Marketing
It overcomes the separation of time by keeping
Storage the product in good condition between
production and the final sale.

It overcomes the separation of space by moving

the product from where it is produced to where
Transportation
the consumer is willing to purchase it.
Physical
functions
This function is responsible for changing the
form of a commodity to a form that has greater
value to the consumer.
Processing
The form changing activity is one that adds
value to the product.

Simplifies buying and selling as well as

reducing marketing costs by enabling buyers to
specify precisely what they want and suppliers
Facilitating
Standardization to communicate what they are able and willing
functions
to supply with respect to both quantity and
quality of product.

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 An inevitable lag between investing and sale
and someone must finance the lag.

The question of where the funding of the

investment is to come from, at all points
Financing
between production and consumption, is one
that marketing must address.

Overcomes time separation.

Involves assuming the risk of loss between the

time of purchase and sale.

In both the production (physical risk) and

marketing of produce the possibility of
Risk bearing
incurring losses is always present (marketing
risk).

Overcomes the separation of time

It reduce the level of risk in decision making.

It establishes what products are right for the

market, which channels of distribution are most
Market
appropriate, how best to promote products and
intelligence
what prices are acceptable to the market.

Overcomes the gap of information

A useful way to think about the utility process is to think of them as adding
value to the product.

Form

Utilities of
Possession Place
Marketing

Time

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 Each of these utilities is added to the product by performing one or more of the
marketing functions. Form utility is created by processing. Place utility is created
through the transportation function. Time utility comes from the storage function.
Possession utility is created by the buying and selling functions.
In this way the barriers of space, time, information, value and ownership are
overcome for the producer and consumers.

Fill My P-M-I Chart!

Fill the chart below with your thoughts and views on the importance of
marketing research for agribusiness marketing decisions. Why do we need to conduct
marketing research? What do you think are the positive and negative sides of a
marketing research? What are interesting ideas about marketing research?

So, you are going to write the positive things about marketing research in the
P (Pluses) column; negative things on the M (Minuses) column; exciting things in the
I (Interesting) column. You may write phrases or key points. Have fun while learning!

Marketing Research P-M-I Chart

Pluses Minuses Interesting

1. 1. 1.

2. 2. 2.

3. 3. 3.

Application:

Easy Essay!

For the past two decades, Southeast Asian agricultural economies are moving
closer towards agro-industrialization. This development has provided opportunities
and challenges for South East Asian countries to develop non-traditional exports
manufactured out of the traditional agricultural products that many neighboring
countries were found to produce and export.

In this activity, you are to write down your own understanding and feelings
about “Green Marketing”. This concept is now being adopted in the Philippines and
other Asian countries. What is it? How will it influence agribusiness in the country?

So, in not more than 200 words, express your thoughts by writing it inside the
horizontal scroll below.

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 -
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Great job! What a wonderful experience. Congratulations for you

have completed all the activities and tasks for lesson 4 of module 2.
Anticipating that you appreciate all the learnings gained in this
lesson. Share your ideas about agribusiness marketing to other
students. So, you re now ready to move to lesson 5 of this module. Be
persistent and keep going!

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