Introduction to

Agribusiness Management
 Contents
• Introduction
• Nature
• Important requisites
• Scope
• Characteristics / Special features
• Types
• Institutional Arrangements
• Constraints
• The Task Ahead
 Agribusiness
• Agribusiness, as a concept, encompasses the
whole range of activities from agro input
manufacturing to marketing the processed
food for the ultimate consumer.
 Nature of successful agribusiness
• Today’s business is very competitive and
complex, due to
– Changing taste and fashion of the consumers on
the one hand, and
– Introduction of substitute and cheaper and better
competitive goods, on the other.

Produce only
Produce and what customers
sells want
 Important requisites for success
• Clean objectives
– Objectives are destination points
– Should be realistic and clearly defined
• Planning
– A pre-determined plan of action
– Planning is a proposal based on past experience and
present trends for future actions
• Sound organization
– Organization of business is a harmonies combination of
men, machine material, money management
• Research
– Research is a systematic search for new knowledge
– Consumer behaviour
• Finance
– Estimate its financial requirements
• Proper plant location, layout and size
• Efficient management
• Harmonious relations with the workers
 Scope of Agribusiness
• India is endowed with varied agro- climate, which
facilitates production of temperate, sub-tropical and
tropical agricultural commodities
• There is a growing demand for agricultural inputs like
feed and fodder, inorganic fertilizers, bio- fertilizers
etc.,
• Biotechnology applications in agriculture have vast
scope in production of seed, bio-control agents,
industrial harnessing of microbes for bakery
products.
• Export can be harnessed as a source of
economic growth.
• Rising standard of living expands the
opportunities for secondary and tertiary
processing of agricultural commodities.
• Vast coastal line and internal water courses
provides enormous opportunity for
production of marine and inland fish
• Live stock wealth gives enormous scope for
production of meat, milk and milk products, poultry
products etc.
• Forest resources can be utilized for production of by-
products of forestry
• Bee keeping and apiary
• Mushroom production for domestic consumption
and export
• Organic farming has the highest potential in India
• Wide scope for production and promotion of bio-
pesticides and bio-control agents for protection of
crops
• Production of Seeds, Hybrid and genetically modified
crops have the highest potential in India
• Micro irrigation systems and labour saving farm
equipments have good potential
• Production of vegetables and flowers under green
house conditions for export market
• Trained human resources in agriculture and allied
sciences will take on agricultural extension system
• Enhanced agricultural production throws open
opportunities for employment in marketing,
transport, cold storage and warehousing facilities,
credit, insurance and logistic support services.
 Characteristics / Special features of
Agribusiness
• Primary forces of production
• Size of Production unit
• Frequency and Speed of decision
• Seasonality in Production
• Yield variability
• Standardization of practices and products
 Types of Agro-based Industries

Agri-Business

Agro-produce Agro-produce Agro-input

Agro-service
Processing Manufacturing Manufacturing
units
units units units
 Agro-produce processing units
• These industrial units simply process the agriculture
produce .

• They do not manufacture any new product. The

bulkiness of the produce is reduced.

• They simply process the raw material so that it can be

preserved or transported .

• Eg.. Rice mills, Dall mills.

 Agro-produce Manufacturing units
• These units manufacture entirely new products
based on agricultural produce as main raw
material .

• The finished goods will be entirely different

when compared to its original raw material.

• Sugar factories, textile mills, paper mills etc.

 Agro-input Manufacturing Units
• These industrial units produce goods either for
mechanization of agriculture or for increasing
productivity of agriculture.

• These units are directly linked with agriculture , as

they support agriculture at various stages.

• Eg., Industries manufacturing fertilizers,

pesticides, all types of agril. implements, pump
sets etc.,
 Agro-Service Centre's
• These are the workshops and service centers
which are engaged in repairing and servicing of
agricultural implements and machinery.

• Eg : Servicing centers of pump sets, tractors,

diesel engines,
Establishment of Agro-based industries in rural areas will
help in

Reducing exploitation of producers by middlemen.

Assuring a better price to producers.

Bringing more areas under different crops,

Reducing transporting costs of produce and thereby

price of the finished products.
Reducing wastage of perishable agricultural
commodities.

Increasing the incomes of farmers.

Development of backward areas.

Preventing in the migration of people from rural

areas to urban areas.
 Institutional Arrangements for the
promotion of Agro-industries
 Ministry of Agriculture deals with rice mills, sugar
mills, bakeries, cold storages.
Khadi and Village Industries Commission (KVIC) looks
after the traditional agro-based industries like “Gur”
and Khandasari
Director General of Trade and Development looks
after the industries engaged in the manufacture of
tractors , power tillers, diesel engines, pump sets etc.,
Agro-industries Development Corporation (AGROS) in
each state mainly supply agricultural machinery, inputs
and agricultural advisory to farmers.

Small Industries Development Organisation (SIDO)

deals with processing of food products, beverages,
food and fruit preservation, agricultural implements ,
pesticide formulations etc.,
 Constraints in Establishing
Agro-based Industries
• No-availability of raw material throughout the year.

• Under-utlilisation of the capacity of the unit.

• Changing cropping patterns make the units defunct.

• Failure of monsoon may hit the supply of raw material.

• Units may have to diversify to utilise different varieties

of the same product.
• Proper guidance of entrepreneurs is not available.
• Certain agro-based units are capital intensive and
financing by institutions is a difficulty.

• Promotional activities by Govt. departments is

inadequate

• Uncertainty about market demand.

• Absence of information about the market.

• Absence of proper integration among various agencies

of development in the district.
 The Task Ahead
 Coordination between Agro-industries Corporations
and Research institutions.

 Study of existing units before setting up of new units.

 Identification of entrepreneurs and imparting training.
 Establishment of a cell of technical officers for technical
guidance.

 Proper institutional set up to achieve integration among

various agencies of development in the district.