Definition of Agribusiness: Scope, Function, Benefits, and Aspects

Maybe we often hear the term agribusiness, but there are still those who don’t know what agribusiness is ( agribusiness ). In general, the definition of agribusiness is a business based on agriculture or in other fields to support it, both in the upstream and downstream sectors.

Another opinion says that agribusiness is a group of industries in agriculture or services needed in agriculture that run their business based on commercial principles, especially using sophisticated technology.

Agribusiness in an economic perspective means effort in learning strategies to gain profits through the management of aspects of cultivation, supply of raw materials, post-harvest, processing to the marketing stage. So that agribusiness is often linked in the context of management in the academic world as a science to learn how strategies to run the production chain as effectively as possible.

Also read: Agribusiness Management

Understanding Agribusiness According to Experts

In order to better understand what agribusiness is, then we can refer to the opinions of the following experts:

1. E. Paul Roy

According to E. Paul Roy, the definition of agribusiness is a process of coordination of various sub-systems that influence each other, namely the supply of agricultural inputs, agricultural production, processing of products, and marketing of agricultural products.

2. W. David Downey and Steven P. Erickson

According to W. David Downey and Steven P. Erickson (in Saragih 1998), the definition of agribusiness is an activity related to the handling of agricultural commodities in a broad sense, which includes one or the whole of the production chain, processing input and output (agro-industry) production , marketing of agricultural outputs and institutional support activities.

3. John H. Davis and Ray A. Goldberd

According to John H. Davis and Ray A. Goldberd (1957), agribusiness is the total number of all operations involved in the manufacture and distribution of agricultural supplies; production operations on agriculture; and storage, processing and distribution of agricultural commodities and goods made therefrom.

4. GL Cramer and CW Jensen

According to GL Cramer and CW Jensen, the definition of agribusiness is a complex activity, encompassing the agricultural industry, the marketing industry of agricultural products and processed agricultural products, the manufacturing and distribution industries for food and fiber-fiber to users / consumers.

5. Jose D. Drilon Jr.

According to Jose D. Drilon Jr, agribusiness is all activities related to manufacturing and distribution of agricultural production facilities, farming activities, storage, processing, and distribution of agricultural products and other products produced from agricultural products.

Also read: Understanding Business

Agribusiness Scope

The scope of agribusiness is quite broad, including businesses to produce seeds and agricultural chemicals, animal feed, agricultural equipment and machinery, processing agricultural materials, biofuel production to agricultural tourism. In other words, knowledge from agribusiness is not only about crop cultivation, but also includes animal husbandry, fisheries and forestry. Therefore agribusiness covers a broad view of agriculture.

As with biofuels which are the result of agricultural crops which are currently getting the attention of the general public and academics because of the increasingly intense climate change issues. On the other hand it is also due to an increase in the price of fossil fuels. That is why currently research and production on biofuels continues to develop as a form of agribusiness.

Also read: Definition of Export

Function of Understanding Agribusiness

From the notion of agribusiness that has been explained before, then what is the important function of understanding the science of agribusiness? Based on experience shows that development that has an insight into agribusiness is able to increase producer income , increase employment, increase foreign exchange and increase the number of new agro-industries.

On the other hand agribusiness also has an important role to support the success of agricultural development. That is because the agro-climate conditions are very favorable and the political will of the government that supports it.

To develop agribusiness in Indonesia, it can be done by increasing the use of new technology and improving efficiency in all fields to reduce production costs. Because if given the touch of a good agribusiness system, greater profits can be obtained. For example, by increasing priorities in leading commodities in Indonesia.

Also read: Definition of Imports

Agribusiness Aspects

Seeing from the understanding of agribusiness as an integrated development approach, this system has 4 aspects including the provision of production facilities and equipment, farming, processing and marketing. To launch the four subsystems so that they can run well, other subsystems, namely infrastructure and guidance, are needed.

If coordination between these aspects runs smoothly, it is necessary to create conducive and adequate conditions in the countryside. The conditions in question include:

  • Provision of complete agribusiness components in rural areas
  • The existence of entrepreneurship and agribusiness partnerships in rural areas
  • Other conditions that can support

The study of agribusiness itself often comes from the academic field of Agricultural Economics and also management, so it is often referred to as agribusiness management. Various ways have been carried out by government agencies to support increased economic development in the food sector. However, until now it has not been enough to optimize the work of agribusiness in Indonesia to reduce food imports from other countries.

Talking about agribusiness can not be seen simply. Moreover, agribusiness is associated with larger industries, such as raw material processing companies.


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