What Is Agribusiness?

Agribusiness Explained

Organic Local Farmer Giving Veggies to Shopper Outside
•••

Steve Debenport / Getty Images

Agribusiness relates to industries that are engaged in farming or that produce farm inputs. Examples of agribusiness include farm machinery manufacturing, seed supply, and agrichemicals.

In common usage, the term "agribusiness" usually refers to large agricultural companies in comparison with small, independent farms. However, agribusiness companies can be large or small, corporate or independent. Learn more about agribusiness to understand the business of food production, processing, and distribution.

What Is Agribusiness?

Agribusiness is a way of describing companies and enterprises that are related to cultivating and processing food and other agricultural products.

Agribusiness also is used to describe businesses that are involved in the marketing and distribution of farm products. These businesses include warehouses, wholesalers, processors, retailers, and more. Any company that participates in the production, marketing, safety, and distribution of food is involved in agribusiness.

Use of the term "agribusiness" by critics of corporate farming has created an aura of negativity around the concept, associating it with large corporations and companies that produce environmentally questionable, nonorganic products while ensuring that smaller, potentially sustainable farms fail to turn a profit. But the industry encompasses small- and medium-sized businesses as well as global conglomerates.

It's possible to major or minor in agribusiness at a variety of different colleges and universities across the U.S., including Cornell University in Ithaca, NY, and Iowa State University. Degrees focus on the economics of farm management and the science of agricultural management. Graduates may go on to pursue careers in agricultural finance, supply, merchandizing, and farm operations, among other professional areas.

Types of Agribusiness Companies

Not all agribusiness companies are involved directly in food production. Take Deere & Company, which makes John Deere equipment and may be one of the best-known examples of a classic agribusiness company.

Deere & Company doesn't own farms or produce food products, but nearly every farmer owns a John Deere tractor, baler, or some other piece of the iconic green and gold farm equipment.

Bayer, which acquired The Monsanto Company in 2018 and manufactures the herbicide Roundup (glyphosate) and various Roundup Ready genetically modified seeds, is another example of a company that engages in agribusiness. Another agribusiness company, Corteva Agriscience, an independent company that was previously a wholly owned subsidiary of Dow AgroSciences LLC, makes pesticides, herbicides, and fungicides, in addition to marketing seeds.

The Archer-Daniels-Midland Company, or ADM, processes oilseeds like canola and soy; processes corn into ingredients such as corn syrup, dextrose, and starch; and transports crops both nationally and internationally.

The term agribusiness generally isn't used to refer to individual farms, although Smithfield Foods Inc., the largest U.S. producer of pork, owns and runs its farms. Smithfield is owned by Chinese company WH Group (formerly Shuanghui International), which is the largest pork producer in the world and the largest meat producer in China.

Agribusiness vs. Organic Farming

In the United States, you'll often hear agribusiness used in contrast to organic agricultural businesses. For example, many people when talking about large-scale commercial agricultural operations will use the term agribusiness, but you won't hear the term used in relation to small-scale, organic farms.

Small family farms, smaller organic agriculture companies, and organic farmers often feel they have to compete with giant agribusiness companies when looking to gain a place in the agricultural marketplace. There's a persistent feeling among family farmers that they're an endangered species, due to the encroachment of agribusiness and corporate farms.

However, small-scale farms are also business concerns. For example, the U.S. Department of Agriculture (USDA) advises new farmers to begin by writing a business plan. The USDA also recommends that new farmers determine the business structure of their farm, e.g., a limited liability company (LLC), corporation, cooperative, etc.

Small organic farms often use agribusiness products like John Deere tractors. Also, small organic farms aren't necessarily competing with larger, corporate-owned farms for the same market. For example, a customer who prefers to buy pastured pork because it's humanely produced is unlikely to view conventionally produced, store-bought pork as an acceptable substitute.

Key Takeaways

  • Agribusiness relates to farming. Agribusiness companies produce, market, and distribute agricultural products and supports.
  • Some agribusiness companies manufacture farming equipment, agrichemicals, or other farm products.
  • In the U.S., the term agribusiness is most often used in opposition to small, organic farms. However, even small farms are businesses.