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Increasing role of agribusiness in farm economics




  • Agriculture is considered the backbone of our national economy. Pakistan’s agriculture contributes approximately 20.8 per cent of the country’s gross domestic product (GDP), provides a large scale employment and fulfills the food and nutritional requirements of the nation. It provides important raw materials for some major industries. Pakistani agriculture faces numerous challenges with a rapidly changing business environment, pace of technological globalization, competitive environment and changing role of government.
    Today, agriculture has achieved commercial importance and has changed from subsistence farming, import commercial farming, import oriented to export oriented, supply driven technology to demand driven technology etc. New inputs and new technologies are hitting market every day. The market for processed and packaged food products is increasing day by day and therefore there is a vital need of trained manpower in this business.
    Only 9 per cent of total food products are being fresh processed in Pakistan and 2 percent for value addition, whereas 40 per cent food is wasted during packaging and transportation. Many businesses started building up in and around agriculture. This resulted in growth of agri-business.
    Demand for traditional agricultural economics is diminishing; there is a growing need for the economics and management of the food sector and the environment. Departments of agricultural economics have shown great flexibility in including agribusiness in their Bachelor’s and Master’s teaching programmes. Ph.D. and research programmes appear to adjust more slowly to changing demand. Although agricultural economics programmes are providing a variety of service course offerings, opportunities for joint programs with biological, physical, and natural sciences, particularly resource management, are not being exploited. If business schools decide to compete for agribusiness students in the future, missed opportunities with other departments and schools may become very costly. If this profession is to remain viable in the long run, it must continue to evolve, developing opportunities with biological, physical, and natural disciplines, in order to meet the demands of a changing market.
    Agri-business management is becoming a popular career choice for agriculture students and there is great need to develop the professional agribusiness managers who can not only fill the management requirements of the changing agriculture scenario but also prove to be a great support to the farmers. Agri-business education is a qualification that helps mould the personnel into good managers having managerial expertise.
    Agri-business includes all business enterprises that buy from or sell to farmers. The transaction may involve either a product, a commodity or a service and encompasses items such as (a) productive resources e.g. feed, seed, fertilizers equipment, energy, machinery etc. (b) agricultural commodities e.g. food and fibre etc. (c) facilitative services e.g. credit, insurance marketing, storage, processing, transportation, packing, distribution etc. Agri-business can also be defined as science and practice of activities with backward and forward linkage related to production, processing, marketing and trade, distribution of raw and processed food, feed, fiber including supply of inputs and service for these activities.
    In a developing country like Pakistan, agri-business system with forward and backward linkages consists of following four major sectors such as agricultural input, agricultural production, agricultural processing-manufacturing or agro processing,” and agricultural marketing-distribution sector. These four sectors act as interrelated parts of a system in which the success of each sector depends, to a large extent, on the proper functioning of the other sectors. Thus, agri-business is all about how to conduct successful business in the food and agriculture related sectors.
    Agri-business management is nothing but, the application of management principles for agriculture.
    Keeping in view the importance of Agribusiness sector Government of Pakistan has launched “Agribusiness Development and Diversification Project (ADDP)” a joint initiative of the Ministry of Food, Agriculture and Livestock and the Asian Development Bank. Launched in 2005, the Project aims at enhancing economic growth and fostering employment generation through development of a competitive and sustainable agribusiness sector.
    For effective coordination with provincial governments and private sector, interventions are carried out through project implementation offices in all the provinces and special areas of the country. Initially focusing on horticulture and livestock and dairy sub-sectors, Project interventions would result in increased productivity, improved product quality, and value addition by addressing constraints throughout the product value chain from production to markets.
    The project strategies are comprehensive and systemic and based on international best practices, designed to minimize market and institutional failures and rigidities.
    Under the umbrella of ADDP, the Agribusiness Support Fund (ASF) was established to provides funds on matching grant basis (non-returnable) for Business Development Services, to individuals & firms engaged in agri-related businesses, enabling them to employ modern techniques & practices and build within themselves the different skills, know-how, expertise and market understanding required by a fast-changing economic environment and to improve their productivity, profitability, competitiveness and creditworthiness.
    ASF aims to support employment generation and economic growth by developing a competitive and sustainable agribusiness sector in Pakistan and specifically focuses on the areas like Horticulture, Floriculture, Livestock (Excluding poultry and fishery) and dairy.
    The overall focus of the ASF is to strengthen and support demand driven private sector service delivery mechanisms throughout the agribusiness value chain including supply inputs, production, processing, and market access for domestic and export markets. The specific focus is on horticulture and hortibusiness and livestock and dairy business.

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