AGRC7050 - Agribusiness Value Chain Management

The changing nature of agribusiness

 Changing world
Globalization Urbanization
Economic, political Expansion of cities,
and socio-cultural Rural migration
integration

Technological Changing
Climate
Change Consumer Change

Income
Change
Globalization is a full of paradoxes

but one this is evident

…………... Consumer behaviour is changing

“People should not solve paradoxes but rather try to manage them”

Adapted from: Kotler, P., Kartajaya, H. and Setiawan, I. (2010), Marketing 3.0: From products to
Customers to the human spirit, Wiley & Sons, Inc., New Jersey, USA
 Globalization Urbanization
Economic, political Expansion of cities,
and socio-cultural Rural migration
integration

Technological Changing Climate

Change Consumer Change

Income
Change

Agriculture and Agribusiness

Specifically on chain members

Key drivers of change – Developed
countries
• Globalisation,
• Trade liberalisation,
• Changing consumer tastes,
• Technological advances, and
• Innovation and environmental constraints.

Productivity Commission (2005). Trends in Australian Agriculture, Research Paper, Canberra.

Key drivers of change – Developing
countries
• Globalisation and trade integration,
• Urbanisation,
• Income growth and diet diversification,
• Technology change and access, and
• Climate change and agriculture development

Pingali, P. (2010). Agriculture Renaissance: Making “Agriculture for Development” Work in the
21st Century. Handbook of Agricultural Economics, Vol. 4, pp. 3867–3894.
Result
• Relative importance of agriculture declines

• Industrialization of agriculture
Increasing consolidation of farms and vertical coordination (contracting
and integration) among the stages of the food and fiber system.

• Increasing emphasis on the entire food system from raw

material suppliers to end-user.

• Increasing partnerships with other resource suppliers in

various ways.

• Use of ecologically sustainable production systems, etc. etc…

Relative importance of Australian agriculture
is declining
The last century The last 40 years

Agriculture's share of economy Share of economy

35 100
Mining
90
30
80

25 70

60
20
50
Services
15
40

10 30

20 Manufacturing
5
10
Agriculture
0 0
1901 1921 1941 1961 1981 2001 1963-64 1973-74 1983-84 1993-94 2003-04

Productivity Commission 2005, Trends in Australian Agriculture, Research Paper, Canberra.

Emerging system
Expected to be

• Highly competitive in global markets,

• More efficient,
• More responsive to consumer demands,
• Less dependent on government assistance, and
• More rapidly adopt new technologies.
Changes
• Change in the agribusiness sector is a worldwide phenomenon.

• If any agribusiness firm to remain competitive in a global

market they must become
Agile,
Adaptable, and
Aligned

• Simply, they must become triple A firms operating in triple A

supply chains.
Changing food regimes

Burch, D. and Lawrence, G. (2005). Supermarket own brands, supply chains and the
transformation of the agri-food system. International Journal of Sociology of Agriculture and Food, 13 (1), 1-18.
References
Agriculture - Changing Face of Agriculture – Australia
http://www.anra.gov.au/topics/agriculture/change/index.html#rivers

Productivity Commission 2005, Trends in Australian Agriculture, Research

Paper, Canberra.

Boehlje M., Akridge J. and Downey D. (1995). Restructuring agribusiness for

the 21st century. Agribusiness, Vol. 11 (6), 493-500.

Pingali, P. (2010). Agriculture Renaissance: Making “Agriculture for

Development” Work in the 21st Century. Handbook of Agricultural
Economics, Volume 4. pp. 3867-3894.