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The Oxford dictionary defines the word ‘business’ as buying and selling or trade or commercial work. The word trade or commerce means the exchange of goods as a means of livelihood or profit.

In our National Accounts, agro-processing, production of agro-chemicals and farm machinery, and trade (wholesaling and retailing) are considered as parts of the manufacturing (industrial) or service (tertiary) sector. With the structural transformation of the economy, the share of agricultural production (farming) in the economy is going down, and that of processing, distribution, and trade is increasing. Further, with the increase in backward and forward linkages, the distinction between agriculture and agro-industry is getting blurred.

 Farm production, processing, and trade are getting increasingly coupled. The word ‘supply chain’ is being increasingly talked of and discussed. The supply chain is a coordinated system of organizations, people, activities, information, and resources involved in moving a product or service in physical or virtual form from supplier to the customer. Supply chain activities include the transformation of raw material and components into finished products that are then delivered to the end customers. In the developed countries, agribusiness is defined as the total output arising from farm production and product processing at both pre- and post-farm gate levels. In developing countries like India, the agribusiness sector encompasses four distinct sub-sectors, viz. agricultural inputs; agricultural production; agro-processing; and marketing and trade or utility to the goods.

Agricultural value chains are a new concept and a new approach to harvesting more sustainable profits. Agri value chain encompasses the flow of products, knowledge, and information between smallholder farmers and consumers. They offer the opportunity to capture added value at each stage of the production, marketing and consumption process. Smallholder farmers need to better engage with value chains in order to gain added value for improving their livelihoods, whilst reducing their risks and increasing their resilience.

As value chains differ considerably across countries and products, more research is needed to identify the optimal configuration enabling smallholder farmers to gain a greater share of their value and assume fewer risks. If agricultural value chains are to offer pro-poor opportunities for growth, then those markets in which smallholders can have a ‘comparative advantage/ competitive advantage’ need to be identified and the producers actively assisted. Smallholders with a strong social network can draw upon their social capital to strengthen their position within a value chain.
Agribusiness is emerging as a specialized branch of knowledge in the field of management sciences. In this context, agribusiness can be defined as science and practice of activities, with backward and forward linkages, related to production, processing, marketing, trade, and distribution of raw and processed food, feed and fiber, including the supply of inputs and services for these activities.


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