# Agribusiness: Definition, Challenges, and Market Forces Explained

## What Is Agribusiness?

Agribusiness includes all economic sectors involved in farming and related commerce, from production to distribution. This sector is essential for economies, particularly those with significant exportable agricultural products. Agribusiness faces unique challenges due to market dynamics and climate change, requiring adaptation and innovation for sustainability and growth.  

### Key Takeaways

*   Agribusiness encompasses all aspects of producing, processing, and distributing farm-based goods, integrating traditional agriculture with high-tech advances.
*   The industry faces challenges from climate change, which pressures businesses to adopt sustainable practices and new technologies to remain competitive.
*   Shifting consumer preferences, such as reduced demand for red meat, can significantly impact the agribusiness market by altering the types of crops and livestock produced.  
    
*   Global competition in agribusiness demands efficiency and innovation, with farmers investing in technologies like bee vectoring and drones to manage crops and livestock effectively.  
    
*   Agribusiness is a major contributor to greenhouse gas emissions, accounting for about 17% worldwide, which adds urgency to innovations for reducing emissions.  
    

![Agribusiness](https://www.investopedia.com/thmb/8a2WAkz-u5mGBrVL-mdyDDaSkcI=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/agribusiness-final-e762ff8b78a4488b80446ff5dc9d3d53.jpg)

*— Investopedia / Sydney Burns*

## In-Depth Look at Agribusiness: Modern Practices and Technologies

Agribusiness, as a sector, is all the different aspects of raising agricultural products as an integrated system. Trading farm goods is among the oldest human undertakings, but advances in the last century have made it a high-tech industry. Farmers raise animals and harvest fruits and vegetables with the help of sophisticated harvesting techniques, including using GPS to manage their operations. Manufacturers have developed increasingly automated machines that require very little labor. Processing plants are constantly renewing how they clean and package livestock to make production cleaner and more efficient.

While consumers don't see each part of this industry, we rely on the sector's efforts to remain sustainable while aiming for lower food prices.

## Key Market Forces Shaping Agribusiness Today

Consumer attitudes and climate change significantly influence agribusiness.

Changing consumer tastes affect which products are grown and raised. For example, shifting away from red meat might cause [demand](https://www.investopedia.com/terms/d/demand.asp)—and therefore prices—for beef to fall, changing how thousands of acres of farmland are used. More demand for produce might change the fruits and vegetables grown, needing investments in better irrigation and production methods. Businesses that can't quickly adapt to domestic demand often try exporting their products. If there's no market, they may be unable to compete and remain in business without pivoting to other crops.

Climate change has increased the pressure on the need for sustainable practices in the industry, just as it's already adjusting to vast differences in worldwide weather patterns. But even short-term changes in weather patterns can have dramatic effects: an early frost in a citrus-growing region could cause a severe drop in that year's crop while less snowfall in a mountain region could mean a spring drought in surrounding valleys that depend upon the melted water for crop growth.

> **Fast Fact**
>
> Regulations also affect the agribusiness industry. Changes in chemicals, procedures, or legislation can cause market fluctuations.

## Overcoming Challenges in Agribusiness

Countries with a large farming sector face constant pressure from global competition. Products such as [wheat, corn, and soybeans](https://www.investopedia.com/corn-soy-wheat-for-investors-8546787) are [commodities](https://www.investopedia.com/terms/c/commodity.asp) that are similar wherever they are grown, making one area's product easily replaceable by another's if it can get to market at a lower price. There are many other challenges faced by farmers:

*   Global agricultural products prices can change rapidly, making crop planning complicated.
*   Farmers may also have less arable land to work with as suburban and urban areas expand into the farm regions.
*   Remaining competitive requires agribusinesses to operate more efficiently, often involving investments in new technologies, new ways of fertilizing and watering crops, and new ways of bringing goods into the global market.
*   Climate change is perhaps the greatest common challenge for agribusinesses worldwide. It is one of the industries most affected by and also involved in propelling climate change.
*   Agribusiness worldwide accounts for about 17% of the world's greenhouse gas emissions, helping to drive the rise in global temperatures, creating pressure on the sector to reduce emissions.
*   Agribusiness is also heavily impacted by the volatility in average temperatures and rainfall, as well as extreme weather. Heat waves, [droughts, extreme storms, and wildfires](https://www.investopedia.com/connection-between-nut-farming-and-fire-risk-8779589)—all exacerbated by climate change—can cause damage to crops and threaten livestock. Rising temperatures can threaten growing conditions for crops and could limit production in many regions, while the growing global population is increasing the demand for food.

All this represents a major challenge for agribusinesses, which face pressure to adopt more sustainable production methods. Finding ways to reduce emissions and adapt to a changing climate will be key to future success.

## Leveraging Technology for Agribusiness Success

The use of new technology is vital to remain competitive in the global agribusiness sector. Farmers need to reduce crop costs and increase yield per square acre to stay competitive.

Some farmers have adopted bee vectoring technology. This involves raising bees and using them as a delivery method for biocontrol agents, which can help protect plants from pests, fungi, and diseases.

Bees are key to agriculture, but populations have dropped in recent years. Almost half the honeybee colonies in the United States died between April 2022 and April 2023. This new technology can encourage more beekeeping and promote the growth of more colonies, while improving crop yields and fighting disease.

Electronic drones have also played a greater role in agribusiness in recent years. Farmers use drones for scouting pests, monitoring water stress, screening plants, finding stray livestock, and gathering flood risk data.

Robotics, GPS technology, and moisture sensors also help farmers improve worker safety and apply pesticides and fertilizers more easily across closely-targeted areas, and reduce wasted water.

## Prominent Examples of Agribusiness Companies

Agribusiness is a broad industry with a vast range of companies and operations. Agribusinesses include small family farms and multinational conglomerates in food production on a global scale.

Some examples of agribusinesses include farm machine manufacturers, such as Deere & Company ([DE](https://www.investopedia.com/markets/quote?tvwidgetsymbol=DE)); seed and agrochemical manufacturers, such as Bayer; food processing companies, such as Archer-Daniels-Midland Company ([ADM](https://www.investopedia.com/markets/quote?tvwidgetsymbol=ADM)); farmer's cooperatives; agritourism companies; and makers of [biofuels](https://www.investopedia.com/terms/b/biofuel.asp), animal feeds, and other related products.

## What Is an Example of Agribusiness?

Agriculture is the practice of raising crops, livestock, fish, trees, and other living organisms for food or other products. Agriculture has a long history—it is widely believed that humans began practicing agriculture at the end of the last ice age.

## What Are the Three Main Categories of Agribusiness?

Agribusiness can be split into three major categories—agriculture, livestock, and forestry.

Agriculture includes activities like planting and harvesting crops. Livestock concerns raising animals for products like milk, eggs, or meat. Forestry involves planting, growing, and harvesting trees for construction, papermaking, and other purposes.

## What Is the Most Profitable Agribusiness?

According to the United States Department of Agriculture, the top five products in the U.S. are corn, cattle, soybeans, dairy products, and broilers (chickens raised for food). The most profitable agribusinesses are likely involved in producing, processing, and marketing these products.

## What Is the Future of Agribusiness?

Agribusiness will likely evolve because of the effects of climate change. Other changes underway include the rise of genetically modified crops and industry consolidation.

## The Bottom Line

Agribusiness is a critical component of the global economy, integrating all aspects of food production from farming to distribution. It faces significant challenges, particularly from climate change, which impacts everything from weather patterns to sustainable practices. With technological advancements and market adaptations, agribusinesses must navigate a complex environment, requiring innovations in production efficiency and environmental impact reduction. Despite these hurdles, the sector remains vital, adapting to evolving consumer demands and contributing to food security worldwide.

> **Article Sources**
>
> 1.  The World Bank. "[Agribusiness Trade as a Pillar of Development: Measurement and Patterns](https://blogs.worldbank.org/en/developmenttalk/agribusiness-trade-pillar-development-measurement-and-patterns)."
>     
> 2.  United Nations Environment Program. "[Climate Risks in the Agriculture Sector](https://www.unepfi.org/themes/climate-change/climate-risks-in-the-agriculture-sector/)."
>     
> 3.  Mohapatra, Shurti, et al. "[Climate Change and Vulnerability of Agribusiness: Assessment of Climate Change Impact on Agricultural Productivity](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9645113/)." _Frontiers in Psychology_, vol. 13, 2022.
>     
> 4.  Lynch, John, et al. "[Agriculture's Contribution to Climate Change and Role in Mitigation Is Distinct From Predominantly Fossil CO2-Emitting Sectors](https://www.frontiersin.org/articles/10.3389/fsufs.2020.518039/full)." _Frontiers in Sustainable Food Systems_, vol. 4, February 2021.
>     
> 5.  Shipp, Les, et al. "[Effect of Bee-Vectored Beauveria Bassiana on Greenhouse Beneficials Under Greenhouse Cage Conditions](https://www.sciencedirect.com/science/article/abs/pii/S1049964412001594)." _Biological Control,_ vol. 63, no. 2, November 2012, pp. 135-142.
>     
> 6.  Bee Informed Partnership. "[United States Honey Bee Colony Losses 2022–23: Preliminary Results From the Bee Informed Partnership](https://beeinformed.org/2023/06/22/united-states-honey-bee-colony-losses-2022-23-preliminary-results-from-the-bee-informed-partnership/)."
>     
> 7.  National Institute of Food and Agriculture. "[Using Drones in Agriculture and Natural Resources](https://www.nifa.usda.gov/about-nifa/impacts/using-drones-agriculture-natural-resources)."
>     
> 8.  National Institute of Food and Agriculture. "[Agriculture Technology](https://www.nifa.usda.gov/topics/agriculture-technology)."
>     
> 9.  U.S. Department of Agriculture. "[Farm Income and Wealth Statistics, Cash Receipts by State](https://data.ers.usda.gov/reports.aspx?ID=17843#P01e443ab435e4c7e935f43d59f2fa539_9_17iT0R0x0)."