AGRIBUSINESS

Facilitator: Prof. S.R.Asokan

Extn: 627

(An Optional Course)

1.0 Credit
Room 213
Email: asokan@irma.ac.in

Background

Till a century or so ago farming was basically a subsistence activity and was self contained. Farmers
basically produced their own inputs such as seed, manure etc farm tools were supplied by local artisans
and the production was largely consumed on the farm or in the village. The small surplus that might
remain was collected by itinerant traders.
Technology especially after World War II had revolutionized agriculture in many ways. Inputs such as
seed and fertilizer which the farmer himself was producing had become specialized activities. The
modern inputs and improved farming practices increased production manifold. The huge surplus began
to be shipped to distant markets. This has spawned a range of activities away from farms such as
processing, storage, transportation and marketing giving rise to functional specialization and segmented
organizational handling. For each of these activities there are supporting activities such as finance,
research and development and others such as government policies. Further, the actions of one entity in
the chain affect other entities. If the consumers preferences are not incorporated in processing it not
only affects the processor but also the wholesaler and retailer of the products. However, these activities
had no center for control and the firms separately perform the various functions and make their
decisions. Price is the coordinating mechanism across the structure and that influences the behaviour of
various components. However, price and market mechanism alone is not sufficient to coordinate the
various activities when a firm is offering a differentiated product to the consumers. So other governance
structures apart from price and market mechanisms have emerged in order to coordinate the actions of
the various players in the agribusiness sub sectors effectively.

Agribusiness

Agribusiness sector is a 'chain' of industries directly and indirectly involved in the production,
transformation and provision of food, fibre, chemicals and pharmaceutical products.
Agribusiness encompasses all activities that are relevant to the eventual production, transformation /
value adding, differentiation, distribution and retailing of food, fibre and associated products. The
question then is, what to manage in the various sub sectors? Is it marketing, Is It finance or human
resources? Participants have exposure to these subjects in their first year. What is the gap in their
learning from other subjects which could impart some additional knowledge or skill relevant in the
context of agribusiness?
Agribusiness system consists of three broad subsystems. They are the input supply sector, farm sector
and the processing and distribution sector. It covers all the institutions and arrangement that coordinate
various activities in each of the subsystem. With the rising income and changes in consumer preferences
agribusiness firms are trying to cater to these consumer needs. Depending on the target segment the
firms are organizing their governance structure. Instead of spot market dealings which are fraught with
risk and uncertainty the firms are increasingly resorting to managed coordination that is, building
relationship along the supply chain through non market mechanisms. Such governance structures have

their own set of challenges. It is, therefore, pertinent to have an understanding of the entire picture in
which the firm operates in order to formulate appropriate strategy to perform better.

The course is covered in four modules.

Module 1 Introduction to Procurement Environment

Module 2 Procurement Methods
Module 3 Food Retailing
Module 4 Agricultural Inputs

Objective of the course

The overall objective of the course is to provide an understanding of agribusiness environment which
impact the management decisions. More specifically the emphasis would be on procurement systems of
agricultural commodities under different market structures and marketing of processed products at the
firm level. Since agricultural inputs are part of the supply chain which impacts the products agribusiness
firms provide their target segment the input industry is also covered in the course.

Pedagogy

As there are no standard text books available in the market, the teaching materials are collated from
various sources. These materials basically cover strategic management, supply chain, risk management
etc. Case materials available in different sources pertinent to agribusiness are used to further sharpen
the understanding. Assignments and a Project work form part of the learning.

Evaluation
Components

Assignments (2-3)
Mid and End term Exam
Project
Class Participation

Percent
30
40
20
10

ii

Course Session Plan

Session

1
2

Topic

Material

Module 1 Introduction and Environment

Introduction to
Agribusiness: A Prelude
Agribusiness
Procurement and Competitive Strategy
Procurement Environment for Agri Raw Materials
Agribusiness Environment
Risk and Risk Management
Discuss
From Supply Chain to Customer Value-The
Procurement and Logistics McDonalds Way
Read
Supply Chain ManagementDiscuss : Honey Case
Global Environment for
Read
Agribusiness
The WTO Agreement on Agriculture
Global Gap
Discuss : Cakewalk
Read
Food Safety
Food Safety and Consumers Concerns
Food Regulations in India
Module 2 Procurement Methods
Discuss
Varietal Planning, Production and Harvest
Demand Forecasting,
Scheduling Practices in the Indian Sugar Industry
Planning and Scheduling
Read
Demand Forecasting
Production Planning
Discuss
Quality Management in the Case will be distributed
Supply Chain
Read
Quality in Procurement
Read
Procurement Methods
Agricultural marketing
Spot Markets
Missing Chain ; E Mandis: Market of the future
Discuss
Introducing Contract Farming for Gherkins
Contract Farming
Read
Role of Contract Farming in Agro-Processing
Ryot Act
Procurement Methods
The ITC e Choupal Story
e- platform
Submission of Assignment

iii

Session

10

11
12, 13
14
15
16
17

18

19

20-26

27
28, 29
30

Topic

Material

Discuss
Amul Speeds up to Drive Past Retailers
Biyani Shelves Cadbury products on Pricing Tiff
Vertical Integration
Case of Broiler Chickens
Read
When and When not to Vertically Integrate
Case Discussion (will be distributed)
Read :
Futures Market
Derivatives
Future Trading and Procurement
Community Based
Discuss
Organisations
Girish Mohans Dilemma and Pepsi
Guest Lecture
Mid Term Examination

Warehousing
Case Discussion (will be distributed)
Module 3 Food Retailing
Discuss
Case will be Distributed
Read
Food Retailing
Retail Success and Key Drivers
Organised Food Retailing: A Blessing or a Curse?
FMCG vs Private Labels; Foreign Retail Investors
Cash and Carry
Submission of Assignment Status of Organised Retail in India
Read
Franchising
Franchising
The Entry Route; Franchise in India
Module 4 Agricultural Inputs
Agricultural Input Industry
Seed industry in India
Fertilizer Industry in India
Policy and Market
Indian Pesticide Industry
Environment for Inputs
Agricultural Machinery
Case will be Distributed
Discuss
Kisan Bazaar
Channel management
Read
Channel Management in Agricultural Input Industry
Presentation of Reports
Feedback and Review
iv

Form Groups of 5 for assignment and project work.

In addition to the assignment in the schedule short assignment will be given from time to time
based on the progress.
Important web pages that may be referred from time to time.
1 http://agmarknet.nic.in/
2 ministry of food processing : http://mofpi.nic.in/
3 Food safety and Standards Authority: http://www.fssai.gov.in/
4 Apeda: http://www.apeda.gov.in/apedawebsite/index.asp
5 National Horticultural Mission: http://nhm.nic.in/
6. National Commodity and Derivatives Exchange: http://www.ncdex.com/Aboutus/profile.aspx
7. Multi Commodity Exchange : http://www.mcxindia.com/
8 Directorate of Economics and Statistics, Ministry of Agriculture and Cooperation Govt of India
http://eands.dacnet.nic.in/Default.htm
9. World Trade Organisation : http://www.wto.org/
10. Codex Alimentarius Commission: http://www.codexalimentarius.org/
Besides you may have to refer to the web pages of different agropocessng companies, input
firms and modern retail.