There was a time, not so long ago, when agribusiness referred to a farm input-providing business. This was readily translated into everything involving goods and services that revolved around agricultural commodities. Commodities are the raw products from crops and livestock that cannot be differentiated on product quality. Farmer John’s corn is essentially indistinguishable from Farmer Susan’s corn in the market.
Ag Commodity Markets: As farm commodities move from production to retail, they move through processing and distribution sectors that add value to the undifferentiable commodities. Once a commodity is transformed into a product that can be branded, or differentiated, firms are then able to raise or lower their prices. Marketing has more of an impact on sales when the products are branded.
Value Chain Markets: Over the last few decades, much more attention has been paid to the power of managing the movement from inputs, commodities, value-transformation, to retail. Managing the supply chain from input providers up to retail, or the value chain from the retail-level, down. Today’s best-known poultry companies began as input suppliers, operating feed mills and worked their way to providing food to the retail grocery stores and restaurants. Business opportunities along the market channel are larger than simply supplying inputs for commodity production.
Bioenergy, Fiber, and Non-food Markets: Nearly 20 years ago the dry-mill ethanol industry erupted. Not long after, the pellet-fuel industry grew so fast that new U.S. ports were built to accommodate new export markets for value-added sawdust (pellets). Both are miraculous stories. Another miraculous story is the evolution of everything biobased or derived from plant components. Some of this is due to the federal bio-preferred policy that establishes market standards for biomass-derived goods and services for which the federal government is incented to purchase. There is a statutory preference to purchase bio-based products. Located somewhere in this basic hierarchy of non-food retail markets, are orchards and experiential agricultural businesses. Some consumers are willing to pay more to experience food production and have connections to food producers. All these food-production adjacent markets use the same skill set and often are interdependent on traditional agricultural commodity markets.
Climate and Environmental Services Markets: Expanding federal and state policies that elevate climate-related markets have influenced these new markets. In addition, there is a growing group of consumers who are authentically willing to pay premiums for climate mitigating products and services. Investors are betting billions of dollars on renewable and climate friendly technologies. It is more than one-sided, single federal policy that is driving these events. There are links to demand, available investors, and policies. The EPA oversees the Renewable Fuel Standards even though biofuels provide energy products to the marketplace.
As illustrated in previous posts, it is difficult to get all the related industries under the same economic ‘umbrella’. Each of these categories: agriculture, food, renewable energy and products, and carbon markets with environmental services; each have their own culture, language, policy, and market influences. But there is one common thread that all these expanding markets hold in common. New business opportunities to utilize skills surrounding agricultural-related products and services have exponentially grown for a labor force with critical-thinking, applied science, backgrounds in agribusiness.