The Role of Agribusiness in Development by Julie V. Stanton
January 23, 2016

Recently while surfing the internet, we came across this topic;

The Role of Agribusiness in Development: Replacing the Diminished Role of the Government in Raising Rural Incomes by Julie V. Stanton

And here is the abstract;

With increasing efforts to promote free markets, one must ask whether the impact on some agricultural producers may be less than desirable. Small producers with limited access to capital, technical assistance, and competitive buyers may be unable to participate in new marketing opportunities. Without recommending a
return to heavy government, this article  suggests development policy be enlarged to encompass agribusiness enterprises.
Localized agribusiness can help rural populations capture value added that is otherwise lost to external agents. This may require, however, a different governmental role, primarily in the provision of basic infrastructure, transparent policies, and the continued emphasis on availability of capital and technology.

From the body, here is an excerpt;

A significant worldwide trend in public policy in recent years has been to disengage decades of direct government involvement in the agricultural sector. Price supports, input subsidies, and publicly owned agriculture-related institutions have been increasingly dismantled in favor of private market determination of prices and other incentives. Generally speaking, the arguments  in favor of this approach center on the anticipated gains in production efficiency  that would arise from free movement of resources.

Contributing to this trend toward free market economies are the growing global efforts to liberalize trade by lowering tariffs, harmonizing other standards, and facilitating foreign direct investment. While the short-term adjustments to increased competition are recognized as potentially painful, it is generally agreed that medium-to long-term gains more than compensate.

Nevertheless, in a very real sense, the adjustment to removal of both domestic support structures and barriers to external competition may be especially painful for smaller producers, a group which is often the target of poverty alleviation measures.

When public support has been extensive and in place for long periods of time, private market offerings have typically been stifled if not forbidden. This implies that there may be some delay between public sector withdrawal of services and their replacement by private enterprises. Moreover,  even with such emergence of private offerings of agricultural support services, there are aspects of smallholder agriculture which make access to those services tenable.


Thus, an effective adjustment strategy in the post-reform era must include components that boost the ability of smaller producers to respond effectively to market incentives. In this article, we argue that development efforts must begin to strengthen the price side of producer income in ways that do not undermine efforts to reduce government involvement. More emphasis must be placed on facilitating the marketing aspects of agriculture, i.e., agribusiness, for producers with limited resources. Key is assisting producers  to overcome problems of imperfect markets and empowering them to be competitive participants in the market system. In the next section, we briefly review the breadth of the reforms that have been implemented in various countries, using Mexico to show how well those reforms achieved their goals. It is precisely where such goals have not been fully realized that agribusiness enterprises have strong development potential. We then discuss why smallholder agriculture is particularly unlikely to achieve full market integration under reform conditions unless other aspects of the economy are simultaneously addressed. Then, the traditional approach to development policy is contrasted with one that includes focus on market prices, and the opportunities inherent in agribusiness are discussed. Finally, we consider mechanisms by which such opportunities can be facilitated, keeping in mind the implications for public policy in promoting these alternatives.

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