MAM 052 Solved Guess Paper for Agribusiness Management and Policies, IGNOU MBA (Agribusiness Management) MBAABM and PGDAB

Agribusiness: definition, scope and nature

Question: Define agribusiness. Explain its scope and nature.

Agribusiness makes food and fibre available at the right place, in the right form and at the right time. The term was first used by John H. Davis in 1955 at a conference in Boston, USA. Davis and Ray A. Goldberg (1957) defined it as the sum total of all operations in making and distributing farm supplies, production on the farm, and the storage, processing and distribution of farm commodities and items made from them.

Three sectors of agribusiness

1. Input sector: supplies seeds, fertilisers, plant protection chemicals, machinery and fuel to farmers.
2. Farm sector: produces crops, livestock, fish and forest products.
3. Product marketing and services sector: handles processing, storage, transport, wholesaling, retailing and marketing of finished products.

Scope of agribusiness

1. Wide coverage: input supply, farm production, food processing, logistics and marketing all come under it.
2. Varied agro-climatic conditions: tropical, sub-tropical and temperate zones let India raise many crops and animals.
3. Changing consumer needs: demand for processed food is rising in domestic and global markets.
4. Growing demand for inputs: improved seeds, feed, fodder, fertilisers and bio-fertilisers are needed more each year.
5. Diverse enterprises: manufacturing, finance, technical services, processing and marketing firms all work here.
6. Stronger infrastructure: it expands credit, spreads modern technology and promotes organised marketing.
7. Forward and backward linkages: storage, processing and marketing on one side, inputs, credit and technology on the other.
8. Employment: it creates jobs across the chain.
9. Value addition: it adds value to products and raises the net profit of producers and sellers.

Nature of agribusiness

1. Management varies from producers to brokers, wholesalers, processors, transporters and retailers.
2. Large and complex: many products move through many marketing channels.
3. Great variation in size: some units are very large, many are one-person or one-family units.
4. Family-oriented: most farm units are conservative, subsistence type and family run.
5. Seasonal: farm output depends on seasons and on the weather.
6. Market-oriented: every activity is driven by the market.
7. Integration: vertical integration is common, with some horizontal integration and conglomeration.
8. Government impact: public programmes directly affect production and performance.

Conclusion: Agribusiness covers the full chain from farm inputs to the consumer. Its wide scope and special nature make it a key sector for jobs and growth in India.

Diversification in agriculture: objectives, scope and avenues

Question: What is diversification in agriculture? Discuss its objectives and scope. What are the avenues for diversification and how does it contribute to sustainability?

The Green Revolution raised output, but it also brought high input costs, overuse of water and chemicals, and damage to land and biodiversity. Diversification is advocated as a useful strategy to reduce the effect of unpredictable swings in farming and to tackle concerns over food security and the degradation of natural resources.

It means a shift from less paying crops to more paying ones such as oilseeds, pulses, fodder, horticulture, medicinal plants and floriculture, along with livestock and fishery. It may imply (i) a shift from a less profitable crop or enterprise to a more profitable one, and (ii) the use of resources in diverse but complementary activities.

Short-term objectives

1. Higher income for farmers, especially small farmers.
2. Full employment of farm resources.
3. Stable income across seasons.

Long-term objectives (sustainability)

1. Conservation of natural resources.
2. Restoration of the farm's natural capital, such as soil health and natural pest control.
3. Less dependence on costly inputs.
4. Efficiency in resource use.
5. Resilience: stronger production systems with less harm to the environment.
6. Benign food systems that do not harm the long-term health of the agro-ecosystem.

Scope in Indian agriculture: conditions range from temperate to tropical, and ICAR and state agricultural universities have developed area-specific and climate-specific technologies.

Avenues for diversification

1. Pulses and oilseeds: India still imports large amounts of both, so growing them saves foreign exchange and improves nutrition.
2. Fodder crops: rising milk demand needs more area under green fodder.
3. Horticultural crops: fruits, vegetables, spices and flowers give higher returns, jobs and exports.
4. Medicinal and aromatic plants: demand is rising and the crops are labour-intensive, so they create rural jobs.

Conclusion: Diversification lowers risk, stabilises income and protects natural resources, so it supports both farmers' welfare and the sustainability of Indian agriculture.

Farmer Producer Organisations: nature, comparison and promotion

Question: What do you mean by Farmer Producer Organisations (FPOs)? Differentiate between FPOs and traditional cooperatives. Explain the process of promotion and development of FPOs.

A Producer Organisation is a legal entity formed by primary producers such as farmers, milk producers, fishermen, weavers, rural artisans and craftsmen. An FPO is a producer organisation whose members are farmers. It is run by hired professionals under an elected Board.

Difference between FPOs and cooperatives

Process of promotion and development of an FPO (11 stages)

1. Cluster identification: the Resource Institution chooses a cluster of 8,000 to 10,000 farmers in 80 to 120 villages.
2. Diagnostic study of farmers and farming in the area.
3. Feasibility analysis: financial, technical, legal and social.
4. Baseline assessment through household interviews and group talks.
5. Business planning with at least 10% of farmer members.
6. Mobilisation of farmers into Farmer Interest Groups (FIGs).
7. Organising and finalising: about 50 to 70 FIGs form an FPO; registration follows after 18 to 24 months.
8. Resource mobilisation: financial, human, technical and physical.
9. Management systems for finance, HR, stock, marketing and audit.
10. Business operations: procurement, processing, marketing and financial services begin.
11. Assessment and audit for transparency and accountability.

Conclusion: Producer companies keep the spirit of cooperatives but add professional management and freedom from government control. The careful 11-stage formation makes FPOs strong and lasting.

Agriculture, agribusiness and the dimensions of agribusiness policy

Question: What do you understand by agriculture and agribusiness? Discuss the important dimensions of agribusiness policy.

Agribusiness is an integrating science and practice, with backward and forward linkages, covering production, processing, marketing, trade and distribution of raw and processed food, feed and fibre, including the supply of inputs and services for these activities.

1. Agriculture: farm production is the central activity, and the traditional view treats only this as agriculture.
2. Backward linkages: credit, inputs and labour feed into production.
3. Forward linkages: retail chains, processing, marketing and exports follow production.
4. Indian view: agribusiness has three sub-sectors, namely farm inputs, agro-processing, and marketing and trade.
5. Share in GDP: in India agribusiness gives about 4 to 5 percent of GDP against 15.4 percent from agriculture; in the USA it is about 13 percent against 2 percent, which shows the growth potential here.

Dimensions of agribusiness policy

When the private sector was hesitant, the Government set up the Fertilizer Corporation of India (1961), the National Seeds Corporation (1963), the State Farms Corporation of India (1969) and State Seed Corporations.

1. Retention Price Scheme for fertiliser companies: started after the 1973 oil crisis; cost was worked out with 12% post-tax profit on equity and the gap to the uniform sale price was paid as subsidy, which built the fertiliser industry.
2. Era of liberalisation: from 1991 entry barriers went; Agri-Export Zones, capital subsidies, tax exemptions and Mega Food Parks now attract companies.
3. Research and development investment: the Protection of Plant Varieties and Farmers' Rights Act, 2001 protects new varieties, patents protect new molecules, and engineering firms can claim petty patents.
4. Contract farming and private markets: companies give inputs to get produce of the quality they need, and private markets end the monopoly of APMCs.

Conclusion: Agribusiness extends agriculture on both sides through linkages. Policies on fertiliser pricing, liberalisation, R&D and private markets aim to cut losses and improve marketing efficiency.

Food safety: definition, importance and basic principles

Question: Define food safety. Why is it important and an issue of global concern? Explain the basic principles behind ensuring safe food.

The Food Safety and Standards Act, 2006 defines food safety as assurance that food is acceptable for human consumption according to its intended use. It means no harmful contaminants, adulterants or toxins in food. "Unsafe food" is food whose nature, substance or quality makes it injurious to health, and the Act lists twelve causes of it.

Why safe food is a global concern (WHO fact sheet, 2015)

1. Many diseases: unsafe food causes more than 200 diseases, from diarrhoea to cancers.
2. Huge illness: about 600 million people, almost 1 in 10, fall ill and 4,20,000 die every year.
3. Children hit hardest: children under 5 carry 40% of the burden, with 1,25,000 deaths a year.
4. Diarrhoea: 550 million people fall ill and 2,30,000 die every year.
5. Linked issues: food safety, nutrition and food security are closely linked.
6. Vicious cycle of disease and malnutrition in infants, the elderly and the sick.
7. Economic harm to health systems, economies, tourism and trade.

Principles of safe food: the WHO five keys (2006)

1. Keep clean: hands, surfaces and utensils.
2. Separate raw and cooked food so germs do not cross over.
3. Cook thoroughly to kill harmful germs.
4. Keep food at a safe temperature to stop germs growing.
5. Use safe water and raw materials.

Processes for making food safe: safe and hygienic production and handling; procurement, processing, packaging, storage, transport and distribution; preparation and serving; and disposal of waste and expired food.

Conclusion: Food safety is a set of good practices from farm to fork. Following the WHO five keys protects health and supports trade.