Agriculture Reference
In-Depth Information
4
The organization of an
agribusiness
Objectives
•
Identify some of the important factors involved in selecting the best organizational form
for an agribusiness
•
Understand proprietorships, partnerships, corporations, cooperatives, limited liability
companies, and strategic alliances as forms of business organization
•
Summarize the advantages and disadvantages of each of these organizational forms
•
Outline and discuss some of the special forms of partnerships and their relative advan-
tages and disadvantages, as well as some of the various types of partner
•
Discuss the scope and scale of cooperative involvement in the food and agribusiness
sector
•
Identify the basic principles that ensure that cooperatives serve the needs of member-
patrons
•
Understand the role and impact of current individual and corporate tax laws on a fi rm's
organizational structure
Introduction
An agribusiness may be a fi rm with billions of dollars of sales that employs thousands of
people, or it may be as small as an individual who is a part-time seed corn salesperson.
Agribusinesses may engage in a variety of activities that are related to the production,
processing, marketing, and distribution of food and fi ber products. Though the one-person or
one-family agribusiness is not uncommon, most of the actual business volume in agribusi-
ness is conducted by enterprises that employ hundreds or even thousands of people.
Every agribusiness is owned by someone, and it is the circumstances of ownership that
give an organization its specifi c legal form. There are fi ve basic business forms: the sole
proprietorship, the partnership, the corporation, the limited liability company (LLC), and the
cooperative. The form of organization is not necessarily dictated by the size or type of agri-
business: nearly every conceivable size and kind of agribusiness may use any of these fi ve
business organization forms. In addition to these fi ve forms, strategic alliances are also used
by agribusinesses as a form of business organization. Strategic alliances can take a variety of
forms, and represent an important way that food and agribusiness fi rms can work together.
The many advantages and disadvantages of each of the fi ve organizational forms must be
weighed carefully when attempting to choose the proper one for a specifi c fi rm because each
form tends to fi t some situations better than others. And, even if an agribusiness is organized
one way, customers, suppliers, and partners may be organized in another way. So, it is
