Development of Agribusiness Enterprises - Asian Productivity ...

sense that businessmen should produce what the market wants, rather than selling what they
can produce. The role of government is to devise policies to promote agribusiness.
CURRENT STATUS OF THE GLOBAL MARKET:
OPPORTUNITY AND CHALLENGE
Today the global market is characterized by the freer flow of resources. With regard
to the markets, two fundamental revolutions are occurring: (a) world markets are opening
up; and (b) information technology is becoming pervasive.
Twenty years ago half of the nations of the world were closed to market economies.
Today, perhaps less than 10 countries can still be considered as closed. The opening of
frontiers goes in parallel with the harmonization of business rules worldwide through regional
and global agreements such as GATT. Similarly, the opening of what used to be closed
industries, such as telecommunications, and privatization also mirror this trend.
The consequences of this fundamental trend are:
C more business opportunities
C more competitors than ever before
C greater vulnerability of nations, enterprises and people than ever before.
Opportunities
The changing trends in global markets will affect the agribusiness sector. The basic
roles of agriculture, especially in developing countries, remain its importance as a source of
foodstuffs, support for agro-based industry, and employment. In a more open economy, the
external sector becomes more important, and international marketing of agricultural products
is therefore extremely important. Trading of agricultural products is likely to continue
expanding in coming decades in response to rising populations and increasing food demand.
More open export markets in the future will provide market opportunities, especially for
those countries with production surpluses.
Some processed commodities such as oil, fruit and vegetables show a higher response
to income changes than that of basic staples. Similarly, the Food and Agricultural
Organization of the United Nations (FAO) has shown that processed products will dominate
future demand for agricultural products. Traditional commodities such as tropical products
have shown negligible growth, while cereals and sugar have shown negative growth, and
vegetable oils have exhibited moderate growth (Table 1).
Table 1 reveals that in the world markets, processed foods recorded the most rapid
growth. World markets for the traditional exports of ASEAN members have been
particularly weak. World exports of tropical products grew by only 1.7 percent per annum
over the past decade. The growth rate of vegetable oils was somewhat higher at 4.8 percent
per annum. Meanwhile, world trade in higher valued products such as meat, fruit and
vegetables, fisheries products and other processed commodities was far more dynamic.
Growth rates for many products exceeded 10 percent per annum over the past decade. This
reflects the high growth rates of many emerging markets and the high-income elasticity of
demand for higher valued products, including processed foods.
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