The Evolution of Agribusiness
Lending a fresh, uniquely global perspective, Harvard Business School's Agribusiness Seminaris the only program to assess the total food system from the perspective of every player in the vertical food system—from genomics to farms to supermarkets. This program is designed to help experienced managers anticipate and take advantage of new trends and opportunities in domestic and international agribusiness.
Ray Goldberg, the George M. Moffett Professor of Agriculture and Business, Emeritus, is currently teaching the course "Food Policy and Agribusiness" with Dan Glickman (former U.S. Secretary of Agriculture) at the Kennedy School of Government at Harvard. A founding father of the field, having developed the term and concept of "agribusiness" in the 1950s, Goldberg continues to spearhead the development of about a dozen new cases every year.
EE: When you began your study of the agribusiness industry more than 40 years ago, did you have any inkling of the astounding changes that lay ahead in areas such as biotechnology and the human genome project?
RG: I knew there would be enormous changes, but no matter how many projections I made, they were never wide-eyed enough in terms of what actually happened.
EE: The School's Agribusiness Seminar was ahead of its time even forty years ago. What led to its development?
RG: The idea for an agribusiness seminar for senior managers grew out of the School's MBA elective course, introduced in 1956 and based on a conceptual framework that John H. Davis, former U.S. Assistant Secretary of Agriculture, and I developed. In order to measure total value added of the agribusiness sector, we used input-output economic theory developed by Harvard professor Wassily Leontieff. At that time, U.S. agribusiness utilized 38 percent of the labor force, provided 40 percent of consumer expenditures, and accounted for 50 percent of all manufacturing assets.
The second major study I undertook was in agribusiness coordination, a systems approach to the wheat, soybean, and Florida orange industries. From this study, the agribusiness program developed a systematic way of approaching decision-making and positioning firms in the global food and fiber industries.
Incidentally, one of the students I taught back in 1956 still returns for our senior management seminars. I have had a very long relationship with our students as MBAs and as senior executives.
EE: That shows just how much there is to learn in this field.
RG: Actually, I believe it shows how fast the world is changing and that from the beginning we've never been able to teach the same course twice.
EE: In what ways are the issues you discuss today different from or similar to those you faced in the early days of the program?
RG: The issues I grappled with back in 1961 have been fundamental issues that have been with us throughout time. For example, I've always had to address the question of risk management. When people invest in agribusiness, they're not investing in just farming or processing or distribution, but rather in the margins at each of those levels. Going back to input-output economics, somebody's input is somebody else's output.
Thus, central to all of our cases from 1961 through the present is the idea that what people pay to consume food or are paid to produce food are both political and economic issues. We're examining not only a market system, but a political, social, and economic development system as well.
EE: Has the recent revolution in life sciences, characterized by the blurring of industries such as food and medicine, introduced new issues into the agribusiness seminar?
RG: Actually, life science issues have permeated our discussions for the last twenty years. This is because we have always had a futuristic orientation in our case discussions. I have tried to anticipate change by having the change makers involved in our case development. For example, about eight years ago, the provost of the University allowed me to develop a university-wide research program looking at how the genetic revolution is going to affect the food system. From that time on, we had participation from the Medical School, the School of Public Health, the John F. Kennedy School of Government, the Business School, and the Biochemistry Department. In addition, the research program had representation from all participants of the value-added system, as well as consumer groups and governmental leaders from the EPA, the USDA, and the FDA. In 1999, we developed an interesting case on Celera Genomics, the public company which was recently successful in mapping the human genome. Its CEO, Dr. J. Craig Venter, has been our guest for the last two years.
Incidentally, for every case our faculty group taught for the last 41 years, the senior executive of the firm or government agency being discussed is always present when we teach the case to our Seminar participants. In that way, we not only add a living dimension to the issues presented, but we gain valuable feedback on how well we've written the case.
EE: Unlike other fields of study that "went global" during the Eighties, agribusiness has had a global orientation right from the start, hasn't it?
RG: Yes. Agribusiness has been global from the start because the food system is global. For example, I developed the first Chinese agribusiness case at HBS, some 25 years ago.
In addition, addressing the economic needs of developing countries has always been integral to the seminar. An example of that would be my case on Amul Dairy, India, in which Dr. V.J. Kurian helped create a farmers' cooperative—involving landless laborers, small-scale peasants, and medium-size farmers—that changed the country's dairy system. This case study became an example for other cooperatives around the world.
EE: Was the Amul Dairy model emulated by others?
RG: Yes. Not only that, but it spawned a number of spin-offs, including new programs at the World Bank. In addition, the federal government then came to us looking for a way to retrain their economists to think more systematically rather than by individual commodities. In 1971, we created a specialized program just for economists of the Extension Service of the U.S. Department of Agriculture.
I should note that every U.S. Agriculture Secretary, starting with Eisenhower and through the Bush administration, has participated in our senior management seminar.
EE: The program has been quite influential.
RG: I believe it has helped to create an entire profession. When I received my doctorate in 1952 in agricultural economics, for example, agribusiness did not exist as a course of study. It has since become not only a word and a concept but a subdivision of agricultural economics, which in turn is a subset of general economics. Today there are more students majoring in agribusiness in the United States and other countries than in agricultural economics, in more than one hundred agribusiness programs throughout the world. In addition, we have our own professional organization—the International Agribusiness Management Association, with some 1,200 members worldwide.
EE: An impressive legacy!
RG: You know, even though I go through the numbers every year in an attempt to show global and domestic trends, at the end of the day what pleases me the most is that we're fortunate to attract high-caliber men and women not only to our profession, but to our seminar. In a way, it has become their seminar as much as it has been Harvard's. Without their help in the development of cases, their ideas and thought processes, and their participation, this program could not have evolved as it did. Today we have a thriving, integrated system that in many ways can trace its roots to HBS and to the excellent leadership of our industry. Naturally I take pride in our collective achievement. The attack on the United States on September 11th has also affected our Seminar and our case studies. Much of the unrest in the world is due to poverty, lack of access to food, water and the basic necessities of life. Our ability to address these problems in our case studies is crucial for long term global peace.
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