Five(5) MOST Important Things You Should Know Before Venturing Into Agribusiness.

Invest In Agriculture

It is important you understand the term AGRIBUSINESS and what it really means. Today, I will share my knowledge of Agribusiness with you so you can decide on which aspect you will focus as a fulltime business or part-time.

 

What is Agribusiness?

 

The term Agribusiness is used in agriculture for the various businesses involved in food production, including farming, seed supply, agrichemicals, farm machinery, wholesale and distribution; processing, packaging, marketing, and retail sales.

 

In a simplistic term, anyone can invest or participate in agribusiness. This is not just the production of food which involves rearing of animals and cultivation of the soil, all the activities that involve the transformation of raw food into an edible state could be termed Agribusiness.

 

Therefore, you do not need farmland to market money in Agribusiness and you must not own a poultry farm to earn money from the industry.

You can start distribution of DOC (Day Old Chick) across to poultry farmers in your community, sell chicken feeds, sell drinkers/feeders and other poultry materials.

 

Let us assume you want to venture into the sell of HONEY but you do not have a bee farm, but you know how to construct beehive, that could be your full-time business. You can monetize this knowledge, build a company that is into construction and setting up bee farms for people.

 

It means you into the agribusiness. You are supplying farm inputs.

 

We have rural farmers who have zero knowledge about fertilizer application, this could be your money-making business. Buy original fertilizers, sell to them and teach them the right way to apply to their crops.

 

Though there are business opportunities for everyone interested in Agribusiness, you must undergo some phases before investing in any aspect, and this article is for you if you are interested in agribusiness/agriculture.

 

 

Follow the steps below,

 

NUMBER ONE: Knowledge Gap

Before you commit your funds into any branch of agriculture seek some prerequisite knowledge about that line of business.

 

For example: You want to venture into “Poultry Business” conduct deep research and ask the right questions. Google can assist you to answer some of these questions but don’t limit your information source to google alone.

 

Meet practising farmers in that your line of business and ask them serious questions. Don’t ask questions like, “What is a pen” such questions clearly show that you are not serious and don’t know the use of the internet.

 

Know a lot about birds before you invest in poultry. Study that line of agribusiness first, do not invest base on popular assumptions, study the figures and understand your target market, know their purchasing power.

 

It is unwise to breed and N3,000 bird in N1,500 market. Know how much your customers can pay for your product and adjust to fit their purchasing.

 

NUMBER TWO: Finance(Owners Capital)

Money is the second thing. When having the basic knowledge of that particular agribusiness line, you’ll automatically know the total amount of money you need and how to manage it.

 

For example: Maybe during your research, you discover that 100 birds can consume 15 bags of 25KG worth of feed within 6-8 weeks.

And 25KG cost ₦4,000

Therefore ₦4,000×15=₦60,000. You’ll know feeding 100 birds for 8 weeks cost ₦60,000.

 

Let’s assume: Vaccination would cost ₦10,000 for 100 birds within 8 weeks.

 

The cost of pen construction, Calculate the cost of power supply, water, workers salaries for the number of weeks and put it down. Then, you can confidently tell how much money you need for rearing 100 birds for 8 weeks.

 

This will help you in planning, you wouldn’t be asking annoying questions like: “I have ₦25,000 which agribusiness can I invest in“.

 

The punchline is: Sit down and do the money calculation and pick a business that fit your budget. Maybe rearing of birds is above your budget, try selling of poultry feed.

 

NUMBER THREE: Value Chain Analysis

What is Value Chain?

Value Chain in agriculture describes the range of activities and set of actors that bring agricultural products from production in the field to final consumption.

 

If you sit down and carefully study the value chain of plantain production, you might discover that is better supply ripe plantain to final consumers than cultivating plantain.

 

You may also discover that you have the competitive advantage of marketing farm inputs such as fertilizer, hybrid seeds, herbicides, pesticides, and others than trying to be a primary producer.

 

About poultry business; if sit down and calculate how farmers feed their birds from day old to table size, you’ll discover that is better open an abattoir than rearing birds.

 

Do a careful value chain analysis in order to know where to invest your limited resources. Some individuals with money shouldn’t be thinking of primary production, that might be a waste of resource.

 

People with money should be looking at food processing. You can invest in tomato processing instead of cultivating 200 hectares. Maybe rice processing will pay more returns than engaging in primary production.

 

 

NUMBER FOUR: Endurance(Patient)

Farmers are patient people.

Invest and give your farm time before you think of reaping money to buy a car for your personal use. Also, 2+2 is not always 4 in agriculture. The total might increase or decrease, but be patient, try again, pay more attention and you’ll reap your profits someday.

 

I invested in pig production a few years back, did my paper calculation like most people will do and it was in millions of Naira. I was expecting 100% returns within 6-9 months but the plan failed, but as a real farmer, I have to move forward than dropping agriculture like most first-timers do.

 

Do not invest N3,000,000 in poultry production and be expecting 100% return on investment within 8 weeks because someone told you broilers are sold at week 8, uncertainties of life might hit your investment hard.

 

Invest in time. Your first cycle might not pay you a 100% return on investment, but never give up, try again and again.

 

Don’t use your house rent money to invest in agriculture except you are ready to fight with your landlord. All business have maturity period, give your agribusiness time to grow.

 

NUMBER FIVE: Value Addition

Maybe is better you buy raw cassava from rural farmers, process into Garri, starch, Ethanol, cassava chips, cassava flour, etc and sell than cultivating cassava yourself.

 

Maybe is better you buy Honey, package and resell than trying to set up a bee farm. Or you can equally do both? I made a lot of money trading money without a bee farm, all I could do was buy original honey, package neatly, and sell.

 

I was making more profit than the primary producer. I had a good market and the rural farmer couldn’t access my market. You do not need a fish farm to start earning money from the selling of fish, buy from primary producers and sell, cash out your money.

 

No excuse.

 

There is money in the muck.

If you are prepared to do work others don’t like or won’t do, there is often a killing to be made” -Joanne Hession.

 

There is a huge market for the supply of farming inputs and a lot of people haven’t seen the goldmine, so all the see and talk about is investing a huge amount of money in primary production of crops.

 

 

 

My humble advice for you is to do what others are not willing to do, there is a killing to be made there. Invest in chicken meat processing instead of risking your capital to start at the stage of primary processing, maybe you should invest in agricultural machinery supply across Africa.

 

If you are doing this, you are in the Agribusiness/Agriculture already.

 

In all you do, do not be jobless in Nigeria/Africa when agriculture can employ.

Written by Denison

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