This article is for people that have money and are ready to invest in agriculture. If you do not have money but know how to raise funds, you can read this article too.
I know you are interested in investing in agriculture and your mind is looking at primary production, but I have a suggestion to make. I am a farmer and know the exact challenges young people face trying to venture into agriculture.
Modern agricultural practices involve huge capital and this has built a tall barrage in from of youths who want to venture into commercial farming in Nigeria and Africa at large. I will be narrating this story from my personal experience so you can understand my message and further take action.
As an Agro consultant, I have seen wealthy individuals who invested in profitable agricultural projects in Nigeria but end up failing and never making their invested capital back. I mean huge projects that worth millions of Naira, and the problem have always been Lack of Management.
One mistake most individuals with plenty of money do is, they thought money is all they need to run successful and profitable farm, but that is a wrong assumption in the business of agriculture.
In some states of the federation, we have massive agricultural projects underused.
Here is the message I have for those individuals with plenty of money thinking of investing in Agriculture this year, do not invest in primary production. Yes, primary production is not for your type of person.
Just give me 3 minutes of your time and I will explain in a better term. I will be using Benue State where I reside as a case study and you compare my explanation to that of the situation in your state or community. We have more than 300 hotels in Makurdi, and the majority of these gigantic buildings are built and own by politicians.
The returns on investment (ROI) from building a hotel in a strategic location is instant because people lodge rooms and pay money on daily basis, so you do not have to wait for 5 months before getting paid. Though it might take longer to recoup capital invested, owners of such properties are certain that their investment is secured.
People that invest millions of dollars in logistics here in Nigeria do so because the returns are instant, they get paid daily. People that invest in Real Estate do so because they will be paid for life and their properties appreciate in net-worth constantly.
All the above-mentioned businesses required closed supervision and good management to become profitable.
We have wealthy Nigerians/Africans who invest in Logistics, Real Estate, Schools, Entertainment, sports, Fashion, and media(Radio, Television, and newspaper) business that have turned the management/control to competent hands to run the daily activities of such businesses.
The competent hands entrust with huge investments turned them into multimillion Naira companies that pay investors dividend for life.
Here is the miss-link, when such individuals venture into agriculture, management of the farms are given to either a family member, inlaws, and sometimes employ people with a paper qualification who have zero knowledge on-farm management.
Here is my humble advice to you if have plenty of money or maybe you want to empower youths in your community. Let me introduce this system, we do not have the finance to build or set up processing plants, though we have the knowledge and the farm management skills.
Build Farm Structures
Do this for us, if you love poultry or fish farming, build pens and lease out to youths who couldn’t afford to build. As a poultry farmer, the challenge I face daily is low production capacity. I have a huge demand for eggs in my community, I know the practical aspect of the business too.
If I have access to a 20,000 capacity layers pen for lease at a fair price, I will be able to pay the owner such fee to use the facility, nurture my birds in a modern pen, pick healthy eggs, sell and make a good profit.
I have been into pig rearing for some time now, my farm is based in an urban area where an empty plot of land is expensive if I must increase the size of my pen I need to build a bigger pen. I do not have the money to invest in structures, but if have such on the ground, feeding won’t be a challenge.
Rearing of livestock or cultivation of crops in agriculture is not a get Rich Quick Scheme, our return on investments most times do not come out as planned or at the planned date. So, most people are not patient to give their farm 1-3 years to start harvesting big returns.
They now invest in broilers production because they want to make 100% ROI within 8 weeks, therefore, they become frustrated and end up abandoning such projects when the result proves otherwise.
Here is the idea: Build farm structures and lease it out for people who are interested in farming but cannot invest in proper pens.
Provide Machines To Farmers
As a farmer and consultant, I have worked with over 1000 rural farmers closely and their number one challenge is mechanization. All the hard labour of food production are done manually and it takes them days and even months to work on a piece of farmland.
Now understand this, manual labour in agriculture cost more money than using machines. Here is what I mean, we (DENKOL FARMS) cultivated rice last year(2019) and we did our money calculation and labour took most of our potential profit. We did not use tractors, rice harvester, and other tools.
So, rural farmers have the money to pay for tractors to tile their soil. They cannot purchase a 30 million Naira tractor but can pay 12,000 for a tractor owner to plough their field for them. This could be a business opportunity for you to invest and earn money from agriculture without really cultivating the soil yourself.
Maybe you do not have the money to purchase a tractor but you can share this investment and money-making opportunity with your friends. Go ahead, discuss with them and launch an Agro company that will focus mainly on providing machines to rural farmers with modern tools that will easy their hard labour and you will get paid.
Investing 10 million Naira into an agro project you have zero knowledge on is sure failure in advance. Do not jump into practice because of those figures you see on a paper business plan, know the demerits of such project too.
Mechanization is the only way we can increase food production in Africa. Invest in modern farm tools and you will make good money without stressing yourself.
Build a company around this and allow rural farmers to cultivate the land and plant crops. Provide tools to them.
Provide Farm Inputs.
Our rural farmers basic need today in Africa is access to the right inputs.
Here is what I mean; As of 2019, I was working on a project with over 300 rural Rice, Maize, and Soybean farmers. Their complain was that, they couldn’t access original fertilizers for crops. Accessing insecticide and herbicide was equally a huge challenge.
While I was speaking with them, I discovered that money wasn’t the issue, they had enough money at hand but nobody brought the original fertilizer to them.
Not just fertilizers. Seeds and other inputs are needed in rural communities. Therefore, instead of investing in a wrong project and begging for buyers, marshalled such funds into the trading of inputs to farmers.
You can actually earn money in Agriculture without owning a farmland or involving in primary production. Invest in processing tools, lease them out and you earn a commission for years just as Real Estate and those hotel rooms.
Invest In Agriculture.