With the current hype on agribusiness, it is likely to get it all wrong and risk your investment if you get into it without proper information. There are statistics to support that the future is in the agriculture sector such as population growth and urbanisation but this is not enough. Developing a viable agribusiness enterprise requires research and this is the first step in coming up with a proper business model.
First, consider where in the value chain do you want to join. The agrifood value chain is broad stretching from inputs supply, consultancy, production, processing, marketing and distribution, support services such as transport, financing and insurance among others. This will be determined by your availability and capital outlay. For instance, if you are employed it’s advisable to shun a project that needs your presence day in day out. It’s also importantvto specialise in one area and perfect it rather than getting into several and mastering none.
Secondly, consider the market and pricing. A lot of people are getting into agriculture instead of agribusiness. This basically means deciding the products or services you will offer by analysing gaps or needs in the market. This could be products/services in demand but currently not in the market either partially or entirely. It could also mean products or services in the market but their delivery or quality could be improved. For instance there could be vegetables in the market but no vendors offering fresh ones or delivery services. At this stage it’s critical to analyse current market trends (consumer preferences), priced and outputs to ensure higher returns.
If one decides to do production (farming crops or keeping livestock) a number of factors such as land tenure, soil type, environmental/climatic factors will have to be considered in deciding the crops and livestock that are most suitable.
Another important factor is budget and financing. Developing an entire capital outlay for your agribusiness project is key. Like any business, it takes time to recoup your investment and this may take time depending on the products/services or the business model adopted. If one decides to borrow money, efforts should be made to match payment dates with cash flows to avoid penalties.
Government policies and regulations is also an important factor to consider. Get the necessary licenses and pay the relevant dues otherwise you can lose your investment due to non compliance. Government policies could aldo render you out of market through imports/tariff/taxation laws that affect the products or services you are offering. The availability of support services such as good roads and power is vital for supplyvof inputs and delivery of produce to the market. After setting up your agribusiness investment, it’s important to diversify by combining viable projects which can complement each other. Have a marketing plan for your business. Cash flows are the lifeline of any profitable venture and a good marketing plan will definitely increase your sales. This plan should indicate how you intend to reach your target customers and influence them to buy.