Starting an agribusiness is an action thousands of Africans look forward to someday taking. They’re largely motivated to go into the industry because their governments have decided to show a certain degree of support to farmers, or they know a person or two who are into agriculture.
While just as any other business, agriculture can be profitable, most people who venture into it or intend to, make little to no research on what to expect in the industry. They believe starting an agribusiness will make them millionaires or highly successful entrepreneurs in the shortest possible time, and so, are not sensitive enough to make deep researches into what challenges, opportunities, and disappointments a lot of existing farmers already face. They simply follow the trend, start up what a person they know is already doing, and within two years, shutdown the farm to do something else.
If you’re starting an agribusiness soon but don’t know what to expect, here are 7 things to consider before you start an agribusiness in Nigeria, Africa, or anywhere else around the world:
1). Technical Know-How:
This is perhaps the most important thing to know when starting an agribusiness. Whether you’re venturing into fruits and vegetable farming, poultry farming, fish farming, or whatever, a lack of the right technical know-how could lead to a major loss of your investments.
You need to understand how to plan for any agribusiness of your choice, know the cost of equipment, the production techniques, the water content of the soil, irrigation, and a whole lot more.
Initially, it would be wise to hire an expert to help setup and manage your farm at its early stages, before you completely take over. This way, you’ll have enough time to learn from experienced hands and avoid pitfalls you may have fallen into either way.
2). Licensing And Registration:
Every business in all countries requires some form of registrations. This could be a company registration or an association registration. Whatever it is, you have to ensure you’re duly registered with all the right bodies and organizations to avoid stiff penalties for violation of rules you may know absolutely nothing about.
3). Choice Of Plant Or Animal:
Choosing the right crop to plant or animal to rear is crucial to the success of any agribusiness. When most people are starting an agribusiness for the first time, they tend to follow the popular trend and do what everyone else is doing. This ends up leading to failures because they acted without insight.
According to the FAO, rice farming is one of the most profitable aspects of agriculture. But rice only grows in certain conditions. Again, pig farming is another profitable aspect of agriculture that could be ventured into.
No matter what aspect of agriculture you set your focus on, it’s important you do an extensive research, get as much information about its revenue and profit potential, find out the mortality rate for animals, and a whole lot more.
Beyond just choosing what to plant, you should also consider the use of hybrid seeds in your farm. This way, you can greatly improve your farm yield and maximize your profit margins.
4). Condition Of Farmland:
After deciding what to plant or not, your efforts could entirely go to waste if you’re operating from a farmland with the wrong soil type or atmospheric conditions.
Some plants thrive in moist soil, others in dry soil, and many others in highly controlled environments. Starting an agribusiness without considering what soil type is best for your business can lead to wasted efforts and investments.
5). Potential Risks:
You need to consider the possibility of environmental hazards and threats like insects, snakes, rodents, and more. If you’re running a snail farm for instance, you have to be careful to completely seal off the environment from rodents or other animals, because an intrusion could lead to a loss of over 80% of the entire snails you’re managed to raise.
Likewise, you must ensure your snails are not close to your vegetable farm because they could destroy the entire farm in a short time by consuming a great part of the crops.
The potential risks involved in any agribusiness must be carefully analyzed, and crucial steps must be taken to mitigate against them.
6). Available Market:
While certain farm products may excite you to venture into their growth, there may be little to no market demand for it in your community or country.
Before you venture into the cultivation of any crop, it is important you explore the available market, determine its size, examine its potential for scale, and also consider the possibility and feasibility of exportation.
By starting an agribusiness with an all-year-round demand, you can be certain to growing a venture that guarantees a constant cash flow.
On the other hand, venturing into something with little to no demand will most-likely lead to a complete waste of your investment (no matter how much it is).
7). Financial Analysis:
This is one of the most important things to know and must be paid careful attention to.
Before the start of any business at all, a careful and highly-detailed financial analysis must be carried out to determine how profitable or not the business is, how long it may take you to break-even, the potential expenditures, and a whole lot more.
By doing a thorough financial analysis, you can better understand how to create a budget and put your money to good use.
What are your thoughts on these 7 things to consider before starting an agribusiness in Nigeria, Africa, or anywhere else around the world? Let me know by leaving a comment below.