BENEFITING FROM THE AGRICULTURAL INDUSTRY

As much there are other forms of investment you could get involved in. One that is always and will continually stand the test of time is Agriculture.

There have been quite a lot of of direct efforts by the government of the day to revamp the agricultural sector and this has been yielding a lot of positivity. The sector accounted for the second  highest GDP non oil sector earnings, proving it to be a viable industry. The days of cutlass and hoe farming is beginning to dwindle away. The sector should be looked at like any other business with rich financial prospects for investors.

3 Ways to cash in from the Agricultural sector

1. Get a viable product: it is imperative to know which sector of the agricultural value chain is viable. Currently almost all produce are in huge demand in the nation at the moment. This can be connected to the high population density and a need of man's basic need of food to be met. There are some industry in the sector that are a instant financial success, such as Poultry farming, cassava propagation, plantain farming, water melon, pineapple, cucumber, aquaculture etc. This are some of the sectors you could go into and I would be glad to get you up and running.

2. Acquire the Prime lands: every government within the states would be more than glad to always at every point in time  open its corridors to agriculture. Look out for such areas with viability, they are spread all over the geopolitical zones. There are so many prime plots in the western states that have no form of agricultural plantation and have rich soil texture and structure that supports farming. These lands are easily acquired and sold for less than $9,000 per acre http://www.4321.co.il/property/ad706477.aspx. You could also get a lot less if you are purchasing a huge expanse, just like the one we just acquired for plantain farming.

3.  Get your business plans together: it is important that you have your comprehensive business plan together, as this would guide you in proper business management. It could also come in handy in acquiring a financial lease from the banks. It is important to note that a good business plan must clearly show your cash flow pattern in the short term and medium term, as well as long term. Do not be tempted to writing a very short term agribusiness proposal showing only a 12 months profit margin period. This pattern would not fly as agric venture needs a medium term business approach to profitability and break even point. Just as I have just concluded one for a client, you need to show how funds would be directly invested in the entire value chain of the chosen agricultural business. Ensure you exploit all the value chain, this is one of the ways the financial institution are harnessing all possibilities in their sector.

One of the major challenges of agric entrepreneur / investors, getting the right business plan that holistically supports their agricultural venture and this is our core strength.
There is no other time to invest in the nations agric sector and make huge profits than now. Make that life changing decision as we step into 2014.

FINANCIAL BENEFITS IN AGRICULTURE 2 …………………………..pathways to farming success………………..

Every intending farmer wants to ensure his produce is of high quality and quantity to meet the demands of their clients. It’s not debatable that agriculture is not profitable, yet some few small holder farms are barely struggling to survive. In as much as they are putting in much effort to farm their produce, the corresponding output in relation to profit is on the decline.

Here are three(3) steps every farmer should take to enhance steady income generation.

1.  Know the product/produce: it is important to have a foundational knowledge of the product you want to cultivate or rear. It’s not just about cultivating maize for instance and making sales. Having an understanding of the climatic condition and the diseases associated with the crop is very essential. Armed with this knowledge will help you as a farmer to reduce the unforeseen risks to the barest minimum. One of the major challenges to any agricultural venture is the risk involved, which is often disease control and theft. You need to know the common disease and take safety steps to combat such, should it occur during the farming period.

2.  Draw up a feasibility survey: as important as this is, a lot of farmers have intentionally omitted this aspect of farming and they are paying dearly for it in the long run. A feasibility survey helps to bring into the open, risks and steps that could be avoided or combated during the growing period. It clearly shows you the stage you are in and what to do at such stage. A lot of farmers usually get stocked during the growth phase of their produce; they do not have the knowledge capacity to prepare for the next cycle without losing ample time. Usually, some farmers wait until they have completely harvested all their stocks before planning or preparing for another cycle. Adopting such a process could make you loose a lot of propagation time, especially if you are propagating/rearing an all year produce.www.4321.co.il/property/ad692704.aspx

3.  Draw up a comprehensive Cash flow analysis: this is a big challenge for farmers, especially when they are not educated in such. I have often times come across farmers groups and they hardly do such in their record that is if they have any.

To become a successful farmer and trailing your profit margin, you need to understand the three models explained above. Especially drawing up your cash flow analysis, this is the map to farming profit and break even points. Irrespective of the model, fish farming, poultry farming, crop propagation, processing etc you need to have a cash flow.

In the quest to ensuring farmers and would be entrepreneurs take advantage and harness the opportunities of farming in Nigeria, we are holding a seminar tagged: ‘FINANCIAL BENEFITS IN AGRICULTURE’ in September, in Lagos Nigeria.

We encourage every intending agric entrepreneur home and abroad to make a date with us to attend this revealing seminar, as we would be harnessing the opportunities in three agric ventures; POULTRY FARMING, CATFISH FARMING, CASSAVA PROPAGATION.

FINANCIAL BENEFITS IN AGRICULTURE (1).

…….. 3 things you need to know……………………………

Having highlighted the reasons why banks shy aware from some agricultural venture, it is important to note that agriculture in any form is a very lucrative and rewarding venture. There is a known fact that every living creature needs food to survive. The potential clientele in the sector cuts across every living being.

In harnessing the benefits accrued in the sector it is necessary you have in the following information at your disposal.

1.   The kind of venture you want to exploit; as mentioned earlier in my posts, agriculture is majorly divided into two; plant cultivation and animal husbandry. For plants is further divided into food crops and cash crops. Irrespective of the type, it is highly profitable. You need to decide your cultivation preference, either crops or animal husbandry. This needs to be accompanied by the desired knowledge about that chosen venture, plants or animal. Get some basic knowledge about the fundamentals to the propagation of the crops, as well as the animal husbandry chosen. The processes involved in the rearing stage, that is the life span and the possible challenges that are often encountered in the process. Every agric business has got its peculiar challenges.

2.  Get the desired land; this we have in abundance in Nigeria getting one isn’t much of a challenge. The topography and soil structure must be such that should support your preferred agricultural venture. There is no point getting a huge limestone deposit site and intend to use it for agricultural purposes its dead on arrival. There are huge expanses of land in the six geopolitical zones of Nigeria that are very suitable for farming. These prime plots are less than N2million naira ($20,000) for one to two acres of land. With such size or even less, you could considerable make good income for yourself in your chosen agribusiness. Putting into consideration your cost and revenue ratios, making profit will be a mile stone away.

3.   Get knowledge; this will help you to create a pedestal to which you can lunch out. Do not get tempted to starting too big, test the waters and then sail along. Just as we advise clients it is important you know more of the risks involved and how to avert or better reduce the risk to the minimum. It is only when risk is reduced revenue rise above cost that profit is brought about. Agriculture involves some level of financial planning and intelligence and not just the cultivation or rearing aspect alone. To this end we are planning to hold a comprehensive training session, looking at three (3) agricultural models that anyone can venture into. We would be holding the seminar in Lagos, Nigeria in September. The precise date would be communicated to you in this blog.

Anyone can be an agric investor irrespective of the profession, lawyer, engineer, and clergy, whatever. It is a venture that encompasses any discipline. It’s basically about feeding the populace, the market is well over 130million people to feed, why not take the plunge.

4 Reasons why the banks May run away from your agribusiness.

One of the main stay of a stable economy, is its ability to provide for its citizens. Quite a lot of developing economies such as China, Philistine, Malaysia, Japan, to mention but a few have successfully provided for its citizen via agricultural venture.

No doubt Nigeria has a nation is blessed with available arable land and natural resources that would support the growth of any agricultural business.

However it takes the support of certain industries to ensure the success of a nation’s agricultural sector. One of such industries is the financial sector.

Quiet a number of banks are not involved in the huge financing of agricultural business. Not necessarily because they don’t want to, but rather the understanding of the life span of the venture is not within their corridors.

The Central Bank of Nigeria and a few of the commercial banks have programmes that support agricultural schemes, yet this is a far cry from developing the sector. Below are some of the few reasons why the banks often shy away from the venture.

1.    Life Span of the business: The life span of most agricultural venture takes long time to recuperate the initial investment, and most banks may not have the luxury of waiting that long. Every business has got associated risks attached to it, so is agriculture. Some of these financial institutions do not have the appropriate risk mechanism to ascertain the level of exposure of the risk venture, as a result accessing financial loans may be impaired.

Animal husbandry or crop propagation all take a long time to get the cash flow balanced, coupled with the fluctuating weather conditions. A lot of technical issues are left unanswered and these are some of the factors the banks looks at.

2.    Improper business plan: It is important to have a well written business proposal before accessing that loan desired. The plan needs to spell out every detail that is important to the success and failure of the business. The risk factors have to be spelt out to the letter, indicating the Strength, weakness, opportunities and threats of the business. A business plan without these indicators is like car with faulty dash boards. The banks want to see the risk involved in the business and the steps you would take to mitigate against these perceived risks.

Never try to impress with your business plan by stating only the benefits and profits that may accrue. Every business has got its risks. On assumption that there is no risk in your agric venture, just shows that you are not ready for any financial lease and the proposal would definitely be thrown out or flushed.

3.   Cash flow statement: Every sector has got its professional jargons. You need to speak in the language the banks understand. The business proposal should clearly state how the cash would be disbursed into various sector of the business. Just showing that the fund would be used to purchase assets and liabilities for the agric business is not enough. There has to be a clear flow of where, when and how it would be shared. The basic salaries of workers, purchase of items(assets and liabilities), proposed cost and selling price, gross income, taxes where applicable etc and most importantly how you intend to pay back the funds and in what manner.

The statement must be done professionally and well tabulated. Make the figures talk, that’s what matters and not how fulfilling the business may seem to you. It’s all about their money and how you intend to pay back feasible. Understand this and you are half way through.

Having done all is not an absolute criteria for getting the desired funds. Everything still falls on the bank accepting to give you that loan facility or not, irrespective of the payback time of their funds.

The Importance of Agricultural Blue Print………..A business plan.

The success or failure of your farm starts from the business plan you have laid down. It is important to have a plan/ blue print to which stands as a guide. This will help you understand all the necessary inputs the venture requires.

Below are models that should holistically be viewed in your business plan

1.    Determine your scale of production: in this regard it is the production output that should be your target. It is very important you know beforehand what your output would look like. This helps to bring into perspective the amount needed for the venture as well as the man power needed to bring it to completion. It is not just enough to assume that your agric business will be on a commercial scale. Have a clear margin of your proposed income and profit written out from the very beginning. Put into consideration the required workforce to bring the plans of the scale of production into reality. Make the figures talk, write them down.

2.   Input the cost implication (variable capital): In agricultural venture, not all capital is fixed. Only the land is fixed. Never assume that the equipments are capital neither are they assets, as they invariable take money out of you for periodic maintenance. Funds will be needed in purchasing items such as livestocks, seeds, fertilizers, organic manure, overheads, logistics and procurement etc. The major source of income will be the output of the produce, be it livestock or plants, cash crops or food crops and other added services in the value chain. Treating these liabilities as assets will give you a wrong cash flow pattern for the farm and this could be detrimental on the long run. So many farms run like this have had cash flow problems.

3.   Regular streams of income: It is important you understand the economies of scale of the produce you intend cultivating or rearing. The demand trend and its availability during its seasons and off season. This will help you drive your market towards a targeted pattern. In the cultivation of seasonal crops, a backup crop or animal production needs to be put in place, to ensure the stream of income keeps flowing else the farmer may end up selling his produce and would have to wait till the next season. This will only leave long periods of redundancy. Structure the farm output in such a way that the flow of income is regular no matter how little. This structured model will help to carter for the small bills and overhead, don’t forget the machinery will need maintenance, either they were used or not.

4. Envisage risk: It’s unprofessional and cynic to assume that everything will go well because you have been handed a high flying business model. Oftentimes the beginning seems sweet with huge prospects, then the realities of a skipped plan begin to cripple in. At this point the farmer begins to wonder why the losses are coming in and fails to realize that the risks were not factored into the plan. I have come across quite a few in this category, especially in the aquaculture and poultry industry. Every good venture has its own risk, no matter how small. Plan for risks happening, factor in the possibility of losses, this will give you a higher leverage than the other farmer who does not have this in the scheme of things.

In preparing for the risks, you will have a clear understanding as to how to tackle it and reduce the effect on your business. It exposes your anticipated weakness and gives you a holistic approach to reducing that venture weakness.

These risks can’t be eliminated, but can be drastically reduced, so as not to have a high negative impact in the profit figures both in the short and long run

5.    Realistic Research: This cannot be ruled out as it helps the farmer identify his market and streamline his produce where necessary. It is not enough to identify the market, but also know the proposed demand for the produce, as this will help put a check in price of produce. An excess in the output will only force the price to drop, usually below the initial capital. This is often the case when the produce along its value chain cannot be properly preserved.

Assuming that the demand will always be on the increase is a wrong notion, as this will only lead to glut and crash in prices. I am not saying prices should always be on the high side, far from it. I am saying this based on the cost on overheads and production incurred when the goods are produced in excess in anticipation of supply.

In coming up with your agric business blue print, it has to be holistic. I often advice clients to have me hand them a complete overview of the agricultural venture they intend investing in rather than just having a business plan, showing only the income and profit. Neglecting risk and its mitigation is a short step away from failure.

It is important you get a complete step approach all the way as a guide as this will bring about the profitability in the business.

Please your feedback and questions will be highly appreciated as my team and I are here to ensure your farm succeeds.