FARMING AS A BUSINESS MODEL 2

We talked about the value chain and the angle to which each of the concerned viewed the agric business. Let’s see the point of correlation between the farmer, market audience and the value chain.

The farmer’s expectation

Every farmer wants to get good seeds that are disease free and ensure they grow at the shortest possible time. He wants to ensure the yield are up to his expectation and supplies his clients as at when due and in the right demanded quantity. A shortfall from any of these keeps the farmer worried about the survivability of his farming venture.

However a lot of these expectations have been impaired by lack of finance and adequate modernization of the process. It takes the modernization of agricultural process to make it completely commercial venture. The old practice of crude tools will in no way result to profitability no matter the input of the farmer. Just like other business models, it takes volume sales and turn over to achieve profitability.

The Investors concern

The investor is worried about every sector of the value chain, as this helps to induce profitability and reduces down time. From the quality of seeds to the harvesting and production of the produced as finished goods.

In case of food crops, the quality of seeds/ vegetation used is of great concern, as this helps to give the agro industry a direction to where its going. A low quality seed is sure of not boosting the profitability of the industry. Take for instance the pineapple value chain. The fruit comes in various species and they differ in the juice production. There is the species that is small, not juicy but rather very sweet. The other comes in huge sizes, with thick fibre, juicy but not sweet. The output in terms of fruit juice is a function of what the agro allied industry is aiming at as its finished product.

Same goes for oranges, mangoes and bananas.

As lucrative as farming venture is, it requires an understanding of the present day environment and the antecedent in the sector. In an economy like Nigeria, it is about understanding the economics of scale; the demand for the produce, its availability and sustenance.

One of the challenges faced by the Nigerian agricultural sector is the processing and preservation of farm produce. Right from the farm to the point of sale, this is where the industrialization of the sector would be appreciated.

Until the right enabling environment is put in place, investors may still be faced with the high cost of doing farming business.

It is important to know the sector of agriculture you desire to venture into, food crops or cash crop. Having a clear understanding helps put the business model into perspective. In subsequent post we would be looking at a general agricultural business plan that is bankable.