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Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! - Agriculture - Nairaland

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Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by saliubello(m): 8:47pm On Nov 24, 2016
Why is the Agricultural and Agribusiness Sector So Lucrative on Paper yet so Prone to Shocks and Failures?

The saying that "a good numbers of start up companies close down before they are even started" applies to agricultural business. But why is this so? Different opinions have been documented in the literatures about the reasons for their closure. Inexperience, pausity of funds, mismanagement, change in government policies and a host of other reasons.

Despite the lucrative nature of agriculture in all the various agricultural enterprises, why are they failing? I have seen large farms ( mechanised crop production outfits and Poultry farms) close down or still existing but struggling in the midst of abundance.

But why?

Here are some of the reasons:

1. IT STARTS FROM THE BEGINNING: The decision to invest in the agricultural or agribusiness sector is DEVOID OF ANY WELL LAID OUT PLAN AND VISION.
The concept just pops up from no where!

E.g Reading articles on

" Making millions from Cucumber farming" or

" tomatoe, a money spinner" or

" Make Millions doing dry season farming" or

"Make millions from Exportation with ease"

" Making it big from Plantain"

" Success story of youngster who made his first million at 18 exporting agro produce


To others, they have just seen a neighbour acquire wealth within a short time growing water melon or Cassava! <<< SMILES!..cassa.. what? >>>

Alot of us fall into some of those categories.

To others, a 5 minutes simple mental mathematics was all they did that spur them into the business.

This initial none-preparedness is USUALLY A RECIPE FOR FAILURE!

SOLUTION: Plan, plan and plan. Integrate your processes appropriately. Have stratergic plans to achieve your business aims. Take precautions. Heed to advises. But watch where you seek your advise. Think your thoughts through from A-Z.

E.g. A seed farmer can sell excess seeds as grains.
Feed your farm waste to your livestock (cattle, goat)
Generate power from bio waste to power farm house or workers shed.

2. PRINCIPAL CAUSAL OF FAILURE: I have heard or read countlessly of how a lot of people stumbled on the agribusiness they are into without training, learning, test trial on small scale or even understudying of any sort. I stumbled on Raising Layers birds after a good success with Quail Birds and Broiler grow out. I failed woefully. Some GOOD money is lost, precious time wasted.

The failures in the agricultural and agribusiness sector has more to do with INABILITY TO CLOSE THE KNOWLEDGE GAP AS AGAINST other known reason for business failure. We know next to nothing on the aspect of farming or agribusiness we are going into!

Ranging from the plant agronomy to farm management, farm planning, farm layouting, storage of produce, pest and diseases; including marketing and logistics, processing and packaging.

SOLUTION: Go for short courses like training, workshops, field days, open days if available, go on agro tourism to viable and enterprising firms before starting out.

3. Long gestation period: Unfortunately, Large number of us do not usually know that our prefered area of interest in agriculture or agribusiness USUALLY HAVE GESTATION PERIODS. E.G Im planning exportation of cocoa, cashew, kola or palm fruits. It will take 3-4 years before they mature to start giving me some returns.


Of course, short duration crops like vegetables and other annual crops can be be developed in the interim to sustain cashflow while we await the long gestation investments.

4. LONGER PAY BACK PERIOD: Profit taking and the payback period is usually long, The profit trickles in slowly with ease. Not for faint hearthed. Before your investment start bringing in money, think of other money generating ventures e.g for some vegetables (6 weeks -3months)

SOLUTION: Plan for CASH FLOW. ALWAYS HAVE A PRODUCT TO SELL AT YEAR ROUND. Invest in Irrigation accessories if need be!

to be continued.....

7 Likes 2 Shares

Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by saliubello(m): 8:48pm On Nov 24, 2016
BEFORE STARTING YOUR BUSINESS, CONSIDER THE FOLLOWING:

CAN YOU?
1. Identify The Right AgriBusiness Opportunities for you?
2. Determine your area of Core competence?
3. Determine your area Comparative advantage?
4. Determine the Product Market need analysis?
5. Meet the Basic standards?
Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by saliubello(m): 8:50pm On Nov 24, 2016
WHERE ARE YOU LOOKING?

POULTRY IS VERY LUCRATIVE:

Most new entrants will think poultry business is only about:
======Layers and Broilers Production
======Egg Production and Sales
======Sales of Spent Birds


But do you know that their is more to poultry than this 3 above.

Consider these other segments :

1. Farming Segment to produce feed components: Growing maize, groundnut, sunflower, soybean and sorghum

2. Feed Formulation : maize, soy meal formulation.

3. Imports : Bringing in of essential Amino acids, Vitamins, and medicine.

4. Fabrication of cage, feeders and drinkers.

5. Parent stock
6. Hatchery
7. Fertile egg
8. Pullet rearing
9. Layers
10. Table egg production
11. broiler production
12. specialized poultry slaughter
13. Live bird market
14. Distribution of egg
15. Wholesalers
16. Retailers
17. Export
18. Supply to eatries, hotels and school


Choose wisely the segment you wish to play
Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by saliubello(m): 9:01pm On Nov 24, 2016
Nobody can make it out here alone...the world's most successful didn't achieve it all alone. Alliances and partnership were formed. Go for the best partnership if you can.

That means you will be getting more with less.

2 Likes

Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by saliubello(m): 7:41pm On Nov 26, 2016
Venturing into agribusiness requires training and learning new skills of how best to manage your resource.

Are you ready to seek knowledge first or Gamble?
Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by Jofez: 10:08pm On Nov 26, 2016
Nothing good comes easily
Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by Mustack: 8:02am On Nov 27, 2016
I just can't take my eye off from this agriblog. everyday I learn new things.. one thing I know about agric is that you have to dedicate all your time commitment money how can you manage resource and strategies.

1 Like

Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by DammyOlu123(m): 11:13am On Nov 27, 2016
Very accurate piece. My dad also fell for the 'realize so-so millions'. We lost hundreds of birds, and the cost of feed nearly destabilized our financial security. Eventually, we settled on turkey farming, before the recession shut that one down too. Moral of the story:
Don't jump in!
I am going to go into farming, a few years from now, but I'm reading and studying aspects of agric like it's my compulsory course in uni. Mistakes of the father must not happen to the son.
Thank you so much for this thread. Maybe you'll save some hapless people from financial demise.

6 Likes

Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by Ademat7(m): 3:42pm On Nov 27, 2016
saliubello:
Nobody can make it out here alone...the world's most successful didn't achieve it all alone. Alliances and partnership were formed. Go for the best partnership if you can.

That means you will be getting more with less.

This is the bomb that will fast track achievement of our desire but our [b]CULTURE[/b]is against such; we r always scared of "what if I was killed by my partner "

3 Likes

Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by saliubello(m): 9:16pm On Dec 16, 2016
LETS LOOK CLOSELY AT THE TOMATOE VALUE CHAIN

This is just an highlight of the stages along the tomatoe value chain.

UPSTREAM:
1.INPUT SUPPLIERS
2. HIGH YIELD SEED==Disease resistant varieties.
3. GREEN HOUSES
4, NETHOUSES
5. TUNNEL HOUSES
6. AGRO CHEMICALS===Fungicides, herbicides, pesticides, Knapsack, Fertliser

FARMER: Rural farmer, elite farmer, absentee farmer, full time farmer

MIDSTREAM:
1. Commission agent
2. Assembler
3. Transport and Logistics
4. Packing
5. Processors

DOWNSTREAM:
1. Wholesaler
2. Retailer
3. Market
4. Distribution

Locate your niche along the chain and play actively in that niche.

1 Like

Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by saliubello(m): 9:29am On Jan 13, 2017
Ever thought of pawpaw plantation?

Pawpaw juice?

Pawpaw fruit mix?

Pawpaw based cream?

Pawpaw flavour for foods ?

Pawpaw powder?

Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by osita4ag: 4:56pm On Jan 15, 2017
saliubello:
Ever thought of pawpaw plantation?

Pawpaw juice?

Pawpaw fruit mix?

Pawpaw based cream?

Pawpaw flavour for foods ?

Pawpaw powder?

I am interested in everything pawpaw. From seeds to the whole value-chain.
Please how so i go about it?
Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by drberry(m): 6:50pm On Jan 15, 2017
Saliubello God bless you for this thread. Really learnt so much. I'm interested in Tomato and Beans farming. What do I need to know about it? Not just interested but I'm about starting this month or next. Thanks.
Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by saliubello(m): 12:23pm On Jan 16, 2017
drberry:
Saliubello God bless you for this thread. Really learnt so much. I'm interested in Tomato and Beans farming. What do I need to know about it? Not just interested but I'm about starting this month or next. Thanks.
send me a mail. Let's x-ray your farm dynamics together. Will be glad to share my thoughts with you.
Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by saliubello(m): 8:47pm On Mar 11, 2017
Recipes for failure in Agribusiness

1. When people invest in agriculture ( crop production or animal production) just because they heard or perceived high demand for a product or the huge market price or the high Cost Benefit Ratios. And venture into the trade with a poor knowledge of the dynamics of agribusiness plus input-output analysis. They are bound to regret.

2. Trial by Errors: When you start out in Agriculture and hope to learn the rope as you journey on without making any concrete plan to be trained either by a successful agri-preneur or plan to receive coaching and mentorship from a succeeding agropreneurs. You are bound to fail.

3. Farming by proxy: a delicate pit that has fallen many who have the zeal or passion for agriculture. It's your dream, it's your vision. No one will hold it in high esteem like you. The farm requires the presence of its owner.

Or send your proxies to trainings where they catch the vision thing too. Farming by proxy is a recipe to disaster.

4. Internet has all the solutions: As much as the Internet is full of resource for growth and development. Learning the sieve the chaff from the wheat is a delicate thing. Wouldn't you consider the adaptability of the concept you read about to your local environment. Not all concepts can work in our various areas.

E.g I read about bee keeping but in utilizing the knowledge; I didn't learn about siting the bee box in an appropriate environment until Bees started stinging my neighbors children and livestocks. Imagine the uproar and embarrassments.

Or the one who read about rainguns but have a borehole. Will it work efficiently? Instead of asking the vendor pertinent questions decided to import it himself. Eventually he bought near toys which never can perform the raingun functions.


More later

2 Likes

Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by saliubello(m): 11:24pm On Mar 18, 2017
Agribusiness Risk Assessment

Agribusiness is VERY profitable SIGNIFICANTLY. But then all business have risk factors. Same goes for agribusiness.

The Agribusiness with the highest risk factor is dependent upon what enterprise you engage in and what stage your business is in.


Identifying and assessing the POTENTIAL risk is critical to success.

Potential risk areas are:
1. Production
2. Market and Marketing
3. Human resource
4. Financial risk

Risks are factors that can cause losses to the business.

E.g
Low rainfall
Changes in market prices
Disease outbreak
Decision on where to site your venture
Decision on types of input go buy and use


Managing risk is a guarantee for success as IT ALLOWS THE FARMER TO EFFECTIVELY MINIMIZE the effects on his business.


RISK MANAGEMENT STRATEGIES

a.Market price information: Internet resources come in handy here. ICT has bridged the dearth of information gap. From your phone you could access information on areas where your commodities is needed,meet new buyers and price information sharing.

b. Production diversification : Diversifying your production base in view of available information.

E.g trying your hands on soybean if you predominantly grow maize.

Or growing Ewedu alongside your tomatoe

Or intercultivate cocoyam with plantain, introduce some Snails and your risk factors of failure is reduced greatly.

Or plant perennial crops like cocoa or kolanut or cashew while doing vegetables on the same land. If vegetables fail, your trees will hold forth for you.


C. Risk reduction input: Invest in hybrid seeds which are resistant to diseases prevalent in your area. It saves you stress and worries, but don't do it in large quantities. Try out in little quantities before scaling out.
Buy new R&grin herbicide's and pesticides. The old and banned agro inputs are now failing us. Glyphosate based herbicide is a banned herbicide worldwide. You can't export produce produced using them. They have long term residual effects on crops and animals.

D. Invest in low risk activities: Grow crops you have comparable advantage growing in your area.

Are you COMPETITIVE growing water melon in your area?
Are you competitive growing vegetables or low risk crops like plantain or cassava?




Continues later

2 Likes

Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by saliubello(m): 5:47pm On Mar 28, 2017
High yield Investment?
Is Agriculture a high yield Investment?
Is Agriculture, Agribusiness a money spinner?
Does Agriculture hold the key out of Nigeria Economic Problems?
Yes or No?
Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by saliubello(m): 11:17pm On Apr 01, 2017
Don't just start a business. .. Start a successful one!

In order to start a successful agribusiness; you must determine your area of COMPETITIVE ADVANTAGE.

Your competitive advantage is the aggregation of factors that set a business apart from its competitors and gives it a unique position in the market.

What is easier for you to market, advertise and distribute better than your competitors or other things in the same business line? Identifying that product is IDENTIFYING YOUR COMPETITIVE product; start it immediately.

I have learnt early that "Jack of all trade, leads you to be Master of None". Identifying that one product is the REAL DEAL for success.


Your identified product will be easier and cheaper to source, produce, market , advertise and distribute.

Identify yours today!

1 Like

Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by saliubello(m): 10:36pm On Apr 20, 2017
Anti Spam locked here no be small
Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by longjohnsilver: 10:13am On Apr 21, 2017
This is an eye opener for most people that want to enter agriculture, most people just venture into agro business because they "heard" how lucrative it is.

You rush in...you rush out.

Op, i am an agric graduate and i wud really love to practice, I still need to learn more and more. Is it possible I get to meet you one on one.

There is a lot i need to learn, tried your number its didnt go through.

saliubello:
High yield Investment?
Is Agriculture a high yield Investment?
Is Agriculture, Agribusiness a money spinner?
Does Agriculture hold the key out of Nigeria Economic Problems?
Yes or No?
Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by Agritech(m): 11:59am On Apr 21, 2017
So true. A major problem is the proliferation of fake agro-consultants who prey on ignorant minds. They claim people would make millions if they pay for their consultancy or buy their e-book or any other thing from them.

The truth is Agriculture is very very risky and shouldn't be treated with kid gloves. There are so many doors failure could come from, and there are lots of uncertainties. No matter what a farmer do and no matter how skilful he is, their is still a probability of failure. Successful farmers witness failures once a while.

All these, these "consultants" wouldn't say.

1 Like

Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by saliubello(m): 11:07pm On Apr 21, 2017
Agritech:
So true. A major problem is the proliferation of fake agro-consultants who prey on ignorant minds. They claim people would make millions if they pay for their consultancy or buy their e-book or any other thing from them.

The truth is Agriculture is very very risky and shouldn't be treated with kid gloves. There are so many doors failure could come from, and there are lots of uncertainties. No matter what a farmer do and no matter how skilful he is, their is still a probability of failure. Successful farmers witness failures once a while.

All these, these "consultants" wouldn't say.
Thank for your submission. Despite the seeming risk; there lies alots of money to be made. Managing the seeming risk appropriately is key.

Let me get practical a bit,

An intending Poultry farmer who doesnt take record keeping seriously is a failure before starting at all. How?? Record kept could be financial records,sales record or production record.

In a typical production record, you will have things like:

--Total stock (birds)
--Feed record (supplied and consumed)
--mortality
--Number of egg produced
--% of egg laid ( fraction of birds that laid egg each day)
--% mortality

With these simple details, the boss can determine GENERALLY what is going on in the farm.

But here is the risk, if the total egg laid drops in number,

How do you determine which birds laid egg yesterday?
Which bird laid egg yesterday but did not lay today?
Which birds had not been laying in the last 3 days??
Which are the sick birds?

Director's verdict?

1. Give all birds antibiotics
2. Give all birds multivitamin
3. Give all birds deworm

Analysis

1. Is it all the birds that need the blanket medication despite not missing the routine dosage?
2. Do you know the blanket medication might distrupt the cycle of some laying birds to seize laying over the next few days?
3. Isnt it cheaper to be able to identify (-aproximately) the few that need the medication despite maintaining the normal schedule medication for all?

My insinuation??

In your farm, with tailor made record keeping, you can tell the exact bird that is not laying per day per time. Thereby, saving medication cost and distruption of laying cycle of laying birds.

Go the extra mile and SMILE TO THE BANK

How many poultry owners care about this??


Note that for every bird that didnt lay each day, you are losing money.

For every less feed ( short; less) brought from the feedmill, you are losing money.

For every unwarranted drug or vaccination purchased, you are losing money.

Do you now see the many fronts the poultry farmer is losing VALUABLE CASH??

The good news is that once you can break the jinx, understand the simple METHODOLOGIES to lower your expenditure, money starts trickling in like never before!

1 Like

Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by RealityShot: 6:01am On Apr 22, 2017
saliubello:
.. locked here no be small
good day!
sorry..
please do you know about cucumber farming?
what are the value chain and possible risks?
this seems to be the current popular serminar topic for a while now.
thank you
Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by saliubello(m): 11:15pm On Apr 22, 2017
RealityShot:

good day!

sorry..

please do you know about cucumber farming?

what are the value chain and possible risks?

this seems to be the current popular serminar topic for a while now.

thank you
send me a mail and lets xray your own situation together. So you too can learn to make money in your situation
Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by RealityShot: 7:31am On Apr 23, 2017
saliubello:
send me a mail and lets xray your own situation together. So you too can learn to make money in your situation
my situation is: i am trying to decide if planting cucumber has any downsides that these serminar sellers are hiding.

i just got a plot.. Am being advised to.plant it.

sorry cant send a mail on this 2G phone now..

thanks
Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by saliubello(m): 6:56pm On Apr 24, 2017
RealityShot:

my situation is: i am trying to decide if planting cucumber has any downsides that these serminar sellers are hiding.

i just got a plot.. Am being advised to.plant it.

sorry cant send a mail on this 2G phone now..

thanks
Give it a try. There is no harm in trying. ROI is infinity but it will all depend on what you will do and what you will ignore doing.

1 Like

Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by RealityShot: 6:57pm On Apr 27, 2017
saliubello:
Give it a try. There is no harm in trying. ROI is infinity but it will all depend on what you will do and what you will ignore doing.
thanks so much!
i will try to follow the best agronomy i have learnt so far..

i will start with 100 seeds first to learn the ropes

thank you again!
Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by saliubello(m): 3:34pm On Apr 29, 2017
The rains are here again. Lots of people have started to PUMP cool CASH into the bush again blindly! They are wasting there money.

Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by saliubello(m): 11:53pm On May 03, 2017
In What League do you wish to PLAY??

What comes to your mind?? Division 2? Europa League?? Carlng Cup?? F.A?? No. No.

What Im refering to is the Strata or Level you wish to operate when it comes to agribusiness??

A producer? An aggregator? A Processor or what??

Nigeria is the largest producer of cassava Worldwide, yet we can not boldly say we have up to 50 cassava planter for large scale cassava mechanization!! The bulk is produced by millions of small holder farmers. Who are peasants, poor and often economically backward??

Is that the level you wish to play??

Why not STEP UP YOUR GAME

Be a processor instead.
Dictate the tune and dictate the dance.
Lift yourself anđ alot more out the poverty chains.
Why not embrace mechanization??


If they grow, you buy up from them..
You dictate the type of cassava they plant..
You dictate how much you buy..


Make HQCF,
Make Garri,
make fufu powder.
Make particle board,
make glucose,
make starch


You create the market they seek.!!

Imagine you invent your own rules in a game. You are a player, and the opponent plays by your rule...

Think about it

2 Likes

Re: Why Is The Agribusiness Sector So Lucrative and Yet So Prone to Risks !! by saliubello(m): 4:59pm On May 13, 2017
Apply innovation. Use pladtic crates for produce

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