Following the recent economic downturn in Nigeria, the focus of business
has shifted from the oil sector to other sectors with the aim of diversifying
the economy. Evidence of this change in emphasis is the increasing efforts of
governments to increase the productivity and competitiveness of the
agricultural sector through a variety of loans, subsidies and programs.
Starting a business in the agricultural sector in Nigeria has always been
something that interested me.
So, I sat down to interview my friend Uka Eje who has tried his hand at
several entrepreneurial ventures in the agricultural sector. He gave me some
tips on how to start a farming business and I will share these tips with you in
this article.
Here are Four Practical Tips to Help you Start a Farming Business in Nigeria
Tip 1: Identify Agricultural Problems
The first step in starting a farming business is identifying the problems
people have and focusing on solving those problems. A few months ago, Uka
launched Thrive Agric, a technology-based agriculture company that raises
crowdfunding from individuals and companies interested in agriculture. The
money is invested in farms with the promise of profits after the agricultural
cycle.
But before starting this business, he worked with many farmers across the
country and while interacting with them, he identified two major problems they
faced. These major issues were related to the demand and supply of agricultural
products.
• Supply Problems: On the supply side, he found that farmers
across the country face three major challenges.
First, they did not fully understand standard farming practices, which
resulted in low yields from their farms. Second, due to lack of financial
knowledge, there was not enough money to expand. For example, they did not
understand the concept of distinguishing between income and profit, or that
work should be consumed and personal wages divided by income. As a result, they
were spending all their income and could not expand their business.
Third, they could not access profitable markets, which forced them to
sell their products at subsidized and unfavorable prices.
• Demand Problems: The aforementioned supply issues have affected
market participants who request produce from these farmers. e.g: Residents of
nearby villages needed more produce than the farmers could supply. Processing
companies in Lagos and elsewhere also wanted more raw materials that farmers
could provide.
Identifying these issues led to the establishment of Thrive Agric. Simply
put, UKa wanted to produce enough to meet its domestic food needs.
If you can identify the agricultural problems around you and create a
plan to solve them, you have taken the first step necessary to start an
agricultural business.
Tip 2: Close the Knowledge Gap
Once you've identified the agricultural problem you want to solve, the
next step is to bridge what you know about that problem with what you need to
know to be a successful agricultural entrepreneur.
There are two ways to break this:
• Pursue agricultural knowledge: You can
learn about the problem you want to solve through available resources (online
courses or books to read).
• You can benefit from the knowledge of others
by consulting with experts in your desired field. There are many
intelligent people in Nigeria that we can learn from but the problem is that we
rarely see them.
A combination of these two methods is recommended, as a proper
understanding of the agricultural business is an important key to success. This
lack of understanding can cost you dearly, and Uka used a personal story to
explain how.
In 2014, he opened a poultry farm and raised about 450 chickens. An important part of any agricultural enterprise is the individual agricultural technological practices, and in the case of raising poultry, this includes the administration of scheduled vaccines, maintaining the temperature of the birds and understanding their general behavior.
He built this business primarily based on knowledge gained through hours
of online research.
However, online information is often unstructured, leaving many
opportunities for knowledge gaps. Lack of knowledge of agricultural techniques
prevented him from properly administering the necessary vaccines.
As a result, he lost about 100 of the 450 pigeons he was breeding at the
time. Fortunately, Benue has an agricultural college, so I met a friend who is
a livestock farmer. Her friend planned a study trip for her to learn more about
animal behavior.
Therefore, to start an agribusiness, it is important to first have the
right experience/education, and second to be curious and willing to learn. No
matter how many experts you want to hire, there's no substitute for a solid
understanding of the industry you're entering. No matter what type of farm you
want to run.
Here are the Basic Things you will Need to Know Before Starting a Farming Business Regardless of What Type of Farming you are Looking to go into:
• Right input
Appropriate inputs include healthy animals, high-quality seeds,
fertilizers, pesticides and insecticides from reputable companies. It is
recommended that you get seeds for planting from a seed research institute or a
reputable organization and look for seeds at the Institute of Agriculture
(IAR). It's important to know where your crops come from, as the wrong seed
variety or fertilizer mix can lead to low yields.
Before deciding on fertilizers and other input options, Thrive Agric
conducts soil tests to determine soil nutrient requirements. It is this
information that informs the composition of the fertilizer to be used or the
input requirements of the soil. This type of due diligence is important when
starting a farm.
• Proper Management
There's an old saying: "If you can't protect the castle, it will
fall." Management is an essential part of any farming business and
includes proper supervision, knowing when/what crops/animals should be grown,
knowing soil requirements, moisture retention, rainfall requirements, signs of
disease and pest control methods. attack.
In the early stages of business development, it is best to act as an
expansion/farm manager. And even if you're old enough to get extended service,
you should consider all of these checks. Without proper management, your
farming business will be destroyed before dawn.
• Select a Location
The appearance of your farm is an important part of your farming business.
Many people don't know this, but there is a difference between earth and land.
Land is general, but soil refers to the environment conducive to the production
of a particular crop under the right conditions.
Some land in Nigeria has been divided into private ownership, losing
topsoil (essential for arable farming). It's important to always make sure you
do a soil test before choosing what/where to plant. It is also important to
locate operations close to product markets and consider logistics and access
costs.
• Security
Protection against pests and product theft is an important aspect of any
farming business, especially if you operate a large farm. In addition, all
farmers are protected from fires, droughts, floods, etc.
Tip 3: Raise Capital
Finally, the main limiting factor for many potential farms is funding to
get started. But with any business, it's important to start as small as
possible and learn to be patient and grow. That being said, there are three
ways to raise capital to finance your farming business.
• Use of personal funds: If you want to start a farming business
with personal funds, you will usually need to use your savings to finance the
farm. This is the most effective way to start a farming business as it helps
you test your farming ideas, learn valuable lessons and gather useful
information before attracting external parties in the form of loans or equity
capital for your business. This was Uka's experience when he started Thrive
Agric.
Initially, he and his co-founder used their savings (₦60,000 to be exact)
to start the company. Their desire to expand their business and lessons learned
from previous farming operations helped them gradually grow their business
until they felt confident that they could bring outside parties into the
business.
Now, Thrive Agric collects money from subscribers to buy a share of the
farm, and after the contract expires, customers get their capital back along
with the promised return. More information on how this process works can be
found here. Remember, getting where you want to go is all about where you
start.
• Through Partnership/Equity Financing: This is when you sell your
interest in an agricultural business in exchange for capital to start the
business.
• Through Loans: You can finance your idea by taking loans from
financial institutions or from close friends or family members. However, at
this crossroads, I would strongly recommend taking a loan and starting a
business.
Before considering a loan agreement for your business, it is wise to test
the situation at an early stage and save money to invest in your farming
business. When starting a business, there are too many uncertainties to be
certain about the repayment of the loan.
Tip 4: Run
The final step is to officially launch your business. The version of the
farm you start with may not be the one you want, but you should take a bold
first step and start somewhere, learn from any mistakes you make, and scale as
your business grows.
No one knows everything when they start out, so don't let the fact that
you don't have all the information you need hold you back. This information
will help you expand your business operations, so you should continue to learn
and keep up with the latest trends in the agricultural industry.
Final Thought
Well, that's it for now. The four steps above will give you the basic
information you need to start a farming business in Nigeria. Now that you have
this basic information, go ahead and start your farming business. Together we
can create economic prosperity for Africa through agriculture.
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