Setting up an AgriBusiness in Nigeria
With Mr Adekoya Femi, CEO of AGRICDEC LTD.
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Hi, my name is Adekoya Femi. I’m the CEO of Agridec Limited and founder of The Hortus community. I’m an agribusiness consultant with a sentiment in vegetable production. I’m a practicing farmer and I believe that I know the pains and joy of this subject of discussion. I will be making submission on setting up Agribusiness in Nigeria as well as its opportunities and challenges
But before I go on, I will love to appreciate the effort of Myfarmbase Africa for giving me the opportunity to communicate my ideas and experience to youths who might be interested in agriculture and ultimately setting up an agribusiness enterprise in the Nigeria. And I want to appreciate every youth and participants here that have caved out the time to be part of this experience and I’m confident that you will learn a lot today that will help you for a life time. At the end of this session you will understand what it takes to be successful and make profit in agribusiness especially in Nigeria. I will be sharing from my wealth of wisdom and my experience in the industry for over 7years.
There is no doubt that the opportunities in agriculture is so enormous. Well, there are so many people in this business that are facing one challenge or the other. Including me, but the fact that a business is full of challenges is not enough reason to conclude that it is not a workable one. For the fact that you have so many organizations going bankrupt in a field does not mean there are no opportunities in that field.
In the 21st century, the narrative and definition of agriculture is changing. Agriculture cannot only be said to be a hobby or a means of rural development. Agriculture is now a business from every sense, I make profit out of it, and you must take cognizant of good planning and management if you will too. In setting up agribusiness enterprise in Nigeria, you need to arm yourself with requisite knowledge, skill and technical know-how. Many agribusiness are no more running, why? Because the owner didn’t get some things right at the out start. The killer stunt that captivates and attract many into agribusiness is the perceived or estimated ROI on investment
For example, tell folks you can make 300% ROI from farming cucumber in less than 2 months. Their olfactory lobes stand well to get on the farm and cash out the said ROI. They well up pseudo passion for agriculture
However, it is more than this! Estimated yield or say potential yield is really different from Actual yield. Yield on paper is quite different from that which is realizable on the field. They put their hard earned money into the enterprise and wait patiently for the bounty. But, unfortunately they’re always disappointed. I believe one must have passion for agriculture to make good out if it. This is requisite in agribusiness!
But it is not enough to guarantee the desired sustainable enterprise, I mean long term success in the business. You must get some things right. There are just two options available; Get it right or wrong. You must understand that there’s far more to setting up and operating a farm than simply preparing the land, sowing seeds or planting seedlings, harvesting, and taking the produce to the market.
Now don’t misunderstand me, I am not saying that this example here is not achievable. No! I’m only saying that there is a lot more to know than the potential ROI. You need to get to work by first planning, make good decisions and implement them timely and appropriately, there is no shortcut in agribusiness.
Here are some tips for setting up a profitable and sustainable Agribusiness in Nigeria: These tips are principles that need to be uphold by any agribusiness enterprise.
- BUSINESS PLANNING
Sincerely yours, well thought out and comprehensive business plan is essential to any new enterprise, and mind you, farms are never left out of this. The agribusiness planning process helps to understand who we are, what we want to achieve, the steps we need to take in order to get it done, and the tools we need to engage in that process. A business plan is like a road map to farm success, and is essential for anyone who wants to build a profitable farm business.
Most of us also know that business plans can also be essential for securing the necessary fund to finance farmland purchase or lease, farm machinery and infrastructure. Most formal lenders like banks and other financial institutions often ask to see a business plan before considering a loan application. You need to articulate your plans in well and convincingly on paper. Even if you’re not taking up a loan or grant you really need a business plan. It would be your guide.
At least have a good financial analysis of the business
The summary here is, know the business well, like the back of your palm
- MARKET RESEARCH
One common mistake most farmers make is planting crops without first conducting adequate market research. They simply assume there will always be a market for their produce. They say, “Shebii it’s food people will eat.”…lol
That is very correct… People will surely eat. You will boost the food availability in the market and help our food security at least people will eat, in fact animals too will feed out of your harvest if you don’t have a good market analysis.
Others go with what they see their neighbours do. They plant the same crops as those around them because they believe that is what is going to sell e.g. cassava… I know I have a witness here… Lol. The problem with such a move is that the market becomes saturated with one type of product, forcing farmers to compete by lowering their prices and hence profit becomes just a dream.
If you want to succeed in Agribusiness, you need to find products that you can sell easily at a profitable price. Ask yourself, is the market for this product available at this time, who will buy them and at what rate?
You must understand the market dynamics! We live and farm in a country where things aren’t regulated and business risk especially agribusiness is so high.
Don’t come to the market shocked. Understand your market, understand your customers well so you can manipulate around their interest and make profit
Market research involves understanding the times and season. Building relationships with customers before plating your crop is critically important. Ask again, does this product fit this market? Is this what the market wants? For example, here in South west Nigeria they LOVE the dark green cucumbers varieties but you went ahead to plant lights green varieties My friend, you’re miss your free-kick. Be like that Algerian player… Shot well
Know the market sentiment! I say again play along the market sentiment. Likewise, keeping a record of what does and doesn’t sell, and understanding the profitability of each crop are critical for anyone who wants to build a profitable and sustainable farm business.
- CHOOSING THE RIGHT CROP
There are many factors to consider when choosing a cropping plan and system for your proposed farm or existing farm. Some of these are biological, ecological, cultural, and economic factors and the knowledge and equipment required for successful production.
Do you have the right or appropriate infrastructure in place? E.g. irrigation system and such. I don’t advice my client setting up a vegetable farm especially cucumber or tomato to rely on rainfall, because it’s not wise to depend on what is uncertain. You must be aware of crop requirements. It is a garbage in and garbage out situation. Many small or upcoming farmers start with fast growing annual plants, then scale up to more complex perennial systems.
Understanding what grows well in your climate and soil is essential, and can often involve a process of trial and error or better still ask from previous farmers cultivating in the area. I advise folks to conduct routine analysis of the soil to which they propose to farm. You need to know the nutrient status of your soil. I have already mentioned that your marketing strategy will also affect the crop choices you make.
- START SMALL
Starting small and scaling up is not often the impulse for new farmers, but it can be extremely useful in helping to avoid big mistakes. Pilot projects help us to understand what we are good at, what we need to avoid, and what we need to learn before we go big. Fellow agribusiness enthusiast, this is wisdom at its best for you
It doesn’t sound cool, but start small. Yes, you have the fund and you like to cash out big from Agribusiness. Again, I say to you, start small and gradually scale up. The beauty of Agriculture is that it can be practiced by both low and high income earners. Both the poor and the rich. There is what is called scaling up!
You will thank yourself you did!
Management is a multifaceted function in agribusiness. Every aspect of agribusiness needs good management practices. Many agribusiness fail not because of lack of funds or right workforce but for lack of good management practices. There is such thing called Good Agricultural Practices [GAP] which must be respected in any agribusiness. Management include proper monitoring or supervision, good maintenance culture and practice, cash flow management and resource use, efficiency management. It is necessary to properly manage inputs, processes, human resource, workforce and uncertainties.
Fellow agribusiness enthusiast, you cannot carry out a profitable and sustainable agribusiness all alone, you need to have the right hands to work with. They can come in different sections and functions. You must decide how you like to engage your workforce, in terms of type of contract agreement (full staff or contract), duration of work, remuneration and other factors. This must be well analysed to achieve effectiveness and efficiency. Maximize your workforce, pay them reasonably, seek their welfare and never mistreat them. You need to know that workforce is the blood of your agribusiness. If they’re motivated it will reflect on your farm output and efficiency.
Diversification is especially important to manage risk and uncertainty inherent in agribusiness. Planting a variety of crops is like an insurance plan that hedges against catastrophic failure. If one crop comes out unsuccessful, there is likely to be many others that is successful. Don’t put your eggs in one basket!
- RECORD KEEPING
Good documentation is the key to keep track and understanding what is and what is not working for you, and improving your operation year after year. There are various forms of record that should be kept in agribusiness. But, I will categories them into; production and financial records. You’ll need to keep a record of all your production practices so that you can avoid making the same mistakes over and over again. Farming is complicated and tasks shift constantly, so don’t make the mistake of assuming that you will always remember in the future what you have done in the past.
Financial documentation of revenues and expenses is also critical to understanding how to build farm profitability. Documenting your transactions will help you find inefficiencies and excesses that cut into your profit margin. Record keeping could also help to source or secure fund for up scaling
- CONTINUOUS TRAINING AND LEARNING
In order to set up and grow a profitable farm business, you need to be curious and have the desire to learn more about your industry and take the necessary steps to do so. Conferences, newsletters, books, magazines, and other resources can be invaluable tools for helping you to build your knowledge and keep up with the latest research and techniques. On the field you must be open to learn by observation, traditional or indigenous knowledge. Don’t discard knowledge. You must seek to understand the nitty-gritty of your farm business. Learn to improve your operation and be open to follow trends and technological advancements as much as you can.
Research what works and what does not. Get to the root of the matter even if you have challenges. Again attend seminars, workshops, exhibitions, educational and other events that will benefit your agribusiness. Also don’t forget to build the capacity of your workforce
Talking of mentorship, you need to identify someone who is doing well in the industry and seek to follow them. Go personal… Like chase them down. I have them and I cherish their advice. They make you leap because of their advice. Building relationships with other practicing farmers is also useful. Emphasis on practicing farmer. Not the internet farmers. See, in this world of social media, please don’t be deceived. I categories some folks as Agric or Agribusiness ‘famzer’ all they do is to be shouting around the media. They have the media attention… But they can’t get the job done. They’re without practical experience… Their fund has never been committed into agribusiness… But they know how to woo folks with contents.
Know your onions!
Learning from those who have already been successful in doing what you want to do tends to be the best way to avoid mistakes and find success in this business. Now finally,
Setting up agribusiness in Nigeria requires you to have some basic values or attitudes
- Be patience
- Be Consistent
- Be tenacious…. Don’t give up easily. Be determined to make success in this business.
- Uphold quality
- Be available
Thanks for being here with me.
Thank you Myfarmbase.
QUESTION: What is in your opinion and experience the most challenging factor of farming in Nigeria?
ANSWER: Lack of knowledge in managing the high level of risk and uncertainty inherent in farming.
QUESTION: Good morning, Sir, you mentioned carrying out soil analysis to determine nutrient quality of soil, how does one go about it and how much will it cost?
ANSWER: How do you go about soil analysis? Soil analysis is performed in soil laboratories. I will recommend you seek for a reputable soil laboratory for you to get the true test of your soil samples. On getting the results of your soil analysis, you may need an expert to help you make sense out of the figures and profitable recommendation, to considering crop to be planted. However, before your soil is taken to the laboratory for detailed analysis. You must be aware of how to rightly collect the soil samples for analysis. If you’re not knowledgeable about this… Kindly seek the help of an agricultural expert. I have a soil lab where I perform my analysis. Well, I’m sorry I’m not here to share that information. I hope I answered your question to a large extent?