why invest in agricultural inputs?
Production or trade of agricultural inputs can be a rewarding investment provide that some basics requirements are observed.Agricultural inputs refer to goods and services used for the production of agricultural products. examples of these in crop production are seeds/planting materials , fertilizer(either organic or organic),and pesticides.In livestock, example of inputs are feeds and veterinary products.Labor is an integral input in any agricultural enterprise so provision of labor can be viable enterprise in itself . for instance in mango production, there are business which train and maintain fruit baggers and offer fruit bagging service to mango producers. provisions of service with farm machines such as tractors and thresher has also become a good source of income .
This investment brief serves as a guide in starting up an enterprise which would supply the needs of farmers for certain agricultural inputs. It provides general tips to consider before embarking on the business.
4 General tips
1. Identify the investment opportunities in the area
Agricultural inputs support the production of certain agricultural outputs. it is then important to first identify what are the major agricultural outputs in the locality. this information can easily be obtained from the municipal agricultural office(MAO).in general , an agricultural input enterprise is more profitable and sustainable if it supplies to input needs of major agricultural products in the area
2.determine the current gaps in supply and demand
Potential demand for inputs in your locality can easily be estimated for certain agricultural products. for instance, if you want to estimate the total fertilizer requirement (e.g.,14-14-14) for palay in your municipality, you simply get the information on total palay hectarage in your municipality and the average number of bags of complete fertilizer applied per cropping. this information can easily be obtained from the MAO. if total hectarage is 5000 and the average application of complete fertilizer is 4 bags/ha,
then your municipality needs at least 20,000 bags of complete fertilizer per cropping or 40, 000 bags per year assuming two cropping per year. the same estimation can be done for other commodities which need complete fertilizer
Supply can easily be estimated by discretely interviewing the current suppliers of agricultural inputs in your municipality. agricultural inputs trader (e.g., store selling fertilizer,chemicals,feeds,veterinary supplies,ect.)are normally local in the main municipal market or town capital. absence of inputs traders in you municipality clearly indicates the farmer are buying their inputs from other towns. this means that putting up one on your municipality could be a lucrative venture. however when there are existing input traders, you have to determine how much they are supplying and compare this to the estimated demand. if the supply is less than the demand, there is a supply-demand gap.this means that the existing market can still accommodate a new entrant.
3.Diversify your product lines
Have as many product lines as possible so that your business can serve as a sort of one-shop for agricultural inputs. farmers normally need several types of inputs and they would prefer to purchase from a store where all tier needs can be met,both for convenience and to minimize their transportation cost. deciding on the proper mix of products can be guided by instance,if certain chemical insecticide that are commonly used in your municipality are in defected then you can have more of these products in your products lines.
4.Aim for consignment basis with your suppliers
It is common for inputs suppliers i.e.,companies and distributors)to agree on consignment basis provide you are able to maintain good credit standing. consignment is highly advantageous since this will allow you to minimize risk of losses associated with unwanted stocks. it may also enable you to have many different products with minimum capital requirement.
Production or trade of agricultural inputs can be a rewarding investment provide that some basics requirements are observed.Agricultural inputs refer to goods and services used for the production of agricultural products. examples of these in crop production are seeds/planting materials , fertilizer(either organic or organic),and pesticides.In livestock, example of inputs are feeds and veterinary products.Labor is an integral input in any agricultural enterprise so provision of labor can be viable enterprise in itself . for instance in mango production, there are business which train and maintain fruit baggers and offer fruit bagging service to mango producers. provisions of service with farm machines such as tractors and thresher has also become a good source of income .
This investment brief serves as a guide in starting up an enterprise which would supply the needs of farmers for certain agricultural inputs. It provides general tips to consider before embarking on the business.
4 General tips
1. Identify the investment opportunities in the area
Agricultural inputs support the production of certain agricultural outputs. it is then important to first identify what are the major agricultural outputs in the locality. this information can easily be obtained from the municipal agricultural office(MAO).in general , an agricultural input enterprise is more profitable and sustainable if it supplies to input needs of major agricultural products in the area
2.determine the current gaps in supply and demand
Potential demand for inputs in your locality can easily be estimated for certain agricultural products. for instance, if you want to estimate the total fertilizer requirement (e.g.,14-14-14) for palay in your municipality, you simply get the information on total palay hectarage in your municipality and the average number of bags of complete fertilizer applied per cropping. this information can easily be obtained from the MAO. if total hectarage is 5000 and the average application of complete fertilizer is 4 bags/ha,
then your municipality needs at least 20,000 bags of complete fertilizer per cropping or 40, 000 bags per year assuming two cropping per year. the same estimation can be done for other commodities which need complete fertilizer
Supply can easily be estimated by discretely interviewing the current suppliers of agricultural inputs in your municipality. agricultural inputs trader (e.g., store selling fertilizer,chemicals,feeds,veterinary supplies,ect.)are normally local in the main municipal market or town capital. absence of inputs traders in you municipality clearly indicates the farmer are buying their inputs from other towns. this means that putting up one on your municipality could be a lucrative venture. however when there are existing input traders, you have to determine how much they are supplying and compare this to the estimated demand. if the supply is less than the demand, there is a supply-demand gap.this means that the existing market can still accommodate a new entrant.
3.Diversify your product lines
Have as many product lines as possible so that your business can serve as a sort of one-shop for agricultural inputs. farmers normally need several types of inputs and they would prefer to purchase from a store where all tier needs can be met,both for convenience and to minimize their transportation cost. deciding on the proper mix of products can be guided by instance,if certain chemical insecticide that are commonly used in your municipality are in defected then you can have more of these products in your products lines.
4.Aim for consignment basis with your suppliers
It is common for inputs suppliers i.e.,companies and distributors)to agree on consignment basis provide you are able to maintain good credit standing. consignment is highly advantageous since this will allow you to minimize risk of losses associated with unwanted stocks. it may also enable you to have many different products with minimum capital requirement.
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