6 Great Tips to Consider when Starting in Agribusiness in Kenya
Agribusiness simply is the business of agricultural production. It includes agrichemicals, seed supply, crop production, distribution, as well as marketing and retail sales. Within the agriculture industry, agribusiness is used simply as a combination of agriculture and business, referring to the range of activities and disciplines embraced by modern food production. In Kenya, agriculture is an important fundamental in economic development, contributing 35% of the gross domestic product and constitutes 40% of the export earnings. The sector employs more than 40% of the total population and more than 70% of Kenyans rural people. With the growth in agribusiness in Kenya, many farmers are changing the perspective from farming for own consumption to farming for business.
In order to engage in agribusiness or any other business, one needs enough information on the field. The research builds a strong foundation for a business to be built on, preparing it for any threats or weaknesses that may arise as the business grows. Here are 6 great tips to consider when starting agribusiness in Kenya.
- A Thoughtful Plan
Successful farming operations are based on diligent planning, which helps you decide what type of farming you want to engage in, where and how you will do it. You need to explore different options and pick one that suits you best and go ahead and seek some advice from already established farmers. Since things in business, agriculture, or life, in general, are highly unpredictable, any farming plan should include proper risk management. People can get sick or injured, equipment can break down, and the weather is largely unpredictable therefore need for planning for the worst. Proper planning and diligent execution of all on the farm and off-farm activities will determine your success or otherwise on the farm.
This is money or assets owned by a person aimed for starting a business or a company, and in agribusiness in Kenya, the number one problem facing everyone before starting is capital. In Kenya, the most common way to get capital to finance their farming enterprise is through bank loans. All you need to do is open an account with a bank, have it operate for a minimum of six months and from there you can apply for a loan. Unfortunately, most young aspiring farmers do not have an income to deposit regularly in a bank to get a loan. If you completely do not have any source of capital or income, you can look for at least ten people you know and start a group that can get funding from the government to start.
- Choosing the Crop or Animal
There are many factors to consider in crop selection, a necessity that must be undertaken before actually starting a farming venture. Even without a predetermined location and site of the farm, the crop to be grown can be decided based mainly on its marketability and profitability. Right decision in the selection of crop or crops to be grown, particularly recurrent types, will ultimately convert into a successful farming venture. Different parts of Kenya have varied climatic condition, which means varied choices of the exact type of farming to indulge in. When making the choice, one should also consider the availability of accompanying products such as treatments and others.
- Geographical Location
Site selection is the second step in farming after the crop to be grown has been decided, and it also includes the selection of the right geographical location. This happens because, especially in Kenya, different crops do well in different parts of the country making it more of a specific location for a specific crop. The selection of a suitable farm location also follows when an individual decides to go to farming, the purchase of a farm being considered a better alternative to investing. Here, one of the considerations is the value of the property, that is, the selling or leasing price is as low as can be reasonably possible. Other factors being considered are water supply, fertility and suitability to a wide choice of crops.
- Target market
A target market in a particular grout of customers at which a product is aimed. It involves breaking a market into segments and then concentrating your marketing efforts on one or a few key segments consisting of the customers whose needs and desires closely match your product. You need to figure out who you are going to sell your products to and how you are going to do it. Once you have done that, you need to come up with a backup plan in case the first one does not work or the market pattern changes drastically. For example, one may start farming a crop targeting to sell to big hotels, but one may want to consider selling the products to local residents if the market experiences changes.
- Profit Margin
A profit margin refers to the total income derived from an enterprise less the variable cost incurred. Generally, the profit margins for any agricultural crop are determined by deducting variable costs from the gross farm income of the given crop for a period of time. There are different factors that influence the number of profit margins in agribusiness. One of them is the size of the farm since it determines the amount of the product being taken to the market. Other factors include the type of crop and its market available.
In conclusion, agribusiness is becoming one of the largest sources of income in Kenya and many people are investing in it. So long as you are matching your land or farm to its suited use, you will be on the right path to gain profits in farming. It is very important before engaging in any kind of business to get all necessary information about it to avoid losses. Many of us are driven by finances and traditions and forget to start by loving what you do in agribusiness. In every kind of business, it is good to have a passion for what you do.
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