AgInvestment Guide #1 – Breaking some myths about agricultural investments (Part 1)

does-financing-benefit-Afri

I thought it would be ideal to start the series by first dispelling some myths about investing in the agriculture space. I expect that if you are reading this, you are interested in investing some of your hard earned income or time into agriculture. If you are financially savvy, you would also want to compare the return on investment (ROI) from an agricultural investment to more mainstream investments such as bonds, treasury bills, real estate, etc, (I will run the numbers on the ROI for several investment options later on). Hence, it will be good to know if your thoughts around agricultural investments are founded or endeavor to understand why some of your earlier investments failed.

Myth #1:  I need a sound agricultural background to invest in agriculture.

The truth is that in any  investment, a technical knowledge always comes in handy but it’s overrated to think without that knowledge, you cannot invest. It will however be helpful to build your technical knowledge and expertise along the way. Your will be amazed at how relevant even your current skills are to succeeding in agricultural investments.

Myth #2: I can’t invest in agriculture because farm work is hard work which I’m not prepared for

Indeed, agriculture is hard work but increasingly, it’s becoming more intellectual than physical. With the basic knowledge of technology – improved seeds, crop protection, fertilizers, irrigation, aggregation, market, etc – it becomes less dependent on physical exertion. However, one thing many fail to realize is that investing in agriculture does not necessarily have to be on farm. People need to understand the value chain perspective of agriculture and see what part of the value chain they have an appetite for and go for it.

Myth #3: I will not be competitive with imported products

Indeed, imported products are major concerns in Nigeria. In 2011, over $1.8m was spent importing rice, and this has been on the increase. However, observing trends in the country, Nigeria is starting to place more emphasis on local production in order to promote employment. While importation (both legal and illegal) will not disappear immediately, you will be doing yourself a lot of good by getting into the local production early

Myth #4: You cannot go wrong in agriculture

I’m sure some of you will have had horrific experiences investing in this space and lost money doing it. Long gone are the days when you think agriculture is about throwing the corn seeds in the soil, go to sleep and come back for a bountiful harvest or buy the birds, let them run around and get your daily crates of eggs. If you want to make money in agriculture, you have to understand that it takes good management to succeed. You have to also do your research. There was a wave of cassava investment at a time without a clear idea of the market to absorb that particular variety of cassava you were growing. Yes, while some varieties might be great for garri making, they might not be suited for processing into beer etc.

To be continued…

This article was written by Adedeji Adebusoye and was first published on his blog -http://goo.gl/wL8iqG. Any questions can be directed to him via his twitter handle @amdeji

Photo credit – Future Agricultures

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One comment

  1. It can be quite challenging at first just like other businesses but to be candid the output is in an exponential rate.
    let’s take for instance poultry farming and crop farming,poultry droppings can be digested and used to produce biogas to power the farm ranging from power to hear generation n the sludge can then be used to fertilise the farmland as against inorganic fertilizer….. the output will be what? very enticing!!

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