If you’re getting into the agricultural business, there is a lot to consider if you want to turn a profit. What type of agribusiness will it be? What resources do you have? Is there a big enough market? And the most important question: Is your business idea the most profitable for the scale you have in mind?
During a recent episode of Food For Mzansi’s weekly Gather To Grow interactive discussion on Twitter, leaders in South Africa’s farming sector unpacked what new and established farmers should be looking into this year.
On the panel was Leona Archary, CEO of the Agricultural Development Agency; Elton Greeve, trade and engagement manager at Tridge; Conce Moraba, agricultural economist and strategy and operations analyst at one of SA’s leading agro-chemical companies; and Thabile Nkunjana, agricultural economist at the National Agricultural Marketing Council.
The session was led by Food For Mzansi’s editor for audience and engagement, Dawn Noemdoe, and the publication’s head of news, Duncan Masiwa.
During the session Archery pointed out that there had been an increase in the number of young people attracted to agriculture. Archery said that a key point for newcomers to consider is, while they may not have agricultural experience, they should put focus on what they are passionate about.
“[Establish] which area of agriculture are you interested in or leaning towards… In the process of looking at the different types of agribusinesses, one needs to consider access to land, location and what are some of the commodities that are operating in your space. Do you have equipment and what kind of funding would you need?”
Agriculture should be considered as a business opportunity, she added.
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Think about your return on investment
Greeve pointed out that it was often assumed that small-scale farmers were not profitable or unable to make a good impression on the market.
“For me, this is far from reality. Small-scale farmers have got massive opportunities out there.”
The problem, he explained, is that small-scale farmers often work in silos. Greeve said farmers should look at what other food producers are doing in their area and establish possible synergies.
“Small-scale farmers should look at whatever they produce as an investment, and that investment should bring you a return. Currently in South Africa there’s a big move towards fruit, but that’s not all.
“There are grains and livestock, however it all depends on the area in which you are in, your scope, the resources you have at hand and what’s going to give you the best return on investment,” he said.
Often, small-scale farmers are only seen as food producers, but Greeve explained that there should be a shift towards small business enterprises and how to develop these enterprises throughout the value chain.
Focus on what’s niche and in demand
According to Moraba there is big move in the consumption and demand of macadamia nuts, especially from European and U.S consumers. South Africa, she pointed out, is a large player in that space forming part of the top three producers globally.
“But when we’re talking small farmers, there’s a lot of investment when it comes to that initially. It takes years before the trees actually are in full production. You have to find the right trees for your conditions. Also, it’s an economies of scale type of market.
“I would not say that it is not viable, it will definitely take a number of years before you start to see the fruits of your labour. You [must have] capital and patience because you only start to see full production around year six or seven,” she said.
In terms of smaller markets, Moraba explained more focus should be placed on niche and in demand markets.
“Things like herb gardening is really big. You could be planting on a small space, a number of varieties like basil, oregano and cilantro,” she advised.
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