Agriculture, Agribusiness: Why it pays so much and yet nobody cares (part 2)

Source: Christian Dormedzui
Date: 13th-november-2017 Time:  12:41:54 am

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Last week, I wrote an article about agribusiness. In that piece, I spoke about how convoluted the challenges to agriculture and agribusiness are. I also said that people in the chain would need to communicate the opportunities to people in a tone and manner they can understand. To do that, people would have to get that needed instruction about the business side of agriculture so that when this is done, the youth would then know the technicalities. They must see the projections and draw that conclusion that, starting an agribusiness is the same as working in a bank full time.

 I needed to stay within a certain word range so not bore you. So, in this piece, I bring out some technicalities for reading pleasure and appreciation.

With my interaction with people who have expressed interest in agriculture, the major drawback is the cost outlay that is required in land acquisition, preparing the land for cropping and then having to wait for a whole year or less to get returns. However, the new age of agriculture is the one that climate conditions and diseases are not able to determine the output. Where switching from crops to livestock does not take a considerable long time. Where agriculture becomes the new fuel for a new era industrial revolution. In Nigeria, a professor and technologist is pioneering and deploying the use of digital technology in farming. This professor has basically drawn a new architecture for agriculture. In his innovation, modern fertilizer manufacturing companies would need data design. His innovation is making fertilizer application customizable.

This means that the production of fertilizer will be personalized for the location where it will be used.

That again means that a fertilizer meant for Obuasi in the Ashanti Region may be different from the one used at Akatsi in the Volta region. By this, fertilizer will now corollate with the needs of the soil. The cost implication too is that if a particular jurisdiction has already high nitrogen content, the manufacturer may reduce nitrogen intake into his production. This will mean that the cost for that ferlizer will reduce and farmers will win.

Farming is closely linked to industries and marketing businesses which are essential to transform, transport and transfer to the consumer. Farmers are buying more of their inputs rather than using farm produced inputs. I am talking about feeds, fertilizer, petroleum products, farm machinery, chemicals and other farm supplies and services. Food processors are the link between farmers and food wholesalers and retailers.

 The processor may sell to wholesalers and retailers through food brokers or who we popularly referred to as the Market Queens. If there are 2,000 processing firms within agro and cash crop processing reserve, this will lead to adding utility to the raw farm products and this will see to the transformation of sugarcanes into sugars, ethanol and wheat into bread etc. It also translates a direct 20,000 wholesalers and retailers who will sell directly to consumers.These numbers do not constitute employees. It’s simply an outfit/firms. If I take industrial soybeans, wheat, sugarcane and mango and we have local industries producing such farm inputs as feeds, fertilizer, petroleum products, farm machinery, chemicals, it then means that the effect in employment terms would be measured in many ends far exceeding. To make my readers understand this analysis this, I will resolve to use relational statistics. In 2016, my colleague worker whose father lives in Keta in the Volta Region took GHC 3,000 from his son to mechanize and prepare his 100 x 100 and 70x 100 plot of land for the cultivation of Onions. Three months later, my friend counted to me an amount of GHC 3,000 saying his father had paid him back his money because a Market Queen had bought the produce at GHC 7,500 ahead of maturity. Onions take four months to mature.

If we follow the calculation below:

Product Maturity = 4 Months

Cost Of Mechanization & Land Preparation= GHC3,000

Total Sales = GHC7,500

Net Returns = GHC4,500

Average Monthly Returns = GHC 1,125

It means that this man could be paying himself GHC 1,125 every month. This amount is the average paycheque for graduate entry-level employment in Ghana. Given that the next season, this man will have lesser cost, means that he could be earning higher. Currently, we import carrots, onions, and cucumbers from neighbouring Togo, Cote D Ivoire, Burkina Faso, Niger and Mali. Even though there very serious challenges, the prospects are the financials broken down are good enough for any serious investor or student of agribusiness to make the choicest decision.

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