Every individual, organization, or nation’s economic blueprint is to realize increased profitability and wealth creation, both in the short run and in the long run. Economists define the components of wealth creation as assets, properties, retirement accounts, inherited estates, gold, and precious metals among others. They also quip that investing in such instruments is almost a guarantee that the future financial goals stand a high probability of been attained or even surpassed as the appreciation in the value of such components are a sure bet. While business advisors avail an array of entrepreneurial options for their clients ranging from real estate, stocks, bonds, etc, not many of them recommend the myriad of opportunities available in the agricultural sector – yet agriculture is touted as the world’s largest industry. That said, agri-business could qualify as the most untapped and ignored gem for wealth creation.
Agribusiness is key to driving the socio-economic transformation and wealth creation ambitions on all economic levels.
Agri-business refers to the sum total of all economic engagements and operations involved in the production and distribution of farm supplies, the activities in the farms, storage, processing, and the distribution of the farms’ outputs for entrepreneurial purposes. This translates to enjoying profits through the interplay of the various factors of production employed i.e. land, capital, labor, and entrepreneurship. The form of agriculture practiced in an area is influenced by several factors including; the size of the farm, purpose, availability of land, topography, climatic conditions, as well as soil type.
The Reality-Check
An entrepreneur in the agricultural sector can either opt to specialize in a particular form of agri-business or a mixture of different types. According to an article authored by Eagrovision on February 2021, agriculture practices has evolved over the centuries and the form of agri-businesses undertaken by various individuals and organizations rely on unique factors such as; natural landscape, environment, socio-economic status of farms, farm areas, main crops, production systems, technology, financial support, water reservoirs, animal husbandry and also marketing i.e. both the supply and value chains. The agricultural sector employs more than 40 percent of the Kenyan labor force and contributes more than one-third of the Gross Domestic Product (GDP).
Needless to say, though agriculture is the backbone of civilization and is tasked with the pivotal responsibility of feeding 7 billion people globally meaning that product ‘market is guaranteed’, not many individuals have a natural appetite for agri-business, particularly the youth who are known for their mentality that agri-work is not only tedious or manual in nature, but also, it does not make economic sense. This creates an unfortunate economic gap where agri-businesses remain untapped while unemployment levels remain high resulting in poverty and social ills.
Unlocking Wealth Creation – An opportunity in Disguise
For one to excel in agri-business, it is of paramount importance to understand how to meander through the monstrous terrains using modern innovations and technology. It is also important to adopt an entrepreneurial mindset of participating in both local and global market platforms, creating jobs, paying applicable taxes, and creating wealth. Indeed, competent production processes must be employed in order to reap the desired profitability through genius strategies and planning for whatever type(s) of agri-business undertaken.
Attentiveness and expedition of energies to all the production processes must also be factored in to open the revenue barns. These process sectors chronologically are; input sector which includes; quality seeds, fertilizers, technological apps, pesticides, and water; agricultural processing sector that includes harvesting, transportation, manufacturing like the beer industry, clothing industry, food processing, the product sector which refers to the agricultural outputs such as food, fuel, fiber, stationery, raw materials for further processing; and the market or value chains sector that involves the interconnected activities of moving the product from the farms to the consumers, planning and organizing production, harvesting, grading, packaging, distribution, provision of market information, advertising and sales.
The technology sector impacts all the other sectors as it seeks to improve agri-business efficiency, reduce costs and easily tap into markets and conduct market surveys, making it appealing to even educated youngsters who abhor the laborious activities associated with the agricultural sectors.
To gain ground in agri-business, it is advisable to be well-equipped and cognizant of the challenges associated with agri-business in order to develop strategies to mitigate and minimize threats while identifying growth opportunities. An article authored by Jim Maxwell & John Holtzman and published by SD Publication Series quips that some of the major crippling challenges and constraints in agri-business include; high transactions costs from the farm to the fork including access to markets, poor technical information, inadequate infrastructure, limited access to credit, problems of procurement the required raw materials, risk averseness of small entrepreneurs, limited management skills and high cost of labor.
There is also the challenge of limited natural resources, pollution of soil, air, water, and global warming. This, therefore, calls for sustainable agricultural solutions by adopting the green agri-business strategy that advocates for the production of food, wood, and fibers while preserving the ecological, economic, and social limits, for instance, sustainable farming seeking to minimize the use of pesticides and fertilizers that can harm the health of animals and human beings.
The fundamentals of wealth creation
Despite the challenges associated with generating wealth through agri-business, awakening the smart champion in you can stimulate the growth of a thick skin needed to dare take a risk and grab the countless economic rewarding opportunities available in agricultural economics. The question is where and how to start the adventure of attaining richness or wealthy status as an agri-business entrepreneur. Economists provide some tips that can add value including; find responsive mechanisms to inefficient market structures through evolutionally value chains both local and global by fully understanding the structure arrangements, organization, and operating methods that can yield significant beneficial impacts on incomes, foreign exchange, and domestic consumption. Another tip is adopting innovation and technology to support sustainable agri-business using big data and other new technologies such as IoT, drone imagery, and smartphones. Another approach is the use of favorable government fiscal policy to ensure that women and youth can access financing, ready markets, lower taxes, as well as encourage business owners to operate formally as opposed to the prevailing informal farming practices.
Agri-businesses owners should also employ networking, the formation of credit unions to quicken credit access, and scouting for entrepreneurial training while seeking to engage in contract farming to avoid wastage associated with lack of markets for their produce.
Wealth creation is all about finding the right balance between traditional saving methods and taking intelligent calculated investment risks while applying consistency, tenacity, disruption, and incorporating the right wealth strategies. Since wealth creation is catalyzed by large volumes of revenue, diversification of revenue streams is advised for business owners.
