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Investing In Agro-Business: Pros, Cons, and Benefits

All over the world, agriculture is greatly esteemed for its immense contribution to the Gross Domestic Product and economic sustenance of a country. In recent times, lucrative opportunities in agriculture are being explored in various countries. In Nigeria, there is no limit to the prospects of wealth creation in the Agro-business sector as many millionaires have emerged through the farming business. No matter how bad the economy gets in Nigeria, there will always be a need for agriculture. The recent plunge in the international market value of crude oil has shifted the gaze of many investors back to agro-business. There are numerous advantages to investing in an agro-business; however, there are also some disadvantages. To decide if the risk of investing in an agro-business is worth taking, there is a need to weigh the pros against the cons.

PROS

  • Low-Risk Investment: According to agricultural experts, investing in an agro-business is a low-risk investment that can increase in value over time and thrive despite inflation. Investing in agro-business will also expand the investor’s portfolio.
  • Yield: Agro business investors can make a lot of money from cash flow from crops that are harvested, either annual or multiple harvests. One noteworthy good thing is that in case of a catastrophe, crop insurance protects both the farmer and the investor so if crops get destroyed or there is a decrease in revenue due to a decrease in the price of commodities, the farmer will still receive financial support to pay for their lease.
  • Arable Land Appreciation: Though arable land in Nigeria may seem abundant and available, rapid urban development has caused a decrease in available farmland making it a limited resource. This makes the remaining more valuable therefore it becomes more beneficial to the investors. Farmland can also appreciate if the land is near a residential area, as development influences, the land value also increases.
  • Forced Equity: An investor in agro-business can increase value to his property by making some developmental changes such as turning virgin land to cropland or pastureland or going from conventional farming to organic farming.
  • Principal Pay Down: Apart from forced equity, equity can be naturally amassed just like in real estate; equity accumulates as mortgage payments are made. If there is a note or debt on the land, income from the farm can be used to pay down the principal, and equity will start to accumulate.

CONS

  • Inadequate Government Support: No doubt the Nigerian Government means well for the agricultural sector but there is a need for more government involvement and support. The Nigerian government needs to set up financial platforms that will facilitate the increase in production and processing of agricultural produce which can generate revenue even for the government.
  • Inadequate Technological Equipment: There is a need for more technological solutions to foster profitability and growth in the agro-business. However, with the increasing demand for Nigerian agricultural products abroad, there is a call for more investors in the agro-business to boost technology in the sector.
  • Very few agric-investors: More people need to me enlightened about the importance of agriculture and the need to invest in the sector, the government can only do so much, with the help and involvement of other individual citizens, more resources can be acquired to boost the agricultural sector.

BENEFITS 

There are endless benefits of investing in the agricultural sector because it is one of, if not the most essential sector in any country. These are a few major benefits:

  • Source of Income for the investors
  • Source of Income for the farmers
  • Improving food security nationwide
  • Source of Economic Sustenance
  • Job Creation
  • Proper use of abundant farmlands
  • Alleviate poverty across the nation, and many more

Farmcenta is an Agri-tech startup that seeks to improve rural farming by addressing farmer’s critical farming needs such as mechanized tools, high yield seeds, training on climate smart agriculture techniques and off-take harvest to increase food production in Nigeria and Africa. Our mission is to provide an opportunity for everyone to support the SDG 2: Zero Hunger. Learn more by visiting our website at www.farmcenta.com or contact us via Instagram, Facebook, Twitter, or LinkedIn, or via email at info@farmcenta.com.

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