Thursday, 30 January 2014

The Agribusiness Buzz: Identifying Opportunities from Trends not Headlines.

There’s a lot of buzz around agribusiness, food security in Africa, why it’s cool to farm that even celebrities want to do it, government officials, media personalities, professors in academia and seasoned entrepreneurs are all talking about it      tweeting a lot too. But do you want to get on it because everyone is doing it? I guess no! Do you want to do it because it will create more jobs for our unemployed youths
Or do you want to tackle the famine in Turkana and feel good about it?


So as usual, everything starts with an idea. What do you want to do? What will make me money and in what duration? What doesn’t require so much time, isn’t labour intensive, maybe costs to entry are low are some of the things one considers before choosing an agribusiness venture. However agribusiness isn’t just leasing land and doing some farming there, it’s not buying a greenhouse and doing some vegetables on your idle plot, it’s also not just about quails. It’s neither about what the media reports portray it      not sexy, cool for the softies reading this but actually a lot of work.

So here's my two cents on agribusiness.

When you think of starting an agri-business venture, focus on spotting key trend lines, rather than getting distracted by current headlines in the media dictating what the hot opportunities are. Think in terms of where things are going in the near future, rather than get stuck on where they are, who is doing what and how. If the late entrants to the quail craze thought about that, they'd be safe! The quail bubble for example was fuelled by media reports which showed great potential, handsome returns and great opportunities. Late comers, motivated by positive press then dived into quail farming without further analysis of the opportunity, demand and supply forecasts, and how big the market was. 

If you focus on headlines as an entrepreneur, you’re already behind the curve, because you’re reading what’s happening already    what’s making money. Zeroing in on trends, data, valuable insights and where they intersect, and determining where they breakdown, will help you identify smart agri-business opportunities. Finding success and scale means ensuring your next agribusiness idea not only has merit, but can address a large enough market opportunity---unless you just want to do it to feed your family.

Kenya’s agricultural sector is still not achieving its potential and growth targets. Despite the buzz, huge campaigns, celebrity endorsements, the agribusiness sector –which comprises all businesses involved in agricultural production, including farming and contract farming, seed supply, agrichemicals, farm machinery, wholesale and distribution, processing, marketing and retail sales has not taken off, well maybe on the runway at the moment.
Garbage strewn near the entrance to Wakulima market in Nairobi.

Lets focus on  some of the problems that we need to solve to address food security in Kenya. Think about that for a moment. Viable businesses must fulfil a need in the market, serve it well consistently to remain profitable.

Back to agribusiness, the good thing here is you can do it as proprietor, meaning you don’t have to do the actual farming--KYM kazi. You also don’t have to do the tier one in agriculture which is primarily growing fruits, vegetables, cereals or coffee e.t.c, keeping animals, insects or birds.

So what are some of the opportunities for hard-working agripreneurs around?

1.      1.  Value addition through agro-processing.
The amount of post-harvest losses incurred by farmers are quite often at high and devastating levels due to poor storage, preservation and transportation. Due to that farmers sell cheap when there’s surplus and buy high when there’s shortage. Value addition could help farmers get higher returns on their farm harvest through market linkages with agro-processors. So instead of when there’s a milk glut we can convert our milk to powder or any other product, sell at better prices and redistribute again when there’s shortage. A cooler in village helps just as much to preserve milk before delivery.

2. Technology innovations that improve farmers access to information, inputs, services and markets that improve farming efficiency and output. The opportunities here are immense.  Can mention a few examples here, m-farm, sokotext and more here.

3. Improved services and products (farm inputs) for farmers. Think along “How do you cut out the middle man (regarding agricultural inputs) and pass on the discount to farmers.

4. Training & education: 

I love the discussions, sharing of knowledge and insights on farming kenya Facebook page. We also have iCow doing education in partnership with Safaricom but there are opportunities here especially in the counties. There's also Shamba Shape Up [TV Program on Citizen TV]. I feel that what people need more than anything else is some unbiased guidance, advice and some knowledge to steer their agribusiness ideas ahead. It's not just a capital challenge that hinders participation in this sub sector but also lack of knowledge. If you can think of something hybrid [Virtual and offline] to create, publish or distribute agribusiness education then make it available people will pay. Just make it locally relevant, rural based if possible and do something.  Thegrowthhub.comis running an incubator for agribusiness startups. Think….think. Got knowledge you can share? Can you package it nicely and maybe in local languages? In multimedia ? 
5. Financial solutions (credit, insurance, mobile transactions). This is another huge opportunity for micro lenders, insurance and mobile solutions offering farmers and buyers an easier way of transacting. There was also this brilliant idea of agribonds.

6. Business ideas that improve the logistical infrastructure towards farmers.
How about a fleet of refrigerated vans to transport fresh produce or perishables to markets on behalf of farmers? Can they pay for that bearing in mind fresh fruits and vegetables rot on transit to markets thus fetch lower prices? How about coolers that fishermen can keep their catch overnight? Would people lease that to preserve their fish?

7. Improve efficiencies in distribution of farm inputs and products for easier uptake by markets of farm outputs at affordable prices, adoption of “modern” farming practices & products, organic products? Can you do anything around that?

8. Irrigation technologies & Innovations that improve food security whilst encouraging use of new crops or new applications of traditional crops and those that improve soils. How about biotech? 

Monday, 20 January 2014

Weighing on the Quail Farming Business: My Unsolicited Opinion

The Five Competitive Forces That Shape Strategy
The Quail money or the idea that some wild bird     a poor feeder that lays eggs with great health benefits from week 6- 8 for the next two or so years could be the reason this new business is booming or at least very attractive to anyone who wants to make some good money fast & easy. But let’s take a closer look at where this quail money is heading and at the end of this article you’ll have some points to ponder on before starting.
But you may ask, why do I care to write about quails and their money? Well, financial stability ranks high on my ‘Must haves’ thus any idea that makes me or my friends money legally & ethically is definitely worth looking at or listening to.
So as a blogger      armed with an opinion and some internet connection wrote this unsolicited opinion.
To make my post more than just an opinion I weighted the quail business against the five Cs, the forces that shape competitive strategy by Michael Porter.
Awareness of the five forces can help you    the guy who wants the a piece of the quail money       understand the structure of this new industry and stake out a position that is more profitable.

The Idea in Brief
You know that to sustain long-term profitability you must respond strategically to competition. And you naturally keep tabs on your established rivals. But as you scan the competitive arena; are you also looking beyond your direct competitors? As Porter explains in his update of his revolutionary 1979 HBR article, four additional competitive forces can hurt your prospective profits:
1. Savvy customers will force down prices by playing you and other quail farmers against one another. Due to the popularity of quails, their eggs and all that chances are the eggs will settle up at around 15- 25 shillings per egg range. When the market is flooded with these eggs & birds the price will definitely go down. So if you go into this business now chances are you might not sell your eggs at 75-90 shillings range. Think about that!
2. Powerful suppliers may constrain your profits if they charge higher prices.
As quail farming gets more popular people are moving up the value chain. Some are now making ‘Quail Feeds’ & selling them at a fortune, these birds will need supplements to lay daily for two years so somebody can fill this gap, somebody will also form a cooperative or some distribution/marketing agency to sell quail products. When everyone has these eggs & birds these brokers/exporters/suppliers will buy the products at bad prices. There will be ‘Quail Farming Consultants’, some guy will start selling DVDs or handouts on Quail farming     education. To visit some quail farms one has to pay up 100 to 500 per trip to get some advice on quail farming.
3. Aspiring new entrants, armed with new capacity and hungry for market share      people like you       can ratchet up the investment required for existing players to stay in the game. This really isn’t a big factor in the quail business now. All you need is a KWS license, the sheds and the birds. However in the next few months the big      the bigger      the biggest quail farmers will keep the bulk of the quail profits. So if you want to do this, do think of keeping 20 birds.
4. Substitute offerings can lure customers away. The demand of quail products will also come under attack by cheaper or better substitute products. I am told that for the health benefits doctors are prescribing the quail eggs to terminally ill patients. For that some of the farmers are selling their eggs through pharmacies & chemists, hospitals, clinics and supermarkets. The thing here is should the prices remain high or at least out of reach from the kawaida mwananchi chances are people will look for alternatives. Think of that.
By analyzing all five competitive forces, you gain a complete picture of what will influence profitability of your quail business in the next few months. You identify trends early, so you can swiftly exploit them— or even reshape the forces in your favor. Key thing here is you don’t need to rear these birds to have a slice of the quail money.

Think of getting up in the value chain.