How to Start Agriculture Business in 2021 – A Complete Guide

Agriculture is one industry that is always profitable regardless of the economic environment of the country. Food is one of the most basic needs for human beings, so the agricultural sector is profitable. If you’re looking to learn how to start an agriculture business, you need to learn a lot of things.

Before we dive deeper into the strategy of how to start an agriculture business, it is vital to learn how the industry is. The global agriculture market is expected to grow by $10181.92 billion in 2021 with a compound annual growth rate of 6%. Based on the industry cap and steady growth rate, it is the ideal time to jump on the agricultural bandwagon and turn an idea into a profitable business venture.

Pros and Cons of Starting an Agricultural Business

If you need to learn how to start an agriculture business, then you should know the pros and cons of the industry. Before you invest your time and money into the business, it is important to know the insides and outsides of the industry. Here is a list of the pros and cons of starting an agricultural business:

Pros of Starting Agriculture Business:

  • You will be fulfilling customer demand. If you want to create something and fulfill market demand, then farming is an ideal choice.
  • You can diversify your business. There are multiple areas of farming. You can grow crops and raise cattle for financial means, but you can also use part of the land for public access.
  • Apart from financial benefits, there are other benefits of learning how to start agriculture business. You’re giving back something to the environment, and there are other health benefits from doing manual work.
  • The agriculture business is all about referrals. If your product is good then you will have a higher chance of getting referrals and new customers.

Cons of Starting Agriculture Business:

  • Competition is high in the agriculture industry. Make sure you do enough market and competitor research to understand the industry.
  • Finding the right supplier can take up a lot of time. In some cases, it can even take you months to find the right supplier.
  • The gross margins of the agricultural business are around 43% thus making it harder to maintain profitability if expenses aren’t managed well.
  • Time commitment is another drawback of starting your agriculture business. While every business requires some kind of time investment, it’s tougher in the agriculture business.

Tools You Need to Start Agriculture Business

A business is as good as the tools and their uses. If you wish to learn how to start an agriculture business and turn it profitable then you need to know about the machinery and tools used to improve the workflow and efficiency. Farmers use several tools and equipment to improve farm production and reducing the efforts put in the work.

Be it traditional farming, modern farming, or organic farming, the tools, and equipment contain some kind of mechanical element. Here’s a list of equipment and tools used to improve the workflow of a farm:

  • A tractor
  • The motocultor
  • Garden rake
  • Machete
  • Escardilla
  • A shovel
  • Peak (for digging in hard terrain)
  • Wheelbarrow (for moving stuff around easily)
  • A harvester
  • Plow tractor
  • Sprinklers
  • Seeder and fertilizers
  • Baler
  • Pick-up truck/farm truck
  • Hay rake

There are numerous other tools and equipment that you can rely on to improve the workflow and profitability of your farm.

Average Setup Costs of Agriculture Business

Learning how much it costs to start an agriculture farming business is a part of learning how to start an agriculture business. Based on the type of business you wish to start and other factors, it can be both cheap and extremely expensive. Here is a breakdown of the startup cost of the agriculture business.

  • Minimum startup costs for an agriculture farming business: $2,000 – $2,500
  • Maximum startup costs for an agriculture farming business: $40,000 – $45,000
  • Average startup costs for agriculture business: $20,000 – $22,000

Here’s a detailed list of an agriculture farming business startup costs:

  • Retail business expenses: The space for rent for a farm business depends on where you plan to start the business. It could be $1,000 – $80,000 per month.
  • Software expenses: An accumulation of software can cost around $400.
  • Equipment & Supply expenses: can range $700 – $6,000
  • Inventory expenses: $400 – $15,000
  • Advertising and marketing costs: $50 – $8,000

How Do You Prepare for Launching an Agriculture Business?

Starting your business can be tough, it can take up a lot of time to start your business, and getting enough profits is not easy. Especially when it comes to agricultural business, the competition level is high and you need to build a strong marketing strategy for finding success. Here’s how you learn how to start agriculture business and prepare for launching the business:

  1. Market and Competitor Research

To learn how to start an agriculture business, and find success in the business it is vital to do market research. Knowing how an industry operates and all the ups and downs of the business are crucial for finding the needed success.

Take as much time as you need and thoroughly learn the ways of the industry. With ideal market and competitor research, you can learn from the competitors, build a strong marketing strategy and focus on building a strong pricing strategy. Market and competitor research has a lot of benefits and is crucial to learn the best business ideas for agriculture. Doing competitor research will also help you figure out what kind of farming is most profitable. 

  1. Choosing a Business Name & Logo

The next step in preparing to launch your business is by choosing a business name and logo. The name and logo of your business are like giving an identity for your business. The right business name can help you bring in a lot of customers. An ideal name should help the customers remember your business and what you do.

While picking out a name for your business, you will need to make sure that the name is easy to remember, shows what the business does, and should not be a copy of the business. When it comes to logos, you can either hire a professional or try out several online tools for making your logo.

  1. Finding an Ideal Niche

Even if you know what type of farm you need to start, it’s never a good idea to just dive straight into the business. It is crucial to determine the niche of your business. Let’s say you live in the southern part of the country, and the crop you’ve been growing is in demand in just the northern part of the country. This happens when you don’t know how to find your ideal niche for your business.

 Here are some common and most profitable agriculture business niches to look out for:

  • Urban agriculture
  • Farmer’s market vending
  • Herb growing
  • Vegetable farming
  • Fruit farming
  • Field crop farming
  • Dairy farming
  • Poultry farming (Fish farming, rabbit raising, snail farming)
  • Mushroom farming
  • Beekeeping (Honey production)
  • Soy products
  • Florist business
  • Spice production
  • Nut processing

Apart from this very small list, there are hundreds of niches in agriculture farming. Market research helps in determining the niche you want to choose for your agriculture business.

  1. Picking the Perfect Target Market

Choosing the right target market is just as important as choosing an ideal niche for your agriculture business. A target market is a specific group of people that you wish to target for selling your product and services. Here are the most common target markets for agriculture business:

  • Organic Food Shoppers: This target market is full of people who specifically want to shop for organic produce. Organic food items are in demand as more and more people are becoming health conscious. 
  • Local Shoppers: This target market contains people who shop at small and local farms. They usually enjoy fresh produce and love to shop from local farms.
  • Fresh Food Seekers: individuals and businesses who purchase products from small farms and love eating fresh food items. 
  • Vegetarians and Vegans: People who love vegetarian food and have vegan-specific diets may opt to purchase their fruits and vegetables from local farms. 

There are other target markets that you may focus on for your agriculture business.

  1. Acquiring a Skill Set

To learn how to start an agriculture business, you must pick a skillset that supports your business needs. You’ll need to learn how to farm and grow whatever products you want to grow. If you don’t have any prior experience regarding that, you can attend several online and offline workshops.

There are other skills that you will need to learn to ensure that your business keeps running smoothly. Skills like

  • Human resource management
  • Inventory management
  • Tax and accounting
  • Food processing
  • Harvesting the crops

One of the best ways to acquire the necessary skills for running your agriculture business is to work on a local farm. Find a farm near you and work under them to gain all the trade of the industry. Once you think you’ve gained enough skills, employ those skills in your business.

  1. Sourcing Raw Materials and Tools

As we mentioned above, a business is as good as the tools and equipment it uses. Knowing how to source raw materials and tools is a part of learning how to start an agriculture business. Most of the tools and equipment can be found in your ordinary carpenter store. As for the seeds and other raw ingredients, they can be harder to the source. 

 There are food companies that can help you find tons of raw materials and ingredients for ensuring that your product is perfect and of the best quality. As for the tools and equipment, you can source them from alibaba.com.

  1. How to Setup Your Price Structure?

One sure shot way to succeed in your business venture is by choosing an ideal price structure. You need to make sure that your products are priced fairly. Choosing your price structure can be tough and this is where your competitor research comes in handy.

Choosing your pricing structure requires a lot of brainstorming. You can focus on your competitors and the pricing policies that they’ve picked. Ideally, you pick a price point that is not higher than your competitors. A price point that is too low will also make the customers not stick.

One sure way to set up the price structure is by adding your expenses and the profit margin to find a price point.

  1. Is There a Need for Office and Space?

Knowing how to start an agriculture business also requires you to understand your need for space. You’ll need a huge farm space for agriculture business and to grow crops. Apart from that, you’ll also need to have an office and some inventory.

You’ll need some additional space in your home to run your business. Record keeping and management are crucial for ensuring that your business becomes successful.

  1. Arranging Finance

No business can survive without funds and the agriculture business requires a lot of funds. Arranging funds is a crucial part of learning how to start an agriculture business. First, make up a list of expenses and then start working towards arranging the finances. That’s the first step in arranging funds for your agriculture business.

If you don’t have the funds you need, you can ask your friends and family to help you out with the funds. With your friends and family, you won’t have to worry about interest rates and paying back the money at a specific time. If your friends and family can’t help you out with the funds, you’ll have to reach out to the bank for a loan.

  1. Is There a Need to Hire?

 Starting and operating a farm can be tough if you’re just on your own. There’s tons of manual work that needs to be done and you can’t do that on your own. There is only so much a person can do on their own. As an owner, you can either run your backend operations or you can work on the farm.

You’ll need to hire some help for running your business and maintaining efficiency. However, hiring a team will increase your expenses, and then you’ll need to manage other employee-related things like health insurance and payroll management and setting down safety policies.

Possible Challenges You Will Face While Starting Agriculture Business

Learning how to start an agriculture business is tough, plus running your business can be extremely challenging. Numerous unforeseen events can put a dent in the planning.

The competition level is extreme and you’ll need to build a proper strategy for running your business. Finding the ideal niche and target market are the two biggest challenges that you’ll face during business operations. Picking out a location and sourcing tools and ingredients are some other challenges you’ll face while starting your agriculture business.

As for solving the challenges, you need to focus on simple steps regarding the business. Build a strong business strategy and keep pushing with hard work and dedication. That’s all you need to do to ensure success in the agriculture business.

Conclusion: How to Start Agriculture Business?

Now that you know all about how to start an agriculture business. You need to start making steps towards success. With enough hard work and dedication, you can find success in the agriculture business. If you’ve already started a farm or are in the process of learning how to start a farm business, there are online and offline marketing strategies that you should follow for finding success. 

FAQs

  1. What are the main agriculture business categories I should invest in?

You can invest in productive resources like fertilizers, agricultural equipment, seed, feed, irrigational equipment, etc. There are other areas you can pursue in the agricultural business like raw and processed products of food and fiber. 

  1. What’s the importance of agriculture?

The agriculture business is important for a lot of reasons including:

  • It is a source of livelihood
  • Contributes heavily to the national revenue
  • Creates surplus material in the market
  • Source of raw material
  • Helps with economic development
  • ●        Guarantees food security

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