Building sustainable wealth in food and agribusiness investment
Fulfilling the rising global demand for foods, open the doors to investment through the agriculture value chain.
Food and agribusiness have a massive economic, social and environmental footprint.
The global portfolio size of the food industry is over $5 trillion which account for 10 per cent of global consumer spending, 40 per cent of employment and 30 per cent of Green House Mission (FAO Publication 2013)
Agribusiness activities cover the entire value chain from
• Input (Seed, Agrochemical, Farm Machinery)
• Farming (Crop production)
• Processing (Value addition)
• Agric-tourism (Farm lovers & entertainment)
• Marketing (Commodity trade and export)
• Warehousing (Silos, Warehousing)
Finding the right investment opportunity within this value chain remains one of the greatest challenges to investors.
Food and agribusiness investment requires a deep understanding of specific crops, geographic and compare value chains that encompass seeds and other input production, processing and retailing.
Many of the relevant investment opportunities are in geographic unfamiliar to some investors and their profitability rest not only on crops yield but also on how different part of the value chain performed.
This write-up aims at identifying promising investment opportunities and offers a view of how players can take position and successfully pursue them.
In Nigeria, the level of investment in the food and agriculture is still very low. However, the multi-billion dollar investment opportunities is the Food and Agribusiness value chain have great potential for reduction of hunger, job creation, wealth creation, food security and economic development.
This potential unfortunately, is barely being tapped and this explains the inability of the country to meet the ever increasing demand for agricultural product despite being the dominant employer of labour, serious investment is therefore needed across the board to enhance production and increase the contributions of the sector to Gross Domestic Product (GDP).
It will be recall that the Nigeria economy, at independence in 1960 was agrarian economy with Agriculture contributing significantly both to the gross domestic product (GDP) and over export.
The mainstay product of that time includes inter alia, cocoa, rubber, palm producer (palm oil and kernel) from the Southern Nigeria, and groundnut and cotton from the Northern part. Agriculture provides also the bulk of domestic food requirements which on its own provide an investment opportunity in the area of domestic commodities trade. Besides accounting for over 75 per cent of employment and it’s also contributes to Federal Revenue through export taxes and other related export activities charges.
Also in the non oil export investment, it is important to note that exportation is required by many economy to enhance revenue and usher in economic growth and development, it is therefore very crucial for economic progress and this to large extend has informed the idea of export led growth.
Export is a catalyst necessary for the overall development of an economy. Foreign trade creates an avenue for foreign capital to flow into a country, this increases the earning of the country thereby creating an avenue for raising the national income of the country which invariably increases the level of employment in the economy as a higher element for export will requires more production which in turn leads to the employment of more people.
Exportation by a country also helps attain a favourable balance of trade and balance of payment position for the exporting country provided it export reasonably exceeds its import.
Beside investment in exportation, investment opportunities exist in the following value chain in the food and agribusiness:
i. Investment in crop production is to achieve food security and to provide industrial raw material. Potential exists for the following crops: cereals, nuts, rice, maize, sorghum, millet, wheat.
Root Crops: Cassava, yam, ginger, potato, cocoyam
Legumes: Soya bean, groundnut, cowpea
Fruits: Mango, banana, oranges, guava, pineapple, paw paw
Vegetables: Cabbage, green pepper, carrot, lettuce, spice, onion, melon
Tree Crops: Oil palm, cocoa, rubber, coconut, kola nut, coffee, shea nut, bean seed, cotton, cashew nut, sugar cane
Others: Commercial growing of flowers and ornamentals any experimental orchards for more temperate fruits – apples, grapes vines and pears have been successfully established in the high plateau region.
ii. Food processing and preservation involving wasting that will use agricultural produce as raw materials.
iii. Livestock and fisheries production which posses great potential for development.
iv. Agricultural input supplies and machinery, water resources development especially for food control infrastructure and irrigation.
v. Commodity trading and transportation
vi. Development and fabrication of appropriate small scale mechanical technologies for on-farm processing and secondary processing of Agricultural produce.
vii. Exploitation of timber and wood processing activities. A wide range of wood resources are bound with a flourishing landscape of mangrove forest to desert and different ecology in between, that is suitable to grow a wide range of crops in large commercial volumes.
An investor can take advantage and build capacity in production, processing and marketing of Agricultural product in order to generate and build a mega wealth that can sustain prosperity even for the generation unborn.
Godwin Export Management Consultant
OG2Tech Consult & Investment Ltd.