Welcome2Africa, Leadway reveal why agric businesses fail

Poor knowledge and inability to harness various agribusiness finance options have been identified as reasons most small-scale start-ups in agriculture-related businesses fail at the initial stages.

Experts said these at a value chain finance workshop organised by Welcome2Africa International, supported by Leadway Assurance Ltd at the Boardwalk Event & Conference Centre, Victoria Island, yesterday.

Bamidele Owoola, Chief Executive Officer (CEO) of Welcome2Africa International, said there have always been disconnects between opportunities and those that have interests in such opportunities, especially in agriculture.

She said while the majority of agribusiness owners in Nigeria and Africa are focused on the financial facilities from the conventional financial institutions with higher interest rates, there are many avenues from which cheaper funds could be raised for agricultural businesses.

Some of the ways, she said, are private placements, off-taking arrangements, micro-financing with lower interest rates, networking and grants from international humanitarian organisations.

Similarly, Chief Executive Officer, JR Farms, a cassava-processing and coffee-making firm operating in Nigeria, Rwanda and Ivory Coast, Mr Rotimi Olawale, said to succeed in agricultural business, there must be zeal to learn, unlearn and master the arts of doing a particular agribusiness.

He emphasised adequate marketing plans and contract pacts before massive production in agriculture to avoid capital loss and discouragement.

“Marketing should precede commercial agricultural cultivation or processing. You have to produce based on assured markets through clear agreements on specifications, quantity, and delivery time,” he said.

Olawale warned new business entrants to desist from assumptions that there is a ready market or that they would seek buyers after production, saying, “there is no any market other than the one you create by yourself.”

He added that agricultural investors should spend enough time to investigate where to sell, who buys, their patterns of buying and other relevant information.”

Head of Agribusiness Unit of Leadway Assurance, Mr Ayoola Fatona, also harped on the maximisation of off-taking agreement as a sustainable and predictable way of selling agricultural products profitably.

Fatona said insurance also ensures mitigation of risks involved in agricultural businesses, and that protection and recoup of capital should be paramount in the plans of individuals, firms and corporation venturing into agro-allied businesses, which, he added, Leadway is equipped to handle effectively.

Explaining agricultural insurance further, Fatona said it protects against loss of or damage to crops and livestock, indemnifies policy holders for losses suffered, has great potential to provide value to low-income farmers and their communities and it helps farmers to plan better for the next season.

He added that it helps in transition planning and better output, helps insurers reason in a strategic way to help farmers better in the agricultural value chain, enables the off-takers to enjoy great value for their produce and brings indigenous agriculture back to its right place in Nigeria.