Resolving The ChallengeOf Agribusiness Funding

There is no denying the fact that agribusiness is lucrative because of the return on in­vestment is high.

Agribusiness provides one the opportunity of earning more mon­ey from his efforts and becoming self-confident, high self-esteemed and a better person.

However, one factor that limits would-be investors in agribusiness is the issue of funding. Many with beautiful ideas back out for lack of funds to prosecute them.

Turning to traditional banks to fi­nance your business from the start could be a nightmare in that you may not have the collateral to secure a loan.

This is because banks generally do not grant loans to new business owners with a poor credit track re­cord, let alone investors in agricul­ture with long gestation period to pay back.

Yes, you have agribusiness-friend­ly financers such as Bank of Industry, Bank of Agriculture, microfinance banks and other funding organisa­tions.

However, the process to get there may not be as easy as you might wish.

However, one advantage of an agri­business is that it can be started with little or no money. This, of course de­pends on the level you want to start from. But, if you do not have access to funds at all, you may consider the following funding options:

Personal Savings

One of the easiest ways to fund your agribusiness idea is through personal savings.

The advantage of this is that you do not have to pay any cost of pro­cessing fees or interests when you invest your personal savings.

Another advantage of starting with your own funds is that it earns you trust from those who may want to assist you with additional funds because you are already in business.

However, saving money is not an easy thing; it requires a lot of disci­pline. But if you succeed, you discov­er that it is worth the trouble.

Family And Friends

Another easy source of funds is through family members – father, mother, brothers, sisters and friends. For instance, one established farmer I know started his poultry farm with 10 birds he bought with the money he collected from his mother.

The HND holder shunned the temptation of scouting for a non-ex­istent job and decided to start with what he had. Today, he is reaping the fruits of that decision.

The beauty of sourcing funds from relations is that it removes the pres­sure of beating repayment deadline and it is normally interest-free.

I know a particular young man who after leaving the university gath­ered money from his parents to start fish farming and today the business has grown tremendously with many workers in his payroll.

Facilitators

Another way a starter can obtain funds for agribusiness is through fa­cilitators.

A facilitator can be an individu­al or a corporate organisation that guarantees funds from banks or government agency and disburses to farmers who would in turn pay back after sale of their produce.

The farmer is given a moratorium (according to the nature of his crops) after which the loan is repaid.

This ensures that the smallholder farmer is able to get funds according to his capacity.

Processors

Processors of agro-products can give funds, seeds or inputs to out-grower farmer who would pay back after harvest or production.

In this case, the monetary equiv­alent would be subtracted from the produce supplied to the processors while the balance is paid back to the farmer as profit.

The processor and the farmer would enter into an agreement on the size of the farm the farmer is to develop, the cost of the farming, the amount the farmer is to be supported with and price of his supply to the processor.

The Dangote Group is a good exam­ple of a processor. It has out-grower rice farmers for its rice mills.

Co-operatives

A co-operative society is a volun­tary organisation formed by agri­business owners and other stake­holders to pull their resources and ideas together and render services to members.

The objective is to protect members from exploitations by middlemen and to train members to get better price bargains for their produce.

It is also meant to ensure easy and quick dissemination of information to members as well as to foster unity and solidarity among members.

A cooperative society helps mem­bers to secure loans for inputs and to procure processing and storage facil­ities and marketing for their produce.

A prospective investor can join a cooperative society with a view to obtaining funds for his business.

Again, government agencies or fi­nance organisations can pass funds through the co-operative to individ­ual members who pay back same through the co-operatives.

There are many types of agricul­tural cooperatives with many advan­tages to a members. For instance, a Consumer Co-operative buys goods in large quantities from producers or wholesalers at controlled prices and sells to members at reduced price.

Producers co-operative normally produces some commodity and sells to consumers at a higher price.

It also assists members in buying inputs such as fertilisers and im­proved seedlings. It also purchases equipment such as tractors and hire to members.

Multi-purpose co-operative com­bines many functions such as pro­ducing, processing and marketing crops of members.

Savings and Thrift Society: In this, members contribute money periodi­cally from which they give loans to members at minimal interest rates.

Government Grants

Another way you can fund your start-up is by taking advantage of government grants and low-interest loans.

In order to encourage investment in agribusiness, government has put up a number of intervention funds meant to assist individuals to obtain capital easily.

To access such loans, you have to arm yourself with promising busi­ness plan, good enough to convince facilitators to give you the loan.

To access the funds you have to join or organise yourselves in clus­ters of farmers (usually no fewer than 10 members) engaged in priori­ty food staples namely rice, cassava, sorghum and horticulture in selected states with high potential. You have to apply to appropriate organ of gov­ernment.

It offers a no-interest loan scheme with a one-time 5 percent adminis­trative fee for costs. It has disbursed loans to artisans, traders, farmers and entrepreneurs across some states.

Tony Elumelu Entrepreneurial Programme (TEEP)

This is an initiative of the Tony Elumelu Foundation and provides a $5000 seed capital to enterprising young people with good ideas.

The above are just a few of the op­portunities you can leverage to start your business. Do not allow the chal­lenge of funding to scuttle your am­bition of becoming an entrepreneur.

All you need is courage and diter­mination to succeed despite odds.

To your success!