It has been said agriculture is the next big thing. Most entrepreneurs, and even the employed folks, have been wondering how to make money from this sector. Agriculture employs more than 40 per cent of Kenya’s population both directly and directly according to the Food and Agriculture Organization.
These include those who deal in farm inputs, farmers, transporters, insurers (livestock and crop), processors, agronomists and even food outlets. Since agriculture is a broad sector, I will focus on food, which is one of the fastest-growing industries in the world.
In the Kenyan context, you can never go wrong with food. We all know the importance of food but more importantly there are other factors that make investing in food lucrative.
First, our population structure and patterns indicate that more than 70 per cent of our population is aged 35 and below. This tells you a lot about their lifestyles, especially eating habits. Demand for food has been increased by the rural to urban migration as people search for opportunities and the fact that agricultural land in places such as Kiambu, Machakos and Kajiado counties is being converted to real estate.
Most people have been investing in food production, which is basically farming. Before venturing into farming, the first and most important activity is market research. Know the current demand and possible gaps, pricing, cost of production and quantity needed to break even. This is what Korie Maru, an administrator at Digital Farmers Kenya, refers to as #AnziaSokoni.
This means market-led agriculture where farmers target products with real and viable markets. She advises that this doesn’t have to be complex research but simple targeted interviews with people dealing in the produce.
Once satisfied that there is market for a product, one can proceed to think of other factors such as capital outlay, land and water requirements, among others. For instance, with the recent tax increases on pesticides and herbicides, banana farming would appeal to someone who has a relatively large piece of land in an area that receives good rainfall.
Food processing or value addition in this context simply means transforming raw material by packaging, extracting or through addition of chemicals into a new product, thus, increasing a consumer appeal and willingness to pay a higher price. This is big business in a country that sells most of its agricultural produce in raw form.
Some of the most successful stories have been in milk processing (especially yoghurt) and fresh juice. All this has to be supported by a business model and with the right strategy to gain a foothold in the market. A lot of attention is shifting to fresh healthy eating and whoever will combine this with technology could make good money.
Food processing equipment is cost-effective compared to other manufacturing industries. And you don’t have to start big. In my mentorship sessions I always advise people to start where they are and grow.
So folks, if you have some money you have no idea how to invest, think of food. You could be an IT nerd, an insurer, angel investor, venture capitalist or stock broker. All you need is to decide where in the supply chain you want to join. There was never a better time to invest in food than now.