Agribusiness: Overview, Components, Importance And How To Invest in Nigeria

Agribusiness, sometimes referred to as agribusinesses, agriculture or farming, refers to the business of agriculture, including growing of crops and livestock production.

Agriculture is practiced throughout the world and makes up a sizeable proportion of the economic output in many developing countries.

At least one-third of the world’s workers are employed in agriculture, though some estimates say as much as 70%. Only 10% of farms worldwide produce at or above market prices; farms that produce below market prices receive subsidies from their governments.

Introduction

Agribusiness is an industry where companies and organizations buy from farmers to sell to consumers.

The goal of agribusiness is to provide food for human consumption; a considerable amount of revenue is spent on research and development towards increasing production yields and encouraging sustainable farming methods.

Some well-known examples of agribusinesses include: Archer Daniels Midland (ADM), Dole Food Company, Heinz Foods Company, Monsanto Company and Tyson Foods. , Components, Importance And How To Invest in Nigeria.

Agribusiness is one of the most important industries in today’s economy due to its contribution to national economies as well as local communities.

There are two major types of agribusiness: vertical integration and horizontal integration.

Vertical integration refers to when a company owns all stages of production, while horizontal integration refers to when different businesses within an industry work together through partnerships or mergers.

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An industry can be broken down into different components.

These are called market segments. There are several agricultural sub-segments within agribusiness. , Importance And How To Invest in Nigeria.

The most common types of agriculture include: livestock, crops and aquaculture (farming fish). The most common types of livestock include beef cattle, dairy cattle and swine (pigs).

Crops grown for human consumption include soybeans, corn and wheat. Aquaculture includes raising fish like salmon or tilapia for human consumption. , Importance And How To Invest in Nigeria.

The importance of agribusiness to national economies is enormous. The agriculture industry accounts for over one-third of all jobs worldwide and directly contributes to around 25% of GDP (gross domestic product) across developed countries.

In developing countries, agribusiness accounts for almost 40% of GDP due to a reliance on subsistence farming practices that are not profitable but still necessary to sustain life. , Importance And How To Invest in Nigeria.

Value chain analysis

The value chain can be used to analyze any goods-based business, but it’s most relevant for agribusinesses (agricultural companies). Value chain analysis starts with a high-level overview of costs and profits. When implemented well (and thoroughly), a value chain analysis will demonstrate how each link in your company’s supply chain contributes to your profit margin.

Another important concept related to value chains is known as strategic procurement. This is where you make a conscious decision about which suppliers you want to work with based on their ability to deliver quality products at competitive prices.

In general, there are three main factors that affect your company’s profit margin: Cost of goods sold (COGS) : The cost of your raw materials and other ingredients.

Labor costs : The people who make and sell your product are an integral part of your business model.

Transportation costs : These can be affected by distance or weight, depending on what you’re shipping.

The last thing to consider is how your business model fits into an industry sector.

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Opportunities and risks

Despite being exposed to a lot of opportunities and risks that may arise when you’re running a business, there are many advantages and disadvantages of doing agribusiness. Agribusiness is not all bad. It offers wide opportunities and helps to meet country’s food requirements.

There are also some risks involved. There could be cases where farmers might want to sell their produce at low prices because they want to get rid of them as soon as possible before they rot or get spoilt.

Legal structure
There are basically three legal structures for operating an agribusiness. The first structure is a sole proprietorship.

A sole proprietorship is an unincorporated business owned by one individual. An incorporated business is owned by shareholders and can be either a C corporation or S corporation.

One of the benefits of incorporating your business is that it provides you with limited liability protection against lawsuits. For example, if someone was injured on your property as a result of your negligence (i.e., not keeping up with proper maintenance), you would not be personally liable for damages beyond what your insurance policy will cover.

Financial structure

Let’s start with something that many people are familiar with. Perhaps it’s something you have heard of before or maybe not. Financial structure is a buzzword often used by banks and other financial institutions to describe a company’s level of debt.

The financial structure of a company can be roughly categorized into three main types; being leveraged, balanced and unleveraged.

A leveraged structure for example suggests that certain companies have more debts than others. A perfect example would be a household which uses credit cards and has very little cash in their bank account to cover bills.

Conclusion

Agribusiness is a big deal in Nigeria. The country has been making progress, and it looks like business will only continue to grow from here. There are a lot of opportunities available, and it’s hard to choose between them all. is an excellent place to start your search for agribusiness investments in Nigeria.

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