HOW TO – Start an Agricultural Produce Business

Uganda is richly endowed with arable land that has promoted agriculture over the centuries. There are numerous crops that naturally grow without the need for complex agricultural practices. As a result, so much trade is going on internally as well as export led that focuses on produce.

The growing urbanisation has led to increased demand of various foods that were initially never regarded as commercial crops. Maize, Rice, Beans are examples of produce that has traditionally been commercial. However, over the past decade, we have seen millet, cassava, sorghum, simsim, soya beans among others take up representation on the commercial landscape of agricultural foods.

The beauty of trading in produce is that it doesn’t have high entry barriers as you will note in this article. It is one of those businesses that you can start in a very basic way by simply buying and selling the produce at a markup or buying, processing and selling at an even bigger markup.

How can one get into this business?

Identify the produce for trade: Due to the diversity of foods consumed, the opportunity for trade is also very broad. You need to identify which particular produce you can best deal in. This identification process can be guided by factors like;

• Your village roots – Most of us have villages of origin aside from our urban dwelling places. These villages are largely agricultural oriented and you cant fail to find a common crop planted over there. Where I come from, rice is the most prominent commercial produce and hence it is easier for me to trade in rice as opposed to say simsim .

• Access to Supplies – Trading usually requires that you have some sort of steady supply of produce. You need to know which areas of the country can supply you what you need. The Bunyoro sub-region for example is reknowned for Maize and Cassava production. The Lango sub-region is known for sunflower and sim sim growing. The Mbarara axis towards Bushenyi is regarded as a Banana zone.

• Ease of Handling – How easy is it to handle the produce till it gets to the consumer? Perishable produce always puts you on tension to ensure that it is sold very fast while non perishable produce gives you room to approach the market at your convenience. As a starter, I advise that you avoid perishable produce unless you are very certain of the market you’re dealing with.

Familiarise yourself with the market dynamics: Business is never as obvious as it seems when calculating returns. Its practicalities demand that one is knowledgeable about the trade dynamics involved. Price fluctuation is one of most common issues to deal with. Just like the stock exchange, in a matter of hours, maize prices could drop by UGX 100/ per kilo and in case you had stocked after purchasing at a higher price, it becomes obvious that you stand to lose UGX 100,000/ per tonne sold.

Another challenge is posed by the multitudes of unscrupulous traders who will always give the impression that your produce is of poor quality hence pushing you to settle for a low price.

You also need to know the seasons of the year and how they affect both supply and demand. This can help you determine when to stock and store or quickly offload your stock.

Set up a Supply Chain: Establishing the purchase network is fundamental. There are options at your disposal like; buying directly from the farmers, buying from local traders in the village and buying from urban wholesale traders. Each of these options has its pros and cons. As an example, while it might be much cheaper to buy directly from the farmers, the effort placed in aggregating the small amounts of produce from individual farmers could easily erode the perceived savings in price.

Establish your market: Always avoid venturing into business without knowledge of whom you want your customer to be. Curve out a good picture of the target customer. Is it schools and various institutions that require bulk supplies? Could it be shop or supermarket retailers? Is it the home consumer?

Clarity on the target market will guide you on other factors like packaging, distribution and processing requirements. Try to ensure that you steer clear of credit supplies until a time when you believe the relationships with customers are good enough to facilitate such a judgement.

Storage: This is very crucial at various stages of the supply chain. When aggregating produce purchased upcountry, a storage point is needed. Upon arrival in the urban areas, another storage location is crucial to avoid turning you into a desperate seller as well as allow accumulation of stock for large scale supplies. Ensure that this storage space is free of pests since they can significantly erode your margins if left unattended to.

A village Rice Store

Processing: Some traders choose to sell produce as is while others opt for processing. Kisenyi, a slummy business hub found in Kampala City is a good example of a location where produce is processed prior to sale. Maize is turned into its powder form (posho), same with millet, sorghum, Soya and others.

Processing has been made so easy that within the same milling premises, one can find packaging bags, bag sewing machines as well as print services to brand the bags.

Marketing: You need to build up some noise about your products/produce. This should help you get pre-orders thereby reducing on uncertainties. Besides, the more the marketing, the more the orders which gives you an opportunity to operate at higher economies of scale. Social media is such a low cost and good marketing tool lately especially when dealing with the end consumer. You might want to consider using it.

With these few tips, start working your way towards your dream business today.

James Wire is a Small Business and Technology Consultant

Blog: wirejames.com

Twitter: @wirejames

Email: lunghabo (at) gmail (dot) com

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