Starting a business in agricultural sector has played a major role in the development of India’s economy over the past decade. More than half of all rural households rely solely on this sector for their livelihoods, making it one of the largest contributors to the country’s Gross Domestic Product (GDP). There has been a 350% increase in agriculture since the beginning of 2000, which is heartening!
The government, too, has taken several initiatives to ensure the sustainable development of the sector in India, a country endowed with arable land and climatic conditions that facilitate the production of a wide range of agricultural commodities. In India, the demand for feed, fodder, biofertilizers is growing; biotechnology applications are increasing; secondary and tertiary food processing is becoming more and more common; exports are on the rise; and livestock and forests are abundant, all of which promise a huge opportunity for agribusiness.
In the next decade, the agriculture business in India is poised to undergo a major revolution. Agribusiness chains, equipment, and structure are being modernized; production is increasing; investments are being channeled in; and exports are expected to increase. Agriculture, and its allied businesses, are receiving more and more attention as a sector due to the growing awareness of the need to strengthen agriculture. Agribusiness thus stands out as a lucrative option for entrepreneurs.
Defining the scope
Agricultural goods are produced, processed, distributed, and distributed through the entire Agribusiness industry, which encompasses all steps involved in bringing agricultural goods to market, including production, processing, and distribution. Crop production, distribution, agrichemicals, fodder, breeding, farming equipment, seed supply, raw and processed food and fibre, storage, transportation, packing, soil testing, marketing, retail sales, and more are all part of agriculture.
When you decide to enter the agribusiness field, the first step is to determine the type of product/service you wish to offer. However, you can only make this decision once you have a clear understanding of your business objectives, your business plan, and your resources. It is still possible to enter the market even if you are unfamiliar with equipment, products, grains, soil, seeds, or plants, but you should have a clear understanding of the sector, a solid business plan, and a strong team in place before doing so.
To help you through the process, here is a step-by-step guide:
1. Research into market trends
Whenever you are planning to enter a market, it is imperative that you conduct thorough research before you decide on an idea, product, or service. At the entry level, it will help you decide whether to proceed. In order for this process to succeed, the following questions must be answered clearly:
- What is the current market potential?
- How does the market look in the future?
- Consumers are facing what problems?
- How does the competition fare?
- How do bottlenecks occur?
- What are your plans for this market?
- What is the legal process like?
- Do you plan to run your business locally, regionally, nationally, or globally?
Analyze the prospects, as well as look for your window of opportunity. Always look out for credible and relevant information, and resources. This can open up new opportunities and assist in building your network.
2. Development of a business plan
In order for a business to succeed, it must have a comprehensive business plan. Simply put, it is a formal document that explains the goals of the business, and how they intend to achieve those goals. Here are some questions to be addressed: – Here is a list of questions from a marketing, financial and operational perspective. The best plan will help you get there.
- What are your USPs?
- What is your marketing, operational, and business strategy?
- What are your plans for structuring and managing your business?
- How much does it cost to start a business?
- How much does it cost on a daily, monthly, and yearly basis (in USD)?
- What are your plans for the funds?
- Which markets are targeted?
- What would be the initial number of employees needed?
- Analyse of competitors
- Strengths, Weaknesses, Opportunities, Threats (S.W.O.T.) Analysis.)
- Expenses and revenues are projected for 1000 days in a financial projection.
3. Obtain funding
Since the demand for food is expected to only continue to grow, agriculture has the inherent advantage of having a customer forever. Most agribusinesses begin as proprietorships and then raise funding as they grow. It is crucial for agribusinesses to show some track record of growth and get some years behind them before investors come in at the pre-growth or growth stage.
Depending on the business model and additional factors, you might choose bank loans, crowd funding, incubators, accelerators, winning contests, microfinance, etc. I was trying to summarize a few funding options like bank loans, crowd funding, incubators, accelerators, and microfinance.
4. Acquire a thorough knowledge of legal and regulatory issues
As far as the sector is concerned, both the central and state governments have their own laws and regulations. These are mainly related to pricing, distribution arrangements, workforce management, advertising, etc. Before getting started, it is essential to understand the laws that affect agribusinesses in India:
- The Indian Contract Act of 1872
- The Factory Act of 1948
- The Minimum Wage Act of 1948
- Companies Act of 1956
- The Trade and Merchandise Marks Act of 1958
- The Monopolies and Restrictive Trade Practices Act of 1969
- Water (Prevention and Control of Pollution) Act of 1974
- The Atmosphere Pollution Control Act, 1981
- Health-related Industries (Special Provisions) Act, 1985
- The Environmental Protection Act of 1986
- Legislation protecting consumers, 1986
- Tax laws to include corporate taxes and indirect taxes (e.g. excise tax, customs duty, sales tax, wealth tax).
5. Register and obtain licenses for your business
You can register your company as a sole proprietorship, partnership, limited liability partnership, private limited company, or public limited company.
Incorporating a company involves four steps: obtaining Digital Signature Certificates and Director Identification Numbers, completing an ‘eForm’ or ‘New User Registration’, and completing an ‘eForm’ or ‘New User Registration.’
If you are not comfortable with legal terms, you can also consult an attorney or visit the Registrar of Companies to settle the matter on your own.
To start off, you will need to register as well as get all the necessary licenses. Depending on what segment you get into, the licenses will differ. Usually, the legal companies that help you with registration also assist you in obtaining licenses, but some specialized firms can also assist you in obtaining these licenses. By visiting the Indian government’s portal, you can also do it all by yourself.
6. Arrangements final
When you have completed the above steps, you can then proceed to making all final arrangements, such as purchasing/leasing land and office space, office stationery, machinery (if any), and equipment. In addition, this is the time for all business tie-ups and partnerships to be planned and executed.
A decision to enter the agricultural sector, well planned and prepared, is a huge and promising step. What else are you taking into consideration? The successful execution of that plan!