HOW CAN AGRI OR LIVESTOCK FARMERS BECOME ENTREPRENEURS
Entrepreneurship refers to the ability to take high risks, prosper, manage and organize a new business enterprise to earn the profit. Agricultural Entrepreneurship, also known as Agripreneurship, means the term which is associated with the marketing as well as manufacturing of different agricultural products and inputs too.
Small farmers produce food for their family but at the same token, they sell a small portion of their products into several markets and it increases the level of market sales. So, the working of the small farmers indicates that they are an agricultural entrepreneur. In this way, the Entrepreneurs can work solely and keep the profit from the manufacture or they can be a part of Farmer’s group and sell the crop collectively and get the profit accordingly. Moreover, the farmers enter into the business relationships with other value chain partners such as agents, and also, this forms an approach of contractual marketing which may lead to large business industries at the end if they get success.
Agricultural Entrepreneurship
So, the concept of Agricultural Entrepreneurship is introduced to support the farmers, group of farmers as well as agricultural industries by improving the methods of production and increase the market engagements. An agripreneur is a person who supports and manages a business venture by focusing on the agricultural sector only.
An entrepreneur is not simply someone who can organize and operate a business. He or she has to possess a set of qualities and skills that will turn them into a successful business person. A true entrepreneur aims at two points, producing for the market to make a profit and find ways to improve the product quality as well as increase the efficiency of production itself. Doing the latter is like stepping out of a comfort zone since it requires taking calculated risks to go beyond the day-to-day management activities, into the realm of competition.
Most farmers, however, choose to produce based on their own consumption needs while selling the surplus to the market for additional profit only at best. Few ventures on to apply new agro technologies as ag monitoring, experiment with planting new crops, and try out new farm management practices to increase their profits. This lack of drive can be explained by fear of taking risks, but there actually exist solid strategies that farmers can put into practice to grow into real successful entrepreneurs.
Strategies to Turn Farmers into Entrepreneurs
The key difference between an ordinary small-scale farmer and a farmer-entrepreneur is how they approach making a profit. While most farmers in the world are mainly concerned with feeding their own families, entrepreneurs are focused on profit first. This is true regardless if they’re involved in rural or urban farming. But to successfully maintain such a profit-oriented focus, farmers need to be educated in agribusiness management, marketing, and entrepreneurship. Besides, they need to understand clearly basic common strategies to ensure their risks will ultimately pay off.
Marketing Strategy
Every farmer-entrepreneur has to know about the 4 Ps and 4 A’s. These are the foundation “pillars” of marketing, the 8 points to keep in mind while doing business. A farmer has to consider the quality and the appearance of the product, the distribution methods (place), the price, and how to effectively promote the product. And then the farmer will need to anticipate the customer’s reaction to the 4 P’s, whether or not they’ll find the product acceptable, available, and affordable. Not to mention, the customer has to be aware that the product is on the market.
Customer Satisfaction Strategy
The main goal for any business is a satisfied customer, and entrepreneurs should aim at creating a loyal customer base. To achieve that, farmers need to understand and fulfill the ever-changing needs of the customers by creating effective marketing strategies.
Stakeholders Engagement Strategy
Building effective and sustainable partnerships are of critical importance when it comes to business development. That is why reaching out to different existing and potential stakeholders is not something farmers should ignore. The stakeholders include private sector companies and distributors, the local government, IT solution providers, and legal or financial experts.
Financial Management Strategy
Entrepreneurs have to aim at becoming financially viable as soon as possible. It will ensure the farming business not only stands on its feet but also does not require continuous support from multiple stakeholders.
Risk-taking Strategy
A risk-taking attitude in farm business management implies that farmers need to be open to taking risks and applying modern farming practices and technologies they have never used before. It can be planting new crops, using remote sensors (drones, satellites) or trying out new approaches to farming activities (tilling, irrigation, etc).
Beginners can really benefit from modern tools that automatically collect field data remotely from satellites, ground weather stations, and other sensors. These apps are capable of processing and analyzing impressive amounts of data practically instantaneously with their built-in algorithms. It can greatly help farmers with decision-making. One of such apps is Crop Monitoring by EOS. It uses satellite imagery to collect, process, and analyze data from the fields, and bring it on the screen as actionable insights. It provides data on vegetation, weather (current, historical, 14-days forecast), problem areas, field productivity, and more. Users can easily plan and monitor both future and past field activities and manage scouting procedures remotely. Using Crop Monitoring, farmers can help farmers reduce the risks related to crop failure, improve decision-making, and greatly assist with farm management.
Along with strategies, farmers who want to become entrepreneurs must develop the right policy to support them, including effective laws and regulations, access to timely and adequate finance, and to business development services.
The concept of entrepreneurship and entrepreneur has evolved; from a for-profit business to including social entrepreneurship; and from an individual who organizes or operates a business to qualities that define a successful business person. A small farmer does manage an agribusiness but may not exhibit qualities generally associated with a successful business person. An entrepreneur is someone who produces for the market and always looks for opportunities to improve and expand his business by taking calculated risks. Farmers, on the other hand, produce keeping in mind their consumption needs and the MSP (Minimum Support price). Only a small percentage of farmers try new crops, adopt alternate technologies and package of practices to make farming profitable. The majority of Indian farmers are at survival stage more due to compulsion, despite high weather related risks, than their personal choice to practice agriculture and don’t see ever the growth stage. The new generation prefers to migrate to nearby cities for alternate livelihoods meeting their aspirations, rather than putting laborious efforts in a low profile and less remunerative agriculture. Unlike other businesses, producers benefit least in agriculture as farmers remain dependent on MSP fixed by government agencies that becomes Maximum Price Fetched (MPF) by them. Government needs to change it’s policy and role to empower farmers to decide prices of agri produce and replace old inputs based subsidy approach that benefit mainly input suppliers with an output based price incentives directly to farmers.
Small farmers possess technical and managerial skills but lack entrepreneurial drive to take calculated risks to overcome agribusiness challenges related to accessing remunerative markets, timely finance, low bargaining power, regulations, appropriate technologies and information, and access to BDS providers.
Recent attempts to organize farmers into FPCs (Farmer Producer Companies) have been facilitated by combined efforts of government agencies and field NGOs primarily to help farmers become agri-preneures to diversify into various agribusiness enterprises related to trading agri tools and equipments, seed production, certification and marketing, agri inputs and trade, and value added products. These agribusiness options were available earlier also but small farmers, individually, could never take up these capital and resource intensive enterprising activities. The Producer Company Act allows small and marginal farmers to join hands with other local resourceful farmers to form FPCs to take up agribusiness enterprises, and become entrepreneurs.
However, managing farmers’ institutions such as FPCs require entrepreneurial and management skills for managing staffs and board members, accounting, managing profit and losses, procurement, inventory management, building partnerships with retailers, traders, private players and government agencies, business and marketing strategies, and awareness on rules and regulations of FPCs that small farmers lack currently. Also, government’s efforts of promoting FPCs didn’t visualize the needs for building such capacities of farmers to manage FPCs successfully and sustainably. Therefore, these farmers’ institutions find it difficult to breakeven and continue to depend on field NGOs even after several years of support.
During my interactions with board of directors of FPCs there emerged a felt need for comprehending and managing various functions of FPCs. It posed an interesting challenge to educate and communicate key agribusiness principles to farmers in a simple and easy to understand language. This prompted me to conceptualize similarity between functions performed by our key body parts and different roles that need to be performed for running a successful FPC. Educating farmers in the areas of agribusiness management, marketing and entrepreneurship would help them see farming more as a profitable enterprise than a last resort. Therefore, it is important to develop FPC relevant business, marketing and entrepreneurship training content and methodologies that could empower farmers to manage FPCs successfully.
In order to run successfully and sustainably, a FPC needs to perform functions similar to ones done by key body parts to live a healthy and long life.
- Head: Marketing strategy– similar to head in the human body FPC needs to continuously perform key business functions related to thinking, hearing, seeing, feeling, planning etc. by designing and executing effective marketing strategies around seller centric 4Ps (Product, Place, Price, Promotion) and customer centric 4As (Acceptability, Availability, Affordability, Awareness) principles.
- Heart: Customer satisfaction – A satisfied customer is central to a well functioning FPC similar to a healthy heart in a well functioning human body. FPC should aim to build loyal customers by fulfilling their changing needs with a effective marketing strategies to ensure its long term sustainability.
- Arms: Stakeholders engagement – FPC needs to reach out to various existing and potential stakeholders such as local government, private sector companies and distributors, local mandi, IT solution providers, legal, finance and business experts to build effective and sustainable partnerships.
- Artery and vein – financial management – FPC needs to strive to become financially viable as soon as possible to stand on its feet without having to continuously depend on supporting NGO and government agency similar to artery conveying oxygenated blood to body parts(profits) and veins carrying de-oxygenated blood towards heart(losses) for converting into oxygenated blood.
- Legs: Governance vigour– For a smooth running of a FPC it is important that both FPC staffs (represented by one leg) and Board of Directors (represented by second leg) complement each other. In the initial years NGO representatives manage and run entire operations of FPC that should gradually transform to equal sharing of responsibilities between them wherein vision and leadership should come from BoDs and day-to-day operations and technical aspects should be managed by staffs.
For a healthy and functional FPC it is important for farmers to learn to manage these different functions diligently. FPCs offer a golden opportunity to farmers to transform their destiny to become agribusiness entrepreneurs by graduating from doing a simple farming to businesses that provides them competitive advantage through vertical business integration by moving up in the value chain and as close as possible to final consumers to maximize price realization within a value chain.
Farmers need right policy ecosystem and support to flourish and become entrepreneurs. They can become successful entrepreneurs only if barriers outside their control are removed such as enhancing government investment in agriculture, creating web of irrigation infrastructure, supporting laws and regulations, access to timely and adequate finance, access to effective extension and business development services.
In a nutshell, following three broad areas would help in creating a right ecosystem for farmers to become agri-preneurs:
Build business and entrepreneurship skills: Government needs to encourage private agencies and institutions that build marketing, business and entrepreneurial skills of farmers, certify farmers and also extend onsite hand holding services to them.
Create and facilitate modern IT enabled marketing infrastructure: In order to bring transparency and efficiency all APMC mandis need to use electronic weighing machines, grading machines as per Agmark standards, and differential prices for graded products. Promote modern warehouses with enhanced capacities, cold storages, and incentivize agri processing units.
Policy law and regulations: Innovative laws such as treating FPCs as start ups and extending 3 year income tax exemption proposed recently for corporate startups companies.
The characteristics of a successful entrepreneur
Several common features that flourishing agricultural entrepreneurs have:
- Initiative and capability to identify and take the proper benefits of the opportunities;
- Ought to be single-minded and willingness to adopt innovative as well as traditional opinions;
- Should be an inventive leader and ready the disturb the quo of the status;
- Always looking for some creative ideas to make improvements and expand their organization;
- Operate a business in a different zone that takes more ideas that are less popular in other’s perspective and opinion;
- Combat in a good way with the threat as well as insecurity;
- Ought to be visionary and evaluate the risks to calculate it before;
- Organizing people in a good way and build up strategies as well as technologies to suits with the changing environment;
- Should be a creative problem solver and understand the whole process of decision-making.
A major change has been observed over the past thirty years in the agricultural markets and the trade of agricultural products across the globe. The world is growing and shifted from the national market to the international system of trading, which indicates that, the farmers with a plot of land competing with the huge industrial farmers of other nations in a single marketplace.
In some under-developing nations, there is a pressure on the local farmers for the commercialization of the operations. Here are some factors that have driven all these changes:
- Decline in the size of the land: It refers to the needs of the farmers that they want a more innovative system for production and supports the basic amenities of the family.
- The second factor is the growth of Urban Areas and a rapid increase in the population.
- General Modernization: There is a need to generate more incomes to support the necessities of farming families and their expectations to get the medical facilities, education, better transport, interaction and also covers the additional cost related to the traditional as well as cultural functions.
To support the agripreneur needs of the farmers, the authorities need to formulate some new skills and this is beneficial in the process of commercialization also. The farmers need to grow the farm plans with the help of other individual farmers and also, working with the distinctive levels of farmer organizations from groups to the corporations. This will help analyze the areas of market, sales and financing and building various farming business opportunities with the clients.
