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i-Bulletin 6

i-Bulletin 6



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Published by CaRAPN

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Published by: CaRAPN on Aug 04, 2009
Copyright:Attribution Non-commercial


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 promoting a wider appreciation of information and knowledgemanagement for agriculturaldevelopmentgenerally and specifically,support for theIICA/CTA MEAgrISys project
#6, 2008
Research andPreparation:Naitram RamnananCaRAPN Member
Concept, Artwork,Editing:Diana Francis
Trade Policies andNegotiations ProgrammeIICA Caribbean Region
Financed by:Technical Centrefor Agricultural andRural Cooperation(CTA –ACP)
The Views expressedherein are not necessarilythose of the CTA and IICA
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Using his acquired expertise in greenhouses, ‘Terrance’ started off in1997 with three greenhouses specializing in three crops- sweet peppers,lettuce and tomatoes. The market was growing and he maximized theenabling environment; government policy promoted diversification andmodernization; and financial, technical and business support thatmatched his growing needs. As his business grew, expansion wasinevitable. Terrance needed additional financing to purchase moregreenhouses. While the financing was being negotiated, he did not wait!He used his own resources and invested in used greenhouses, increasingfrom three to eleven in about seven years.His initial investment of his ‘
time, treasure and talents’
paid off! Hiscarefully planned efforts for success included thorough preparation byeducating himself in greenhouse technology; taking risks through hisinitial investments in greenhouses; matching his technical know-howwith business sense through systemized farm management practices andoutsourcing services where appropriate, such as, land preparationservices. Now, in 2008, he has 28 greenhouses with an additional rangeof crops, which now includes red and yellow sweet peppers, cucumbersand cabbage that made him even more sought after in the market place.But, he did not do this all alone! He was able to secure one essentialpartner – a micro-financing institution whose mission is to support thegrowth of a vibrant micro and small enterprises by providing client-driven services. Terrance and his micro-financier took the ultimateplunge– they invested in agriculture and by extension St. Vincent and theGrenadines together.
Some lessons?
Investing in agriculture does not depend on million-dollarexternally financed government projects. Investing in agriculturerequires preparation and smart partnerships between producer/investorand a financier that offers more than just money.
Investing inagriculture
can start at any level, and
one business at a time can makea big difference
There is no doubt that
urgently and absolutely
needs financing and newinvestments
. The right environment must exist for these investments to take place. Thenational policy framework must recognize the pivotal role of entrepreneurship and take everymeasure to ensure that it is developed, in all sectors, including and especially in agriculture.The story of the Terrance our young Vincy farmer is essentially a story of entrepreneurship.Entrepreneurship must be facilitated by a well balanced investment portfolio thatgovernments’ must provide. This portfolio must translate policy into reality for appropriatefinancing mechanisms that include client-driven incentives, functional physical infrastructuresystem, such as good access roads, reliable and affordable water supplies, electricity and otherutilities, and critical services, such as market intelligence, communication technologies, suchas telephone and internet, technical and business advice, best provided through public-privatesector partnerships.
What are some benefits to investing inagriculture?
Increased output leading to higheravailability of fresh local food productswith positive impacts on stability of foodsupplies, prices and food and nutritionsecurity.
Reduced unemployment, especially amongvulnerable groups both directly inagriculture and from downstream andservice industry.
Development of rural areas, enhancing thelives and livelihoods of rural peoples andreducing the tendency to relocate intourban areas in search of perceived betterprospects.
What are some key information needs tosupport these investment decisions?
Trends in consumer demands for market-based products to allow agri-businesses tomake the necessary timely adaptations ;
Research and Development in productiontechnologies to ensure access and use ofmost efficient and competitive processes;
Product-specific cost of production andmarketing vis-à-vis competitors to ensurecapacity to maintain market presence andgenerate returns to investments;
Details on service providers both in thepublic and private sectors that will allowindividual businesses to grow and properby accessing them.Arguably the most important factor in creating the right environment for investment inagriculture is a general positive attitude to business in general and also agriculture inparticular. This must start in the school from a very early age. School gardens and programmeslike junior achievement should an integral part of any school curricula.
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Pre-Production Services: from soil testing and land suitability assessment, land preparation,environmental friendly inputs and planting material, etc;
Production and Post Production Services: from technical advice in fertility management,pest and disease control and other areas of crop husbandry, marketing and value adding;
Production: an ever-growing range of fresh and processed products that are in high demand;
Marketing and Distribution: specialized supply chain and business management services etc.
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Information is key to making good investment decisions at all levels:- from policy that createsthe 'enabling environment' that significantly reduces the 'riskiness' of agriculture and providesmore confidence for persons to choose to invest in agriculture amidst all the other investmentoptions; to the actual investor who needs to secure and maximize his invested dollars andsense! Increasingly, the complaint is that there is not enough or even current information onagriculture to help investors to decide 'where' to invest in a business; to help financialinstitutions to determine whether an agri-business proposal is technically sound enough tomake financial sense; and to help policy makers tailor the polices to suit the needs. Aneffective AKIS must be able to respond to all these information needs on a timely andconsistent manner. The Agromatrix provides an indication of the 'who, what, when and why' of information for effective decision-making."INDICATIVE List; Certainly not EXHAUSTIVE"
From Idea toBusiness:Information NeedsInformation that helps Entrepreneurs makewise decisions and Financiers provide theInvestment financing.Some Information Sources for BusinessDevelopment
What is the need for the product (s) orservice (s)?
How much will it cost to start the business?
How long will it take to start-up business?
What are some key pitfalls and errors toavoid?
What is 'Plan B' - another business option?Statistics Departments compile a range of social and economic information that canprovide ideas; Supermarket shelves andshoppers can suggest products on whichbusinesses can be formed. Governmentservice agencies also have information on'how to get ideas' and start a business.
From Idea toBusiness Plan
Where does the business fit in the valuechain - where are its allies and competitors?
Is it a part-time or full time business?
What are the risks and what is the risktolerance level?
What are its strengths and weaknesses?
What development support is needed to planstart-up and where is it available?
How will cash flow be optimized?
What compliance issues exist?All countries set up special agencies toprovide business development financingand services, especially to smallenterprises. These agencies have theinformation and advice needed to help apotential entrepreneur work through howto move from 'idea' to business byplanning the process and defining the keyinformation needed to make gooddecisions.
Starting up:
How will the business be registered?
Is there start up funding available and where?
What, when, how and how much to produce?
Where is best location?
Is the business on par with industry standards
Where can I access information on standardsand best practices?
How can the product /service be diversified:value-adding, waste processing etc?
What is the risk management plan?This is the most critical part of abusiness. It is critical to have the rightinformation at the right time to avoid themany pitfalls and errors of entrepreneurship. Several governmentministries, including Agriculture,Marketing Boards, can assist with thestart-up. Unfortunately, there are notenough facilities in the Caribbean thatfinance start-ups and work with theenterprise during the starting phase.
Growth andExpansion:
Who can provide product developmentsupport for diversification and meeting nichemarkets?
Will there be continuous businessdevelopment support to reduce cost,enhance quality and maximize profits?
What are the options for joint ventures,locally, regionally and internationally tofoster expansion and increase market share?Regional and international agencies canbe a good source on information toanswer these questions. They can alsoassist with forming strategic alliances andprovide assistance to national agencies inpromoting and facilitating growth andexpansion, especially in terms of workingwith government to improve the policyenvironment for competitive business.

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