Start a Successful Agriculture Business: The Complete Guide 2021

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Introduction

The agriculture sector remains one of the largest contributors to India’s GDP. However, to start and run a successful agricultural business you need to be equipped with the right knowledge. With this guide, you will gain a basic understanding of building your business plan, finding the right equipment, and marketing strategies that can help you grow your farm business.

Agriculture Business Trends & Opportunities

With billions of dollars of Foreign Direct Investments (FDIs) flowing into the Indian food industry, the agricultural sector is expected to grow exponentially shortly. India ranks third in terms of agritech funding. Therefore, if you intend to launch an agricultural startup, there are ample funding opportunities.

The increasing integration of modern-day technologies and E-commerce into agriculture has not only made the business easier but also more profitable. Additionally, several Government initiatives such as the PLI scheme and Pradhan Mantri Krishi Sinchayee Yojana are helping many agriculture business owners. The agricultural market is far from saturated and houses exciting opportunities for new entrepreneurs.

Top Five Profitable agriculture business ideas

There are dozens of profitable business ideas when you enter the agricultural industry. Sifting through them can seem a daunting task. However, you will have to consider several factors when finalizing an agricultural business plan. For instance, the land area that you have access to, the capital that you are willing to invest, the local market potential for that product, etc. Given below are five of the most popular agriculture business ideas:

  1. Agriculture Farms: Standard agriculture farming is one of the oldest businesses in the world. Not only is it the oldest but also offers profits of up to 100%. Growing an in-demand crop on a sizable piece of land can be exceptionally rewarding in the long run. Depending on the yield quantity, agricultural farming can also open up export avenues.
  2. Organic Farming: The demand for organic farming has never been higher than it is today. The rising trend of eating healthy and pesticide-free food has immense potential. Organic produce is sold at a higher margin and is a lucrative option in the current and future landscape.
  3. Hydroponic Farming: As you move deeper into the city, obtaining land and resources for conventional farming becomes difficult. Hydroponics is a modern soil-less farming technique. It not only consumes less water but also less land and resources. This method produces faster and organic yields. Some crops can also be grown completely indoors using hydroponic farming.
  4. Mushroom Farming: Mushroom farming requires lower investment, yet it is a popular agricultural venture. Mushrooms are highly nutritious and sell at a high profit. If you have ample space, you can produce a variety of mushrooms that are constantly in demand in the food industry.
  5. Bee Keeping: Good quality honey is hard to come by and expensive. Cultivating organic honey is a rising business idea. Unadulterated honey sells at a premium. Maintaining a bee colony will take some training but this business idea has the massive potential of scaling up.

Create an Agriculture Business Plan

While different business ideas require varied business strategies, there are some factors that all agriculture businesses share. Land acquisition, tools, and equipment, high-quality seeds, etc. are all factors that need to be carefully examined.

Market Research

It is of paramount importance that you conduct your market research before building your business plan. It is crucial to analyze your competitors and local market to gain a thorough understanding of the business. This gives you insight into industry practices that can further help you refine your business plan. By analyzing the market, you need to identify the growth opportunities of your product and the gap it intends to fill. Start by selecting a specific demographic and build your research around that.

Crop Selection & Land Acquisition

The second most important part of building your business plan is selecting what you intend to grow and where. There are several crop varieties such as medicinal, commercial, daily consumables, botanical, herbal, etc. Consider the equipment, area, and resources each crop requires before finalizing your crop. If you plan on constructing a greenhouse or practice vertical farming, the total area required would be less.

Therefore, calculating your crop requirements shouldn’t be overlooked. Once you have that plotted, searching for a specific type of land becomes easier. Additionally, you must also get the land’s soil tested for pH and nutrition levels to assess its fertility.

Agricultural Equipment Needed

The next thing to work upon is your tools. The equipment that you will require to build and run your farm needs to maintain high standards. You need to factor in every piece of equipment from the land’s fencing and shed construction, to farming equipment such as tractors, harvesters, irrigation pumps, seeds, logistics, etc.

As these details will significantly impact your budget, it is best to take some time to carefully map every small tool that you will need.

Understanding the Financial Aspects of an Agricultural Business

The backbone of your agriculture business plan will be the allocation of funds. Remember, including the running costs of the farm for a brief period (6-12 months) is important for preventing losses. Before applying for a loan, register your business with an operational name.

Agricultural Loans

Getting agricultural loans approved for farming is relatively easier compared to other business models. The interest rates are lower for farmers than other businessmen.

However, you must showcase a strong and foolproof business plan to make the process hassle-free. To apply for an agricultural loan you only require three documents- ID proof, Address proof, and land ownership proof. Up to an amount of 1 lakh, collateral is not required.

Agricultural Taxation

Another important financial aspect of this business is the taxation policies. Agricultural businesses are profitable up to 100% due to the taxation laws. As per Section 10(1) of the Income Tax Act, 1961, agricultural income is exempt from taxes. If your income is solely dependent on agriculture, then you do not have to pay taxes.

However, if you also derive your income from non-agricultural sources in addition to agricultural sources, a taxation rule of partial integration would be applied to your income. Essentially, in the second case, the agricultural and non-agricultural incomes would be combined and tax will be levied on it.

Note: not all agriculture businesses qualify as agricultural income. Businesses such as poultry, dairy farming, standing crop, bee-keeping, etc. are considered non-agricultural and are taxed. Therefore, go through the list of accepted agricultural businesses to benefit from tax exemptions.

Best Marketing & Advertising Strategies for Your Agriculture Business

Setting up an agricultural business isn’t enough if you do not develop a unique brand value. With the popularity of door-to-door grocery deliveries and E-commerce, customers look for an authentic and high-quality product.

Developing and marketing a unique brand will help with customer retention and eventually brand recognition. The right strategies will help you place your product higher than your competitors in this highly competitive market.

  • Organic: If you practice organic methods of farming, you’re in luck. Organic products not only reap higher profits but are easier to market than standard products. Labeling and advertising your products as certified organic improves brand perception.
  • Building Connections: This strategy is true for almost every business. Start attending food festivals, conferences, agricultural events, and seminars. This will provide you with exposure to the industry and help you connect with important people. Having valuable connections is an asset that can help small businesses rapidly climb the success ladder.
  • Social Media: In this day and age having an online presence is more important than a physical store sometimes. Social media and websites have the power to reach extremely specific domains and audiences that can generate leads. Positive leads generated from such platforms can also transform into long-term customers, thereby, growing your customer base.

How has Agriculture Impacted the Indian Economy?

Post-independence, there has been a steep rise in food crops in the country. Yields per hectare have significantly risen throughout the decades due to successful economic planning. The role of agriculture in the Indian economy is undeniable. It has influenced national income and generated massive employment.

Almost two-thirds of the Indian population relies on agriculture for sustenance. India is one of the most densely populated countries. Therefore, the agricultural sector directly supports India’s growing population.

Indian Agricultural Sector – Exports & Imports

India has consistently maintained an agricultural trade surplus over the past decades. It has massively grown its agricultural exports and imports since 2001. India ranks as one of the leading producers of agricultural commodities such as dairy, spices, cereal, wheat, and cotton, in the world.

Agricultural exports are significantly higher than imports, which makes this sector an important and profitable one. Throughout the COVID-19 pandemic, the agricultural industry functioned smoothly. This helped sustain the nationwide lock-down and struggling economy.

Government Resources & Websites

The Government has allocated several resources and schemes to support agricultural businesses in India. Schemes such as Pradhan Mantri Fasal Bima Yojana and energy-efficient irrigation systems are making a big difference. All this combined with high subsidies provides farmers a supportive environment to thrive.

The Government keeps introducing micro changes and policies on agriculture. To stay updated with all the latest reforms you can visit the website of the Department of Agriculture and Farmers Welfare.

Agriculture Consultants & Experts in India

  1. Mr. Vijay Dhavalas – Dhavalas – epost@dhavalas.in – +91 788 2271027
  2. Mr. Dinesh Kumar – Global AgriSystem – +91-124-4153830
  3. Mr. Sanjay – Green India Champion Agro. Pvt. Ltd. – sanjaymandekarsparsh@gmail.com – +91 7507143302
  4. Mr. Manoj Patel – Israel Agro Consultant info@israelagroconsultant.com – +91 98250 20331
  5. Mr. Jay P Desa – Universal Consulting India – strategy@universalconsulting.com – +912249710702

Conclusion

Starting an agriculture business has become a much simpler process than it was ten or fifteen years ago. Even if you don’t own land, obtaining land on lease and getting loan approval is a seamless process. After detailed market research, you can create a compelling business model that has a high chance of generating profits within the first year. Adding on to that, the tax exemptions make agricultural businesses a very lucrative option.

The demand for agricultural products will only increase. Even if you aren’t remotely connected to the agriculture industry, there is still ample opportunity to make it big. Take the example of Harish from Rajasthan. Harish left his government job in 2013 to set up his 80 acres Aloe Vera farm and is now reaping surreal profits. This isn’t an isolated case, several service sector employees have quit their job only to set up successful agricultural businesses. Therefore, the earlier you start your agricultural venture, the quicker you’ll capture the market.

This post is also available in: English

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