Storage Of Agro Products – A Rewarding yearly investment

Storage Of Agro Products – A Rewarding yearly investment

Job creation capabilities and massive income generation of agricultural produce is unlimited and understood by a given few. Storage of these agro products is yet an untapped wealth creation opportunity option in the agro value chain. Many people engage in it as a major business or investment, however a greater percentage of the investors in this area are people using it as a second source of income generation. Suffice to say, both are worth the investment – it is highly lucrative.

The storage of farm produce ought to be the duty of the government, her sister agencies and a task that would have been concluded by major farmer. Unfortunately it is not so in Nigeria. A greater percentage of the farm produce are lost annually due to this. Such gigantic zero preservation and storage culture is responsible for the seasonal availability of some farm produce. Those that some individuals succeeded in storing are sold a good margin once the scarcity becomes visible. Thus a business.

There are numerous agricultural products that any aspiring investor can opt for. These includes yam, Palm oil, Beans, Melon [egwusi], Pepper et cetera. Some of these agro produce could be subjected to changes so as to last longer while some don’t. For example, once you harvest your yam, you can store it in the barn as a tuber. Once the atmosphere is most appropriate, it can shed some of its moisture content and still remain in good shape. It can also be cut and dried for other purposes but the good thing about this item and a lot host of others is that irrespective of its nature before storage for either sales or future use, the demand is always there in large quantity. 

Storage of Agro products becomes a highly rewarding business annually in Nigeria due to so many factors. Prominent among these factors is that farming in the country is mostly rainy season induced thus seasonal. Owing to the seasonal nature of these farm produce, a given item becomes available at a period to the extent that its price becomes quite low. In each of these items season, once the prices gets so low, the storage enthusiasts moves in to mop it up. As the low price season subsists, the investors do buy as much as they could and consequently adopt the necessary practice or practices most suitable to prolong their shelf life.

These stored items command a prime demand price once again about two – three months after its peak period. This does not follow a straight time frame annually. It fluctuates as the case may be. Depending on the volume produced nationally during its season which is dependent on weather conditions, its demand in times of scarcity may be high or low. Irrespective of the demand, people who do invest in storing these items smile home with profits of 40% at the low side of it and as high as 150% on the high end. As it does not take a full calendar to get them sold, the funds invested in such items could be re-invested in other products and almost the same equivalent in percentage income earned in the second cycle.

There is a regular question posed by prospective investors in this area : will there always be demand if one invests in this? The answer is always on the affirmative. In the first place, the demand consumption wise is constant as fewer agricultural produce has direct alternative – for example Red Palm Oil. Secondly, a country like Nigeria and all her federating state does not have tangible investment in food bank – there are no national or state storage arrangements. Thus, once the excess rots away after its season, the only source to future access to such a farm produce is solely via independently and locally stored sources. Lastly the government and the people of Nigeria is yet to embrace mechanized farming where irrigation is adopted to continue food production all year round.

Lets use Red Palm Oil as a case study here. Starting from the month of January, there is an excess supply of the product in the market. Being a normal dry season, the oil is readily available at a low price. Many who opted for the storage of the item do commence storage at this time frame. However, once the rainy season sets in, it reduces the rate at which palm fruits ripen coupled with the fact that it becomes difficult in climbing the palm trees – it becomes slippery and dangerous. Bearing in mind that the demand for the item is constant all year round, much cash will be chasing the small quantity of the product thus the price goes up which is the profit for the investor. And those who warehoused it offloads almost to the last measure. From the experience of many who engaged in this business, you can fund the storage idea and recoup your investment in a space of six [6] months interval or less. And as it regards the item of our case study, it has such an opening at least twice yearly.

However, just like any other business or investment, there are risks associated with it. In some years, the tides do change unannounced. As mention was made earlier that the availability of these farm produce is weather induced, the weather can alter so many things especially for the new investor. It is important to understand once major swing associated with this idea of storage – if it pays investors so much this year, many people will move into it next year. In the alternate year, there may be just hype without actual demand backing it. With the panic buying the price goes up and during the expected scarcity, it will be everywhere. When its availability is more than the usual supply, the price crashes. it is important to note to note that some of these items do infiltrate into the country via smuggling. Such does crash prices during scarcity era.

It is required that intending investors do their fact finding prelude investing.