Thinking of Investing? Think of Food.

It has been said that agriculture is the next big thing. Most entrepreneurs and even the employed folks have been wondering how to make money from this sector. This week we look at investing in food. In a previous article, I mentioned that agriculture employs over 40% of Kenya’s population both directly and directly. From those who deal in farm inputs, farmers, transporters, insurers (livestock and crop), processors, agronomists and even food outlets. Since agriculture is a broad sector, I will focus on food which is one of the fastest growing industries in the world.

In the Kenyan context, you can never go wrong on food. We all know the importance of food but more importantly there are other factors that are making investing in food lucrative. First of all our population structure and patterns indicate that over 70% of our population is aged 35 years and below and tells you about their lifestyles especially eating habits. Rural to urban migration in search of opportunities and the fact that agricultural land in places like Kiambu, Machakos, and Kajiado counties is being converted to residential increases the demand for food.

By conventional wisdom, most people have been investing in food production which in other words is farming itself. Before venturing into farming, the first and most important activity is market research. Know the current demand and possible gaps, pricing, cost of production and quantity needed to break even. This is what Korie Maru- an administrator at Digital Farmers Kenya refers to #AnziaSokoni. This means market led agriculture where farmers target products with real and viable markets. She advises that this doesn’t have to be a complex research but simple targeted interviews with people dealing in the product. Once satisfied, that there is market for a product, one can proceed to think of other factors like, capital outlay, land and water requirements among others. For instance with the recent tax increases in pesticides and herbicides, banana farming would appeal to someone who has a relatively large piece of land in an area that receives good rainfall.

Food processing or value addition in this context simply means transforming raw material by packaging, extracting or through addition of chemicals into a new product thus increasing a consumer appeal and willingness to pay for a higher price. This is big business in a country that sells most of its agricultural products in raw form. Some of the most successful stories have been in milk processing (especially yoghurt) and fresh juice. All this has to be supported by a business model and with the right marketing strategy to gain a foothold in the market. A lot of attention is shifting to fresh healthy eating and whoever will combine this with technology could make good money. Food processing equipment is cost effective compared to other manufacturing industries. And you don’t have to start big. In my mentorship sessions I always advise people to start where they are and grow.

So folks, if you have money disturbing you, think of food. You could be an IT nerd, an insurer, angel investor, venture capitalist or dealing in stocks. All you need is to decide where in the supply chain you want to join.  There was never a better time to invest in food than now.  

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