Where to Invest in Agribusinesses or Food Processing Sector?

Where to Invest in Agribusinesses or Food Processing Sector?

Recently, I was invited by CII, Coimbatore Chapter to share my thoughts on the mentioned topic. I am sharing with you all to seek your feedback and comments and questions on the same. Pl. feel free to analyse the presentation critically and do send your comments where you feel my views needs re-look. 

Without raw material, nothing can be processed... so look for raw material availability around your processed area of investment.

To start with import substitution... this can be a good option provided quality and features should never be compromised. In high current account deficit economy this should be promoted by even by government tax incentives. 

Or, you may start with export opportunity... this can be a good option provided quality and features are not compromised. In high current account deficit economy this should be promoted by even by government tax incentives.

While identifying the investment opportunity, look for value addition opportunity. In pure commodity play, you are always at risk of market price fluctuations in competing products and competing countries because your cushion for safety is low. 

Value added products ensures good profit margins, work for profit and not just act as commodity trader, which are in fact traders of natural resources and labor. 

Evaluate the consumption habits of your society, where you want to invest.  Please also find out the availability of supplies from other sources and who is filling the gap now. 

Wherever you find the gap in demand and supply, it is an opportunity for investment  While doing so, do not ignore the reasons why this gap persist. Is this gap only created recently or it is perpetual gap? Also investigate the reasons about these gaps, this will give you lot of insight about the business you want to invest in.

Market is a dynamic place, sometimes price movements can be erratic and some times they send very powerful signals to investors and policy makers. Do we have capability to capture those signals and interpret them correctly. This is part of knowledge management activity in your company. Do you have anyone to help you... if not, please develop it. This will help you life long in your business. 

Consumer needs are dynamic in nature... they are not static. Are we changing with time? 

Unexpected changes in policy and in market place may spoil the taste of the party... be ready for it. This is also called contingency plan. Do you have it?

Why industry associations are not serious about agriculture sector? What is the percentage of resources and time they invest on agriculture and food activity when society and economy cannot move without food availability. May be their ignorance is leading to food inflation. Think about it.

High food inflation, high current account deficit and growing demand for food and foreign exchange for food is a deadly combination for any developing economy. Focus on food supplies before it is too late. 

These are just few thought in 20 minutes .. this is not the end of the world. You have to think beyond and better and innovative solutions to the food security problems in your sovereign country and society. 

Do write or send your feedback. 
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