Agrinvest approach
Farmers and food processors face a rapidly changing business environment and multiple challenges. Setting up a new venture or improving an existing one involves substantial capital expenditures. It requires extensive experience and straightforward analytics to develop a project trajectory that inherently mitigates risks. AgrInvest developed a structured approach that includes macro and micro economic considerations to reach an agile solution. We consider sub-sectors, integration level, the farming system, market conditions and many other factors. We use in-house developed tools and models to analyze the potential opportunities and help our clients to reach an optimum solution. We present the options at a board level, the pros and cons, and make an assessment to arrive at the preferred line of action. AgrInvest typically gets involved before the feasibility study or business planning phase.
Factors that determine the choice for a type of agriculture include:
- Climate and prevailing weather conditions
- Soil characteristics
- Land type and availability
- Rain fed versus irrigated (water availability)
- Existing local agriculture and processing
- Infrastructure
- Project site distance to urban areas
- Import, export and consumer market potential
- Finance options (including grants and soft loans) and available equity
- Available work force and labor quality
- Per capita disposable income
- Investor preference (animal, crop, covered)
Many agrifood ventures supported by AgrInvest integrate primary production with processing. For investors this integration makes sense. It provides higher and steady long-term returns on the capital invested because of the additional value added. Integrated food production allows for full supply chain control. An integrated farming and processing venture works as a solid hedge against inflation and economic turmoil. Further processing may include a dairy plant, a meat plant, french fries plant, canning factory, starch plant or the like.
Agrifood ventures are multi million operations and therefore it makes sense to invest in solid preparation and planning. After the initial pre-feasibility strategic process has been concluded a feasibility study may be required, followed by a detailed business plan. Agrinvest affiliated company Agrix is specialized in feasibility studies and business planning, using sophisticated economic models to calculate CAPEX & OPEX, cash flows (operating, investment, finance) and a range of ratios like IRR, NPV, payback period and to prepare a profit & loss account and balance sheet.