Introduction on How To Start Agriculture Business In India: Agricultural business is also called agribusiness, is the farming, management, production, and marketing of agricultural commodities. Therefore, the agricultural sector is considered to be the prime sector for any nation. More so in a country like India, this is known as an agricultural country because farming is the backbone of the Indian economy. The agriculture sector has been playing a pivotal role in India’s economy. It is one of the largest contributors to India’s Gross Domestic Product (GDP), and more than half of the rural households depend mainly on this sector as their primary means of livelihood. In this article we also covered the below topics about how to start an agriculture business;
- Tips for starting an agribusiness
- The process to start an agricultural business
- Is agriculture a good business
- Best agriculture business in India
- Small farm business ideas
- Most profitable farming in India
- Agricultural business plan
- People eligible to apply for an agriculture loan in India
A guide on How to Start Agriculture Business In India, Profitable Farming in India and Agricultural Business Plan in India
The important agribusiness includes farm machinery manufacturing, seed supply, and agrichemicals. There are different ways to earn good money in agriculture. By applying different profitable ideas to make a career in the agriculture sector then we will help you to go ahead in this sector. India is an agricultural economy and the nation thrives based on this sector. Farming is a set of several activities that are involved in transforming a seed into an end product. There are a lot of methods, procedures, and equipment involved in advanced farming. Several Indian farmers have limited resources and need to opt for loans to fulfill their requirements.
What Is Agriculture Business or Agribusiness?
The agriculture business is one of the evergreen sectors and it requires several business ideas. Then, there are hundreds of agriculture-related business ideas that are emerging now.
Agriculture is one of the main sources of livelihood for the people of rural and sub-rural regions of the country. It is used to depend much on the climate for its flourishment but with the introduction of technology. Also, agriculture is a vast field that includes forestry, animal husbandry, and fishery too. The agriculture businesses are profitable but it requires passion and dedication. Agribusiness is involved in the marketing and distribution of farm products. These farm products include warehouses, wholesalers, processors, retailers, etc. Agribusiness associating with large corporations and companies that produce environmentally questionable and potentially sustainable farms fail to turn a profit.
Main Categories of Agriculture Business
The agriculture business can be mainly categorized into three main sectors mentioned below;
- Production resources, which include seed, feed, fertilizer, energy, equipment, machinery, etc.
- Some agricultural commodities like raw or processed items of food and fiber
- Insurance, marketing, credit, processing, storage, packaging, and transportation, etc are the facilitative services.
- Starting an agricultural business needs systematic planning and strategizing to achieve the desired goals.
India is a land endowed with vast regions of arable land and climatic conditions that facilitate the production of a range of agricultural commodities. The Indian government too has taken several initiatives to ensure sustainable development of the sector. The growing demand for feed, fodder, bio-fertilizers; the opportunities for secondary and tertiary processing of food; the increasing scope of biotechnology applications; the growing export demand; rich resources such as livestock and forest are a huge scope for agribusiness.
The Importance of Agriculture in India
- More than 60% to 70% of the Indian population is dependent on the agriculture sector and its allied activities for their livelihood
- Agriculture farming employs more than 52% of the total labor of the country
- The contribution of the agriculture sector to India’s total GDP (Gross Domestic Product) is between 14% to 15%.
- Agricultural business is also known as Agribusiness. It is the process of farming, production, marketing, and management of agricultural commodities such as grains, vegetables, fruits, and livestock. An agribusiness consists of resource management, conservation, ranching, and sales of agricultural produce.
Agriculture plays the main role in the entire life of people. It provides employment opportunities to a large percentage of the population.
Below is the Some Important Factors Why Agriculture Is Important
Source of Livelihood – Most people’s main source of livelihood is the farming sector. As a livelihood, about 70% of people rely directly on the agriculture sector. Then, the result of the non-development of non-agricultural activities to absorb the fast-growing population is this high percentage in agriculture. Also, many people are not engaged in agriculture in developed countries.
Contribution to National Revenue – It is the main source of national income. Though, agriculture contributes a smaller percentage to their national income for developed countries.
Source of Saving – Improvement in the agriculture sector can go a long way in increasing savings. It is seen that rich farmers have started saving particularly after the green revolution in the country. This surplus amount can be invested in the agriculture sector to the development of the sector. Saving potentials are large in the agriculture sector which can be accurately tapped for the development of the country.
Supply of Food as well as Fodder – It provides fodder for domestic animals. The cow provides people with milk to form protective food. Also, livestock meets people’s food requirements.
Supply to the International Trade – Some agricultural products is the main items of exports of countries (sugar, tea, rice, spices, tobacco, and coffee, etc.). In agriculture, there is a smooth growth practice imports are reduced while export increases considerably. Then, this helps to reduce countries’ unfavorable balance of payments as well as saving foreign exchange.
Economic Development – Agriculture sector employs many people, it contributes to economic development. In agriculture, the fast growth rate offers a progressive outlook as well as increased motivation for development. So, economic development relies on the agricultural growth rate.
Food Security – A stable agricultural sector ensures food security in the nation. Food security is the main requirement of any country. It prevents malnourishment that has traditionally been believed to be one of the main agriculture problems faced by developing countries. Most countries rely on agricultural products as well as associated industries for their main income source.
Significance in Transport – Several agricultural products are transported by railways and roadways from farms to factories. Generally, internal trade is in agricultural products. Also, the revenue of the government relies on the success of the agricultural sector.
Foreign Exchange Resources – Some agricultural commodities account for about 18 % of the entire value of exports in India like jute, tobacco, spices, oilseeds, raw cotton, tea as well as coffee. This agriculture product continues to be an important source of earning a country foreign exchange.
The Scope of Agriculture Business in India
In case if you miss this: Keys To Successful Farming.
The agriculture business sector that encompasses farming and farming-related commercial activities is referred to as Agribusiness. It mainly involves all the steps needed to send agricultural goods to market i.e. production, processing, and distribution. Agribusiness mostly covers crop production, distribution, agrichemicals, fodder, breeding, farm equipment seed supply, raw and processed food, and fiber commodities, storage, transportation, packing, soil testing, marketing, retail sales, and more.
Decide on the product/service type is the main step in planning to venture into the Agriculture sector. Even if you’re not an expert on equipment, products, grains, soil, seeds, or plants but you need to start armed with relevant information about the agriculture sector.
Innovations in Agriculture Business and Start-Up Enterprises
Agricultural innovation is the procedure whereby individuals or different ways of the organization into use for the first time in a specific context to increase effectiveness, environmental sustainability, and then contribute to food security, economic growth, or sustainable natural resource management.
Medicinal plants like Aloe Vera and Neem are targeted by the medical and pharmaceutical industries for mass production. The plants need high inputs at the initial stage but have a promising sustainable revenue generation capability and growth rate. The other important requirement or decision is the place or location. There are many options available like a backyard, renting an open space, large balconies, or even the terraces. Once the place and the varieties of produce are decided, whether it is the seasonal vegetable plants or the medicinal plants the next step is to take the help of an expert to create a financial plan for the whole agribusiness plan.
Tips to Start Agriculture Business in India
Determine What Services and Products You Will Offer – Before you start any business, you must define the products and services that you will provide. This will act as your agriculture business plan. In this plan, you must include the profits you intend to makeover a designated amount of time, the supplies you will need to make this happen, and the correct licenses you want to make agribusiness legit in the event of emergencies.
Set Up Your Business on Land – Now that business exists in the legal sense, it is time to bring it to life on the land you purchased or leased. Establish a physical building that will best suit the purpose of your agriculture operations. This will act as a place to house the materials, tools, and machinery that you will want to operate.
Define Your Category – There are several agriculture farming types to know and work with in the field. Below are some of the prominent ones that are trending in India are;
- Organic Farming
- Poultry Farming
- Animal Farming
- Dairy Farming
- Biofloc fish Farming
- Commercial Farming
- Cattle Farming
- Modern Farming
- Polyhouse Farming
- Duck Farming
How About This: Vegetable Farming In Australia.
Begin with Small – In the agriculture department, starting any agriculture business from scratch can be very overwhelming for a beginner. Then, this will give you the chance to experience your soil, growth capacity, and if the profit remains substantial throughout, go ahead and expand your agriculture business.
Develop a Marketing Plan – Your agriculture business is now ready to operate. For a successful business, a marketing plan will allow farmers, suppliers, and others to know about your business. The agricultural business will suffer without a solid marketing plan.
Money Management – Having a track of cash flow is a crucial process for any business.
Get Financing – Seek the right form of financing for your agriculture business. Many alternative financing options are available that will help start a business off on the right foot.
Agriculture factoring will help businesses control cash flow in times when you could have more going out than coming in. Because you are faced with pending invoices and orders, a factoring company will purchase those contracts to give you an upfront cash advance. Then, this advance will allow you to have better control of your finances and grow your business.
Training and Research – In agriculture, a powerful element and rural growth lies in impeccable knowledge. Though, reading books of genres regarding farming, the agriculture sector is starting for research purposes.
Training for the agriculture business can be both online and offline. Being one-to-one with farmers and helping them with physical skills might help you acquire a tip or two. There are many groups, online helpline numbers, direct market consultants, certified trainers, or fertilizer experts easily accessible that make the work easier.
How to Establish an Agriculture Business?
- For starting an agriculture business, we have to know about market research on the available resources and technology.
- Farming is a technically intense process and needs the help of qualified and experienced professionals.
- Market research shows that organic farm business plan is food delivery start-ups, high along with partnerships with the retail chains, and large restaurants.
- The important thing in agribusiness is the quality and trust of the business partners and individual customers.
- The hybrid seeds available in the market and the knowledge of fertilizers and other inputs are also essential.
- The important step is to decide what to grow and where to grow along with the amount of the produce.
- The agriculture farm business plan itself has a lot of divisions and different varieties.
A Step by Step Guide to Start an Agribusiness Business
Step 1) Select which, amongst the below, agriculture business idea suits you the most;
- The urban agriculture sector means practicing agriculture in urban areas and their surrounding regions.
- Herb, fruit, or vegetable farming
- Production of Botanical pesticide
- Organic gardening
- Field crop farming
- Distribution of fertilizers
- Dairy farming
- Poultry farming
Step 2) Get the farming land’s proof of ownership or lease agreement and then secure a farm map that includes farm boundaries and watering points.
Step 3) Research and recognize the potential markets and their requirements to cater to.
Step 4) Take into account expertise, ability, knowledge, and access to professional assistance before finalizing the commodity for your business plan.
Step 5) Compute the short-term as well as long-term economic potential, and future opportunities of the commodities and source information accordingly.
Step 6) After that, identify resources that want to be obtained to manufacture your chosen commodities.
Step 7) Once you have finalized the agribusiness sector of choice, you will have to get your business registered with its chosen operational name.
Step 8) After that, arranging the required finances from a reliable source to ensure smooth operations of the agriculture business.
Agriculture Business Ideas for Beginners
Any agricultural practice needs a good level of irrigation at regular intervals and the modern way to begin it is the drip irrigation system. Moreover, this helps you in saving water by not wasting oodles of extra amount or losing it all quickly due to the Indian heat. As it would be machine-controlled, the supervision becomes very easy. The money-making agriculture business ideas can be given below and that provide good returns.
Agricultural Farm Business
It includes producing and exporting several crops, vegetables, and fruits. It is done with minimal investment. It is the most profitable farming business in India. Apart from this, the export of vegetables is increasing in India. In 3 months, about 23% increase in vegetable export registered in India.
Organic fertilizer production
Vermicomposting or organic fertilizer farming has become a household business. It does not require much investment and is also easy to initiate with a little know-how of the production process. This business is mainly suitable for people who live in small towns or rural areas. In this business, you are necessary to buy fertilizers from big cities and make them available in rural areas.
Make Your Fertilizers/Pesticides
If you are clear on How to make the agriculture and organic farming model ready to go, you can easily discover or curate fertilizers and pesticides that will suit your harvest better. As a potential farmer, you should know your soil, microorganisms, and ferns to help with its fertility. Curating fertilizers and water testing helps you alleviate bad or ill practices in farming. This business can be done easily by people living in small cities or rural regions.
In India, the flower business is one of the largest businesses. The business requires all types of flowers particularly unique and hard-to-grow varieties. Growing, processing, and selling flowers is the best method to make money.
Hydroponic retail store
Hydroponics is defined as that does not use soil for growing plants. It deals in hydroponic equipment and also develops plants to be sold for commercial and home use.
Dry flower business
The dry flower business has flourished over the last 10 years. You can grow flower plants, make them dry and sell them to craft stores or hobbyists.
The quail farming business is about raising quails for profitable eggs and meat. It is gaining popularity as it fulfills daily family nutrition demands.
This farming business has huge potential. Typically, Tea plants required acidic soil and heavy rainfall, although they can be grown anywhere from sea level to high altitudes. Therefore, if your demographic situation is suitable for growing tea, you should go into this business.
The mushrooms growing can fetch you big profits in a short period. It can be started with low investment and also it requires less space. Mushrooms can give you profit in less time. Mushroom farming requires less space and time to grow. This mushroom business provides high profit in the least time. Also, this time the Government announced to provide online training for mushroom farming in many states.
The poultry farming business has many benefits for several people in India. In the last few decades, it is one of the fastest-growing business industries. If you are looking for small farm income ideas, this can be the best fit for you.
Horticulture crop farming
Horticulturists produce fruits, plants, and vegetables, flowers in greenhouse systems, and nurseries with highly specialized knowledge. The crops selection is very important in this business.
The demand for honey is growing day by day and it has become a great business opportunity.
Spice powder is necessary for cooking. Good spice mainly helps to bring good taste to the food. Commonly used spices are Chilli powder, Cumin, and Turmeric powder, etc. Spice has a good domestic market. You need a grinding machine as well as a mixer and packaging machine to start this business. It is a low investment business with good market potential.
Fruit and Vegetable export
You can initiate the exporting fruit and vegetable business in which you have to collect fresh fruits and vegetables from local farmers and sell them internationally. For this business, you want to know the import and export policies as well as local markets. Fruit and vegetable export is one of the best agriculture export business ideas in India.
The milk demand, as well as milk products, always remain high. You need good capital investment to start a dairy business and some guidance from dairy experts. With time the demand for milk is rising and it mainly produces manure in huge quantities. This dairy business needs proper knowledge about the profession.
Farming of medicinal herbs
Cultivating medicinal herbs is one of the most profitable agriculture business ideas. If you have good knowledge about growing herbs and have sufficient land, you can initiate medicinal herbs farming.
The fish farming business is a lucrative business idea that can fetch a huge amount of money for many people. With the implementation of modern methods, production and quality can be enhanced to a great deal.
Snail farming is defined as the process of raising land snails for human consumption. Snails contain a high rate of protein, iron, low fat, and all the amino acids required for the human body. Keeping their nutrient value, and they are in high demand.
Making Business Plan for Your Agriculture Business
- The financial business plan will include all the initial and running costs along with the revenue generation calculations.
- The correct calculation of the growth curve is required for sustainable growth and positive aggressive expansion.
- The next important step is to develop a marketing strategy.
- There are a lot of options that need to be explored like grocery delivery giants, large retail stores, and the various restaurants around the region.
Agricultural Business Loans in India
Agricultural loans are available for different types of farming-related activities.
Types of Agricultural Loans in India
The following activities related to agriculture;
- Running the day to day operations
- Buying farm machinery likes tractors, harvesters, etc.
- Purchasing land
- Storage purposes
- Product marketing loans
Agricultural loans in India are offered to farmers working towards food crops farming and also they are engaged in other agriculture-related sectors. When applying for an agriculture business loan online, you will need to duly fill the application form and upload it along with the required documents on the lender’s official website.
NABARD – National Bank for Agriculture and Rural Development
In India, all premier banking and financial organizations, at all levels, offer a great deal of financial help to many farmers. Rural economy and agriculture boosting through financial credit were started by the National Bank for Agriculture and Rural Development (NABARD). Some of the major areas covered under a farming loan are;
- Managing daily operations
- Purchase of farming machinery like tractors, harvesters, etc.
- Purchase of farming lands
- Organizing storage facilities
- Marketing of the products
- Transportation costs from farms to markets
- Expansion of agricultural activities
Apart from these, there are also financial aids like grants and subsidies that protect the farmer in the event of damage to crops due to weather conditions or other factors. This mainly involves the quantum of production and productivity.
All categories of farmers such as small and marginal farmers, tenant farmers, and sharecroppers are eligible to apply for agriculture loans.
Important Specifications of Interest Rate for the Agricultural Loan
Crop Loans – As per guidelines by the Indian government, for crop loans more than Rs 3 lakhs the interest rate is 7% per annum. If the farmers can repay the loan timely, and are offered an interest subvention of about 3%, resulting in the interest rate being about 4% per annum. For loans beyond Rs 3 lakhs, the interest is mainly charged as per RBI directives. Based on the RBI guidelines, for loans up to Rs 1 lakhs, there is no requirement of security. For loans above Rs 1 lakhs, and there is a requirement for collaterals.
Post-harvest – The interest rate for the post-harvest loan is about 7% with interest rate subvention. If the growers avail post-harvest loan against negotiable warehouse receipt, the banks will charge commercial interest rates.
Land-purchase – For land purchase, the interest rate within 5 km of the farmer’s residence varies from time to time. For loans up to about Rs 50, 000, there is no margin required. Though, for loans above Rs 50000, the margin requirement is 10%.
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