The United States is a $22 trillion economy with close to $1.109 trillion comes from the agriculture sector. Agricultural economy is a vibrant economic sector in the United States with a contribution of 5.2% share in the GDP.
Close to 22.5 million people were directly and indirectly employed in the agriculture sector and that amounts to 10.9% of the total US employment. An average American household spends close to 10.3% of its income on farm related products which is the third highest after housing and transport.
Thus, it can be very well said that the farm sector has a major contribution and share in the American economy which also means that it can be a good place to invest in order to get good returns.
Since the last few decades, agriculture in the United States has seen revolutionary changes and methods of farming have also changed a lot. Agriculture now has become more business friendly and the government has reduced its control over it to a larger extent.
This has allowed many private players who are not naturally farmers to invest in the industry in various ways. This has made new inroads for entrepreneurs with new ideas, technology and strategy to enhance growth in agricultural production as well as farm income.
This article thus deals with business ideas and opportunities in farm supplies business and how one can utilize these ideas and strategies to invest and earn returns.
Farm Consultancy and Strategic Planning:
Leaving the traditional method aside, there is a lot to gain from new scientific agricultural planning based on researched strategies. Crop rotation, alternate farming, diversifying crops, and much more.
Farm consultancy simply means advising farmers on agriculture related issues like sowing of crops, use of certain fertilizers, which crop in which season is good for their land, more precision in cultivation with respect to irrigation, use of fertilizer, seeds, methods of farming, artificial methods of farming and much more.
Such strategic planning based on type of land, soil, total area, climate condition, water supply, etc. can help in determining the type of crop that can be cultivated and which one can in combination can lead to maximum output and thus increasing profit.
Technical Supplies and Services in Farming
Another sector in farming that is immensely growing and has become popular is the tech supplies and services. Using the latest technology to detect the quality of soil, quality of water, moisture level, rain percentage annually, and other such factors to determine the crop that can be cultivated to gain maximum profit.
There are also technologies that help in maintaining an artificial climatic condition for growth of certain crops. While there are apparatus and machines that help in enhancing the precision of agriculture, predicting certain possibilities and much more.
Similarly, there’s also an infrastructure that can be built around farming like soil testing labs, controlled and regulated farm nursery for crop plantation and cultivation in control environment, seed production plant, etc.
Agricultural Infrastructure
There are different types of agricultural infrastructure but what should concern us is the private infra. Most of the private infra investment in agriculture is limited to warehousing which can be both refrigerated as well as non-refrigerated.
In the United States, there are a total of 912 refrigerated warehouses as of 2019. 361 of them are owned by private and semi-private entities. The volume’s space overall is 2.97 billion cubic feet.
Most of the agricultural products require a controlled atmosphere to ensure that the produce doesn’t get damaged due to changing weather. In such warehouses, the majority of produce is stored for future sale and for buffer stock in case of urgent requirement.
Investing in such a warehousing business is extremely successful and profitable. Though there are also a lot of challenges related to networking, getting clients and managing good returns.
Agriculture Transportation
Would not get into conventional agriculture transportation but would focus on the emerging transportation challenges. Many of the products have a shelf life of a few days only. Many of them get damaged before reaching the customer for the same reason.
Mushroom-like products have a shelf life of 2-4 days and close to 30% of the produce gets rotten before reaching the consumer. Transportation which also works as a preservative will help in increasing the shelf life.
Such transportation also needs to be smooth and fast. Refrigerated transportation of such goods has become a new trend in this business. Where perishable goods are transported in refrigerated containers through a dedicated freight infrastructure. This reduces the transportation time by 15-25% thus reducing wastage of produce.
One can invest in such a transportation business which has a lot of scope.
Business in Organic Farming
Organic Farming has become a new trend and is being appreciated by the consumer as well. There are now a good number of audiences ready to spend money on organic produce though it is more costly than the general food supply.
Organic farming uses organic methods of farming abhorring chemical-based fertilizers, genetically modified seeds, and similarly other artificial methods of farming. Organic farming has its own requirements.
Organic farming uses a different set of products for farming. You need to have organic seeds, vermicompost fertilizer, manure from livestock waste and other biodegradable waste, pest control products like ashes, introduction of pest control predators, etc.
Preserving organic produce also requires a dedicated infrastructure for storage and preservation. One can explore into this field to eventually determine the right business opportunity in this field.
There is also a lot of scope in organic farming consultancy since many farmers are switching to this method. Also, the non-farming side of organic farming is also very wide. Warehousing, being the seller of certain organic products, marketing, distributorship and much more can be done with proper research.
Agriculture Equipment and Machines
One can deal with various equipment and machines dealing with agriculture. There are lots of such equipment and machines used in agriculture. Though it is already a very competitive market yet one can explore their way into this field.
With the advent of new technology, the traditional machines and equipment are being replaced by new ones. There are many companies already and more are coming up to develop such equipment and machines that can help in increasing the efficiency of farming through these machines.
Reaping of certain products is very complex and sometimes requires manual methods. There is a lot of opportunity in this market if one aims to manufacture specific equipment for this particular purpose.
At present, the equipment market is growing at CAGR of 4.2% and is expected to grow by $113 billion by 2025. The market is booming with the introduction of new equipment dealing with irrigation, artificial conditioning, reaping and sowing.
Value Addition Farming and Business thereof
Value addition in farming is how you develop the agriculture produce by a step or two in order to add value and the selling price thereof. Certain produce can be sold by little value addition at a highly profitable price.
For example, selling Aloe Vera, Aloe Vera juice, vinegar, packaged juices from vegetable and fruits that may be organic as well, mushrooms, honey, and many more. Such products have huge demand in the market.
Juices produced from vegetables and fruits also have a huge demand especially those that are free from added preservatives and chemicals. These products can be sold at a local level or the domestic market within 20-50 miles range.
Similarly, aloe vera has its huge demand for various purposes. One such purpose is aloe vera juice for drinking purposes. Aloe vera is easy to cultivate and can give you maximum profit when sold as juice rather than pulp. Through pulp has its own demand in the cosmetic market.
Moreover, diet conscious citizens are now looking for more herbal and organic produce that is grown in villages and they are ready to procure them at higher prices. Broccoli and mushroom are other two products that have a huge market.
Mushroom Production
Close to 375 million kilogram of mushroom is produced in the United States as of 2019 and it has a market size of $1.3 billion and is expected to grow by 9% annually. The average price received by the seller at first sale to the market was $2.76 a kilogram.
A 250 sq. feet of land can easily produce close to 2500kg of button mushroom that can fetch close to $6900 in one season. One can easily repeat the crop for three seasons a year. Mushroom market is very profitable giving you great returns with limited investment.
Apart from land, you only have to invest in seeds, some irrigation and manpower. There is nothing much required. Close to $2000-2500 is the investment cost and the net profit can range from $4000-5000 per season in a 250 square feet land.
Transportation and preservation are the only issues with mushrooms. If you have a stable and demanding market of mushrooms nearby, then it can easily fetch you great returns. Mushrooms can also be exported in the global market. There are various types of mushrooms that are edible and have different pricing.