Agriculture Business Plan

If there is one sector that is always thriving, regardless of the economic environment of the country, it is Agriculture. After all, food is one of the basic necessities of human beings for survival. So the agricultural sector is considered to be the prime sector for any nation. More so in a country like India which is known as an agricultural country because farming is the backbone of the Indian economy.

The importance of agriculture in India:

  1. More than 60% to 70% of the Indian population is dependent on agriculture and its allied activities for their livelihood
  2. The agricultural sector provides employment to more than 52% of total labour of the country
  3. The contribution of agriculture to India’s total GDP (Gross Domestic Product) is between 14% to 15%.

Hence, it goes without saying that agriculture can potentially be a feasible business idea in India. Also known as Agribusiness, an agricultural business includes farming, production, marketing and management of agricultural commodities like grains, vegetables, fruits, and livestock. From a broader perspective, an agribusiness also consists of resource management, conservation, ranching and sales of the agricultural produce.

The main causes of a surge in the Agribusiness in the past few years:

  1. With the consistent rise of E-commerce, home delivery grocery stores have created an opportunity for agriculture enthusiasts to start their own farms with the help of agriculture experts
  2. The ever growing population has increased the demand for food produce
  3. Start ups have come up with the innovative idea of growing organic produce in terraces and balconies of homes
  4. The growing awareness and popularity of high quality organic farm produce that sells at high value in the market.

The agriculture business can be predominantly categorised into three main sectors mentioned below:

  1. Production resources, which include seed, feed, fertilizer, energy, equipment, machinery and the likes
  2. Agricultural commodities like raw or processed items of food and fibre
  3. Facilitative services like insurance, marketing, credit, processing, storage, packaging, transportation, etc.

However, just like any other business, starting an agricultural business also needs systematic planning and strategising in order to achieve the desired goals.

A Step by Step guide on drafting an Agribusiness business:

Step1 – Decide which, amongst the below, agriculture business idea suits you the most:

  1. Urban agriculture, which means practicing agriculture in urban areas and its surrounding regions.
  2. Herb, fruit or vegetable farming
  3. Production of Botanical pesticide
  4. Organic gardening
  5. Field crop farming
  6. Distribution of fertilisers
  7. Dairy farming
  8. Poultry farming

Step 2 – Obtain the chosen farming land’s proof of ownership or lease agreement and secure a farm map which includes farm boundaries and watering points.

Step 3 – Research and identify the potential markets and its requirements to cater to.

Step 4 – Take into account your expertise, ability, knowledge and access to professional assistance before finalising the commodity for your business plan.

Step 5 – Calculate the short term as well as long term economic potential, viability and future opportunities of the chosen commodities and source information accordingly.

Step 6 – Once you have zeroed in on the commodities, the next logical step would be to identify resources that need to be obtained to manufacture your chosen commodities.

Step 7 – Once you have finalised the agribusiness sector of your choice, you will have to get your business registered with its chosen operational name.

Step 8 – Arguably the most vital step in starting any new business is arranging the required finances from a reliable source to ensure smooth operations of the business.

Agriculture loans in India:

An agribusiness loan is nothing but an overdraft facility that can be used as working capital for activities related to agriculture like farming and cultivation. Agricultural loans in India are usually low interest loans that can be availed by farmers. The repayment tenure of an agricultural loan differs from lender to lender. The loan can be repaid in monthly, half yearly or yearly instalments.

Uses of Agribusiness loans:

  1. Purchasing farming and irrigation equipment
  2. Buying cattle and livestock
  3. Purchase land for agricultural activities
  4. Storage and warehousing expenses
  5. Marketing expenses
  6. Transportation costs
  7. Managing day to day operations.

Sources of Agribusiness loans:

In India, financial institutions like government and private banks, co-operative societies and Non-Banking Financial Companies (NBFC) like Lendingkart provide convenient agribusiness loans.

Benefits of Agribusiness loans from Lendingkart:

  1. Convenient and flexible loan
  2. Simplified documentation
  3. Easy loan repayment terms as per the borrower’s income
  4. Zero hidden costs
  5. Attractive interest rates
  6. Fast processing

Eligibility criteria for an Agriculture Loan:

  1. Applicant should be between 18 – 70 years old.
  2. Applicant should utilise the loan for cultivation of agricultural land

Documents required to avail an Agriculture Loan:

  1. ID proof – PAN card/Aadhar card/Ration card/Driving license/Voter ID
  2. Address proof – Bank statement/No more than 3 months old utility bill/Ration card/Driving license/Passport
  3. Land ownership proof.

Agriculture Business Plan FAQs:

1. What are the most common agribusinesses prevalent in the country for which loans are required?

Many people are delving into various categories of Agribusinesses like: • Poultry Farming • Fertilizer distribution • Dried Flower Business • Vermicompost Organic Fertilizer Production • Hydroponic Retail Store • Snail Farming • Agricultural Farming • Organic Green House Farming• Sunflower Farming • Beekeeping • Fruits and Vegetables export and many more

2. What are the main Agriculture Business Categories, one can invest in?

One can start-up: • In Productive Resources like fertilizers, agricultural equipment, seed, feed, energy, irrigational equipment, machinery etc. • In Agricultural Commodities like raw and processed products of food and fibre • Animal husbandry and fishing businesses • Supporting and facilitating services like packaging, insurance, processing, credit, marketing etc.

3. Who is eligible to apply for an agriculture loan in India?

All categories of farmers, like small and marginal farmers, tenant farmers and sharecroppers are eligible to apply for agriculture loans.

4. Who can be categorised as small and marginal farmers and what are the new start-ups that they are into?

Any farmer who owns less than 2.5 acres of irrigated land or 5 acres of non irrigated land falls under the category of small and marginal farmer. They are venturing into multiple small-scale agribusinesses like: • Fodder Farming for Goats and Cows • Horticulture |Crop Farming • Green House Flower Export • Soil Testing Labs • Certified seed Producers • Dairy Farming • Medicinal Herbs Farming• Tea Growing • Soya Beans, Rajanigandha, Sunflower, Corns, Spice, Cactus, Jatropha, Fish, Shrimp, Quail Egg, Groundnut, Cashew farming • Fruit Juice Production etc.

5. What are the associate activities for which one can avail an agriculture loan?

Agriculture loan can be availed for associate activities like warehousing, marketing and transportation of the agricultural produce.

6. What is the amount of security against which an agriculture loan can be availed?

As per the norms of Government of India, there is no collateral required for agricultural loans up to Rs 1 lakh. For loans exceeding Rs 1 lakh, the collaterals vary from lender to lender.

7. What is a step by step procedure to initiate a new start up agribusiness?

One must follow these relevant steps if he wishes to venture into an agribusiness: • Thorough Research of the Agriculture Market • Complete know-how of the product one may be dealing with • Create a business Plan • Arrange for Funds • Understand the rules, regulations, laws and the system of agriculture • Registration of the business and obtaining a license for the same • Final arrangements

8. Can women avail agriculture loans in India?

Yes, in fact the Government of India encourages women to avail agriculture loans by offering special facilities for women borrowers.

9. Who can be categorised as small and marginal farmers?

Any farmer who owns less than 2.5 acres of irrigated land or 5 acres of non irrigated land falls under the category of small and marginal farmer.

10. How to start an agriculture loan application process?

You can start your application process by duly filling and submitting the application form along with other documents as specified by the lender.

11. What is the online application process for agriculture loans?

When applying for a 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.