NOW, is the perfect time to start an agri-food business.
It sounds crazy, I know. The economic impact of the coronavirus means people are losing their jobs and companies are closing. Economists predict that 100,000 to 200,000 businesses in South Africa will fail because of the corona pandemic. Al Jazeera reports 22 million people are already jobless in the USA.
How could “NOW” possibly be a good time to start a business?
Well, food is incredibly important. The coronavirus has highlighted just how important. In a recent GeoPoll survey, referenced in Farmer’s Review Africa, “more than 85 per cent of respondents in the DRC, Rwanda and Kenya have worried in the last seven days that they would not have enough to eat.”
All over Africa, access to food and water is a determining factor in whether social distancing and lockdown efforts are working or failing. Whether you are in Angola, South Africa, or Malawi, people are saying the same thing: “I’d rather die of the coronavirus than of hunger.”
Africa is heavily dependent on food imports, and that must change
In a must-watch interview by CNBC Africa’s Esther Awoniyi, Ndidi Nwuneli; Co-founder & Managing Partner, Sahel Consulting, says the coronavirus is a “mixed blessing for Nigerian farmers and for Nigerian agriculture. With other countries closing their borders, it means that there is less dumping of food in Nigeria, which then makes us aware of the sense of urgency to look inward. … COVID-19 is pushing us to see how important it is for countries to stand on their own.”
The coronavirus pandemic is a catalyst for the governments of Africa to take action and grow their own agriculture and food processing industries.
Although policy changes are needed, Ndidi says, “the private sector is going to drive this growth… And when we say private sector, we’re not just talking about big businesses like Nestle and Nigerian Breweries and Ola; we’re talking about Ace Foods. We’re talking about So-So Fresh. We’re talking about small companies that are going to become medium, and from medium they are going to become large. We are going to have African companies that are going to become the Nestle’s of the future.”
Why is a global crisis the best time to plan and build a business?
Things are moving fast. Two months ago, many people thought they won’t be affected and that the pandemic might pass quickly. Today, we are well-aware that “business-as-usual” will not return after the pandemic.
For established companies that means finding new strategies and scrambling to secure their businesses. But slow-moving, corporate machines are difficult to steer in a new direction. Many will fail.
Everything will have to be done differently to protect employees and keep supplies and food products hygienic and safe. Instead of trying to change your business to survive the coronavirus pandemic, you can build a business model that is corona-proof, from the ground up.
We have five things available right now, that can help you build a resilient business for the future. We have
- Knowledge about the coronavirus that will help you to plan a business that is safe for your employees and customers
- Information on value-chain problems that will help you to source available, local solutions and build robust supply-lines
- A clear view of essential services that will benefit from policy-changes in the near-future to increase food security
- Many people who need employment
- An urgent need to increase local food production and processing capacity
Ndidi says, “Yes, we can feed ourselves and the world, and we have to change our mindset around it.… Starting locally, then regionally, and internationally, I think will transform the sector.”
How to Start an Agri-food Business
One business that embodies this mindset shift is Elite Crop in Kwa-Zulu Natal, South Africa. Journalist Athabile Mrasi of W24 recently interviewed Elite Crop founder, Ntando Thabethe. Her business journey is a fantastic example of how to start a local business and grow it into the international market. This method also allows for incremental risks instead of a “go-for-broke” approach.
Two years ago, Ntando lost her job as a mechanical engineer when her company moved to Johannesburg. With time on her hands and the need to make her bland backyard a bit more vibrant, she decided to trade an outing to her hairdresser for a handful of seeds.
Ntando says, “My husband gave me money to do my hair, but I decided not to go to the salon. Instead, I bought seeds worth R389 with it, and when I got home, my husband was surprised by my decision.”
Speaking to Duncan Masiwa of Food for Mzanzi, Nthando discusses the process that took seeds and a backyard to an agri-food business with 40 employees, in just two years.
The Lean Start-Up
Starting small, she created a vegetable garden in her backyard. When she grew more food than her family could eat, she decided to sell it to people in her community.
A few months later, her local Pick n Pay supermarket ran out of green-peppers and asked her if she could supply them. “I harvested everything I had, but then two days later they asked for more and I couldn’t produce. I didn’t want to lose out on this rare opportunity, so I devised a plan,” she told Food from Mzanzi.
Ntando could easily have said that she didn’t have any more peppers. Instead, she found a farmer in another district who had excess vegetables and no market. This collaborative mindset became the key to growing her business.
The Growth Stage
When Pick n Pay placed an order for carrots, agripreneur Ntando Thabethe got in touch with more local farmers who were hungry for buyers. So, she built an even bigger network.
To increase her own capacity to produce vegetables, she took a chance and applied at the local municipality to put up a greenhouse tunnel in her residential backyard. To her surprise, it was approved. Next, she used her engineering skills to design her own hydroponic tunnel.
Adding agricultural technology to her business repertoire, she also designed tunnels for other farmers in the area.
The Scaling Stage
When Pick n Pay cancelled her contract because she didn’t have a dedicated processing facility, she approached Oxford Fresh Market.
Having sold cucumbers to them previously, “Oxford Fresh Market wanted the backyard agri-business to supply them with 30 000kg of cucumbers. At her scale she couldn’t do so, but she approached eight farmers who had bought hydroponic tunnels from her.”
To ensure everyone was able to produce at the same levels, Ntando helped the farmers with training. By adding all their produce together, they were able to handle big orders.
Ntando continued expanding capacity. She now has 50 farmers who grow vegetables for Elite Crop. Much of her business is transport logistics as they must pick up produce from various small farmers who don’t have access to transport.
Going from Local to Regional
Elite Crop has extended their product line to canned products by partnering with Giant Canning. They also started a line of frozen vegetables which prevents waste of excess vegetables when they can’t find an off-set. They can then supply out-of-season vegetables to their retail partners when the growing season ends.
By partnering with RSA Group her vegetables are now making their way across the entire South Africa.
Taking the International Step
Ntando recently sealed a deal to ship dried herbs and tomato powder to Saudi Arabi and Dubai.
In January 2020 Elite Crop moved their processing to a dedicated facility. They have also been awarded funding by the Agribusiness Development Agency and has plans to rent a farm where they can erect 20 new hydroponic tunnels.
Impact of the Coronavirus
Speaking to W24, about the coronavirus situation, “Ntando says they are under a lot of pressure as retail stores are stocking up, and people are panic buying, the stores are requiring tons of products, and they are not able to do it on their own.”
Yet again their solution is to team up with other farmers to supply the increased demand. Unlike many other businesses the collapsing markets have led to increased demand and more sales in the agribusiness.
Where the problems come in is in the value-chain. Ntando says that the corona pandemic is having an impact because “it is hard for them to get nutrients and irrigation for their plants.”
When you start a business in tough times, remember, “We all just want access to basic needs, such as food, shelter, clothing and good health care, the sustainable way to go about it is to look for the inherent capacities within the populations that can contribute to various aspects of these universal needs. All said and done, we cannot eat money or vaccines, we will need food.” – Caroline Madagow, writing for ORF Online.
Can you take all the information available to you right now and plan a corona-proof business that gives people the nutritious fresh food they need? Entries are open for GoGettaz Agripreneur Prize Competition 2020, and we want to hear from you.