Why Nigerian Entrepreneurs Should Invest In Agro- export -By Nwosu

Filed under: Economic Issues |

INTRODUCTION

Businesses abound but one veritable business idea would be the export of agro products. Agro export industry is a huge industry globally and figures amount to value over billions of dollars in total verifiable transaction. On the national level, it is also a huge market with total value of export amounting to 4.69 trillion Naira. According to Nigeria bureau of statistics, agricultural export continue to top the charts with positive trade balances and crops worth over 73 billion Naira sold in a single quarter of this year. Export trade is given high priority around the world because of its many benefits inclusive of employment generation, increased national income, improved International cooperation and revenue to government.

REQUIREMENT

In one sense, you will need to develop the right level of commitment, resilence, knowledge and structure to succeed in export. But in a real sense, a new exporter is expected by law to form and register a company with the corporate affairs commission.

 

The process of forming a company begins with identification of a name of a new company. An application is then made to CAC, the Federal Government body responsible for registration of business names and companies, if the name is approved and other specified conditions fully met, a certificate of incorporation will be issued to you upon payment of a fee. The CAC registration confers a legal status on your business and it is a requirement for all other business related registrations.

Basically, to be able to export, you will require an export license. This involves registering with the Nigeria Export Promotion Council (NEPC) which is responsible for the promotion of Non- Oil export and help exporters in accessing export markets. Having met their requirements, a registration certificate is issued which qualifies you as an exporter in Nigeria and renewable every two years. The introduction of the E-Registration process has made all registrations a seemless process with reduced cost and time and convenience in real time. Other certificates and forms you might want to know about which might be needed include sanitary and phytosanitary certificate from the Nigeria Agricultural Quarantine  Services, NXP form for commercial banks, certificate of quality and fumigation from Federal Produce Inspection Service, Bill of Lading and Airway Bill from shipping company which is your evidence of carriage of goods.

These are basic requirements but know this about agro export business, it is a sequential process. One process precede the other and requires a lot of documentations and procedures. As a result, it is essential to acquire the necessary training. I strongly believe in the importance of training. Training should be specific, continuous and relevant. It should be acquired to solve problem. It should make things happen and bring about changes to enable you equal to the challenges you will face in the agro export business.

As a beginner, you will need some basic knowledge on how the export market works, documentation, Port procedures, guidelines, product sourcing, pricing etc. You choose your product interest, commodities you can easily access and made available to your buyers, in the right quality and quantity at a given time. You can decide to source your products from other sources or by producing yourself. Again, it has to be of acceptable quality in the target market. I have a countful experiences of our products being rejected or destroyed in oversea countries due to poor quality and loosed packaging.

Now, I have this to tell you, your products should be adapted in term of quality, packaging and labeling only in line with the dictates of the target market. On a level of the small scale export, your packaging should be firm to withstand long distance transport. Generally, the mode of shipment will determine the type of packaging to use. Packaging should take into consideration of the customers requirement, international standards and regulations applicable in the target market.

 

OTHER REQUIREMENT

At the base, an Exporter needs to choose between exporting directly or through an intermediary. The choice of the distribution channel depends on the very nature of the market, skills and finance. To understand further, direct exporting involves advertising the products at the target market.

Surely, participation in international trade fairs and trade missions are helpful for accessing the market. You will do your due diligence check on the credibility of prospective buyers. On your part, sharp practices are not allowed. Quality products attract quality prices. High quality products attract high prices and in export high quality products and services will increase your chances of success. In addition, branding gives product identity and recognition. A well known brand wins customer loyalty and are hard to displace in the world market.

Furthermore, there is a vital part of export called desk research to establish the size of the population, growth rate, market entry strategies and distribution channels. You might choose to visit the target market to verify your desk research and undertake assessment on the ground by known existence of products similar to yours, the value of the imports, import tariff, market requirements, per capital income, availability and cost of transport and contacts in the target market.

Next, develop an export marketing plan. In short, carrying out desk research is one thing but developing an export marketing plan is another thing of equal importance. The two steps are interdependent. In a sense, it is sequential but simultaneous in another sense. Both senses are right because you must carry out some research before you can develop your plan of action.

You do not need to be a giant manufacturer to venture into the agro export trade. All you need is a market, the right information and to develop the intended skills. You will also need a product which can be adapted to meet the market standards and requirements, the right price to make your products competitive, financial and human resources to develop your export business. You will need an export promotion organization; a focused, dedicated and competent export promotion organization will provide you with the necessary market information and marketing skills that will give you a competitive edge in the world marketplace.

On the skill level, you must develop an integrated response of managerial and coordinated skills. This is not because it pays, but that export trade is a coordinated , stage to stage processes with an ultimate goal to satisfy the needs of your buyer in oversea country. As an exporter, you must understand you play a vital role of a leader and a manager. Leaders are people who do the right thing; managers are people who do things right. You will lead people but you manage and control things. In export, you have to manage money, cost, information, time, structure, systems, processes, inventory, physical resources, tools, and facilities. Proper management of these resources will ensure your success because overtime, you will develop some operating economics due to specialization of these processes enabling you become and ultimately exceed the challenges in export business.

 

OPPORTUNITIES

Business opportunities in agro export is boundless. It opens up a whole and new areas of expanding value chains with opportunities for a new exporter to start an income earning business of his own. The agro export business is a very lucrative endeavour anyone can be engaged due to the abundance of many products that can be exported from Nigeria to many countries across the world.

From the temperate regions of the East to the coastal areas of the south and to the semi arid regions of the North are arable land that produce export ready crops each having it’s own harvest season ensuring the availability all year round. I hope you know each crop has it’s season and agro export is a seasonal business requiring one to understand seasonal effect on commodity prices. Example, ginger is an exportable commodity, it’s planting season starts in June while harvest begins in November. Sesame seed is another fine export commodity, it’s planting period starts in August and harvesting begins from November to July of the following year. Like all other business, export trade is subject to the law of demand and supply. Increased supplyof a commodity will reduce product prices but an increased demand with reduced supply will raise commodity prices.

Now, how do you find export opportunities? When you get involved in an export type of business, you will need to chase opportunities along the way. You pay attention to the trading process to break into new markets but you will need to cut cost doing this. Here, management will be your enabling art enabling you to save for serious investment. And even with good guidance, your perseverance will be valuable because it takes sometime until you break into a new market with the perfect export products. If you follow the basic principle, I am sure you will break new ground in oversea countries, thus achieve a new level of financial success you could have only have imagined.

Finally, have an avid taste for information, check export statistics, choose your country of destination wisely, stay active online, talk to experts,  evaluate your chances, have a good plan of action and create a bridge between your plan  and success.

 

BUSINESS POTENTIAL

What are the business potential of agro export trade? With cashew nut and in specific, the kernel in introspect, cashew kernel export is a promising market. According to recent statistics from NEPC, Germany, Netherlands, United Kingdom, Poland, France, Japan, United Arab Emirates, Canada, Lithuania and Ireland are the top ten markets with the largest untapped potential for Nigeria  cashew kernel export. Vietnam is currently the largest export destination for Nigeria cashew kernels with average yearly exports of 3.4milliona dollars. It is also Nigeria’s largest competitor on a global scale. Poland is a small market for Nigeria but France is a new market.

For ginger, untapped markets exist in Netherland, United Kingdom, Pakistan, Japan, Bangladesh,  Canada, Malaysia, germany, UAE and Italy. Estimated untapped potential is largest in the Dutch market with 4.5 million dollars of additional export  to be reached up till 2021. The Netherland and UK are very interesting. There is a lot of additional export potential there. Try to access new markets like Pakistan, Japan and Bangladesh. Also keep trying to expand export in  Germany and UAE.

Sesame seeds also offers promising markets with Asian countries leading the pack. China, Japan, Korea Republic, Mexico, Poland, France, Lebanon, USA, Canada, and United Kingdom are the real markets. A real market is a positive market with China, the largest estimated untapped potential for Nigeria with over 110 million dollars in value. Sesame seed exports from Nigeria offers plenty room for growth with over 170 million dollars untapped potential for the ten interesting destinations. Finally, try to increase focus on emerging markets of South Korea, Mexico and Poland.

 

BENEFIT

To you the agro export entrepreneur, I want to affirm you of your potential to invest in the agro export business. The benefits are high and endless.

First, exportation business exposes you to untapped markets. An exporter is a market maker. Untapped market are markets not fully explored  and present a vantage opportunities for a budding entrepreneur. You know that opportunity when you have a raw material that is very rare in a distant country but very much available in your home country. Exportation gives you that chance  to explore one or more markets out of the many markets that are demanding such a raw material.

Second is exportation increases your sales. If you are a producer, a manufacturer  or even a trader , it gives you a wider horizon of potential customers and clients to sell your products.  When the economy is bad in one part of the world, there are countries that are doing better . You open up other markets. You proactively select your markets,  you recognize the different markets require different approaches , then you establish and nurture international relationships because relationships are the holy grail of cross border businesses  and finally, you develop partnerships enabling you to achieve your goal of profitability by getting the sales you desire. You will be amazed seeing your sales skyrocket to be 2, 3 or even 4 times the quantity of sales you make in your local market.

Thirdly, exportation increases profit. Exporters have a goal of profit maximization and the bigger the profit , the better. Export contributes to increased profit because the average orders from international customers are larger than they are from domestic buyers. Some products especially those that are unique and innovative ensures greater profit margins abroad than in the local market. I also want to inform that the global market is a competitive market and sometimes can force exporters to lower prices , squeeze profits and reduce cost  and you find in some markets, you generate higher profit margins while in other markets, your profit margins are considerably lower.

Next, export trade will reduce your risk and balance your growth. It is risky being bound to the domestic market alone. Export sales to a variety of diverse foreign markets can help reduce your risk because of fluctuations in business cycles . You will gain a spread effect. To help you understand, for example, at any one time, the UK, China, and Germany will be having different growth rate. By selling in all of these countries, the risk of low growth in one or more of these countries  will be offset by increased growth in the others, thus resulting in a balanced portfolio of growth overall.

On a production level, you gain lower unit cost and economics of scale. Export will put idle production capacity to work because of more efficient utilization of materials. What is more, because you are now selling more products without increasing total cost to the same extent, this has a positive effect  of lowering your unit cost and more productive overall operation. In addition, you enjoy pure economics of scale with products that are more global in scope. The newer the product, the wider range of acceptance in the world, especially the younger “Customer” often referred to the global consumer.

Investing in agro export will be a beneficial idea. For some people, it enhances their status. The status of being involved in International trade and in vanguard of socio-economic development of their country is very important to them. It also enables them gain respectability and acceptance in their community. Too often, they follow others into exports not for economic reason alone but because of difficulties encountered in their local marketplace.

 

VIABILITY

Agro-export business can be done. It is a feasible project. It is a beneficial idea. It is a blue ocean. It can be successful. There is no viable alternative for change and even if you are trading within, it will make economic sense to expand your horizon by investing in export trade. A business with little investment and good returns, minimal risk but great opportunities for growth.

And now, more than ever, Nigeria agro products attract high demands overseas with high prices as products as bitter kola, kolanut, cashew nut, Sesame seed, ginger, Chilipepper etc will earn you real money.

People just want to buy things from other countries. The world has become a global community with the introduction of information and communication Technology and people communicating faster at a distance in real time. Buckle up because anything at all sells in the global market ranging from charcoal , coconut, okro, yam, snail, moringa seed, locust beans, soya beans, cassava chips, flour, starch and even the stem. Furthermore, foreigners are looking for people like you and me to supply these products to them and financially, hundreds of millions of Naira are being made daily in home based export business.

Are you looking for support in finding potential buyers? Currently, there is an ongoing match making service with a promise to match Nigerian exporter with buyers around the world. It involves receiving and responding to trade enquiries and setting up business contacts between relevant parties. In addition, you will be directed to numerous International buyer directories.

Export business also offers some challenges but risk are part of business and they are ingrained in any action we take. A business risk is a future possibility that may prevent you from achieving your goal.  Export business risk can be managed and your strategy will be to optimize your risk-reward ratio within your circle of risk tolerance. To understand better, the risk-reward ratio is an estimate that determine the chance of losses verses the chance of gains in a business decision. You will gain positive risk- reward ratio through strategic and effective planning. To plan effectively in export, you will need a timely, reliable and accurate information system. An effective information system is a strategic tool on one hand and an enabling tool on the other hand. It is a prerequisite for export success. It consist of people, equipment and procedure to gather, sort, analyse, evaluate and distribute the needed information to achieve business success.

I will encourage you further to expand your product interest by dealing with two or more commodities.  For example, your primary export product is sheanut while your secondary can be cashew nut and kolanut. With this, you gain a positive spread risk-reward effect and economics of scope based on variety and product interest helping you to ultimately meet and exceed your challenges in export business.

 

VALUE CHAIN

Export has a value chain. A value chain is a set of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for it’s market. In export, you need to plan your plan your export, then you find a buyer who is called contract source. The next step is to source for the product followed by transportation, logistic process and documentations before you eventually ship the products.

Synergy with Nigerians

There is a win-win agreement, partnerships and collaborations with a lot of Nigerians living in the US and UK to identify the right products in the Nigerian market because they know the market and the terrain and get regular request from such a Nigerians from time to time.

Export mentoring Services

Not everyone has an indept knowledge of the export market. Not everyone has access or can read market intelligence with apt and not everyone has developed the intended skillset and toolset to compete favourably in the global market. There is value in mentorship service . It is a the type of service given to Nigerians who know next to nothing about export and don’t have enough money but with a contract, they can grow big to execute bigger contracts.

Aggregated Export Service

The aggregated export service providers are professional bankers, oil and gas professionals, investors, insurance and retirees. Some of these people have funds and they want to go into lucrative export market. If they subscribe to these services, the bills will go to these category of people every month on the available export contract. If there is any they are interested, they contribute and they have good returns.

Raw product processing

Raw agricultural products can be processed. Processing adds value. Raw products are processed further to attract higher prices in the global marketplace. Adding value to a product through processing will improve it’s quality and shelf life and raise it’s market price.

For example, IMT of split ginger in raw form sells for 500,000 naira while it’s equivalent in weight of ginger oil cost 25, 000,000 naira when processed. Another example is Sheabutter. Sheanut is the raw material for sheabutter production. Raw sheanut sells for N70,000 per ton while it’s equivalent weight of sheabutter is over N350,000 naira in processed form.

As a result, it makes economic sense to process your raw products to gain a better deal.

 

INVEST

Rhetorics don’t improve metrics. Real life application is what translate ideas to profit. Now, you have a choice to choose a better path of investment.

On the economic sense, you will be investing in a strategic viable business that assures good returns on investment, Overtime, you will be empowered to create even more value through processing your item and exploring it’s many value chains.

On the otherhand, you make good things happen. You become a part of something larger; a greater future, a future filled with hope. You change the narrative. You gain dignity and respect in your local community by processing and exporting standard, certified, proud  “Made in Nigeria” agro products that satisfies the need of your buyers.

Think business, Think export, Think Tomorrow business, Invest in Agro-Export.

 

Nwosu is a Business Manager and CEO, Cpraxis Integrated Services. Available is a bankable feasibility studies & business plan, market intelligences, and comprehensive  guide to start investing in the Agro export business right away./07033097160. Have a nice day.

 

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