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.

How to Start Agriculture Business in India?

Step 1: First you need to understand the types of agriculture business. Among them choose agriculture business ideas that align with your business goals and objectives:

  1. Urban Agriculture: This means practising agriculture in urban areas and their surrounding regions. It involves cultivating food and other products in and around urban areas, using small spaces like rooftops, balconies, or community gardens. It is becoming increasingly popular in Indian cities due to the rise in demand for fresh, locally-grown produce. Urban farming also promotes sustainability and provides an additional income source for city dwellers with limited space. 
  2. Herb, Fruit or Vegetable Farming and Export: Starting a business focused on growing and selling fruits and vegetables in a solid option. Organic produce is in high demand in both local and export markets. You could also consider collaborating with local farmers to export their produce. But keep in mind that this requires a deep understanding of the regulations surrounding import-export business in India. 
  3. Field Crop Farming: One of the feasible farming business ideas is to opt for traditional crop farming which is a dependable agricultural business. If you have access to land, you can cultivate a variety of crops, including fruits, and vegetables. This business type offers flexibility depending on your region’s climate and soil conditions. 
  4. Farming of Medicinal Herbs: With the rising trend of Ayurvedic and natural remedies, growing medicinal herbs can be a smart business move. Herbs like tulsi, aloe vera, and ashwagandha are in demand both domestically and internationally. 
  5. Nursery: Running a plant nursery involves growing and selling various types of plants. Although it takes time for the plant to grow and become market-ready, the long-term potential is rewarding. It is especially so as more people are focusing on gardening and green spaces. 
  6. Grocery Shopping Portal: The demand for online grocery shopping has surged in recent years. If you have the capital, creating an e-commerce platform to sell fresh produce and groceries online can be profitable agribusiness. 
  7. Distribution of Fertilisers: Fertiliser distribution can be a profitable venture, especially in rural areas where farming is the main livelihood. You can either produce organic fertilisers or resell them to local farmers who are looking for high-quality inputs for their farms. 
  8. Floriculture: Floriculture is the cultivation of flowers and ornamental plants for commercial purposes. The floricultural market is expanding in India due to increased demand for flowers in events, festivals, and exports. With the right environment and market access, floriculture can be a lucrative business. 
  9. Dairy Farming: Dairy farming is a highly lucrative agribusiness in India. However, it requires substantial investment and the guidance of experts in animal husbandry and dairy management. If executed properly, the returns can be impressive. 
  10. Poultry Farming: Poultry farming has grown exponentially in the past decade, making it the best business in agriculture. Whether you start small or scale up over time, it can provide a steady income and supplement other agricultural activities. 
  11. Fish Farming or Aquaculture: Acquature focuses on the farming of aquatic organisms such as fish, shrimp, and prawns. This industry is rapidly growing in India, especially with the increasing demand for seafood. Proper management and investment in quality feed and equipment are essential for success in this field. 
  12. Mushroom Farming: Mushroom farming is a profitable business that requires minimal space and investment compared to other agricultural businesses. In India, there is a growing demand for mushrooms, both as a food source and in the pharmaceutical industry. It is a suitable option for small-scale farmers looking to diversify their income.  
  13. Oyster Farming: Oyster farming focuses on the cultivation of oysters for pearls and meat. This niche market is gradually expanding and is one of the money making agriculture business ideas in India. It requires careful planning of water quality and feeding systems for optimal yield. 
  14. Greenhouse Farming: Greenhouse farming allows farmers to grow crops in controlled environments. This makes it possible to cultivate off-season vegetables and flowers. This type of farming is gaining popularity in India, especially in areas with unpredictable climates. Greenhouses can increase yields and protect crops from harsh weather conditions. 
  15. Organic Vermicompost: This is an excellent side business for those already involved in farming. The demand for organic fertilisers is on the rise, as people look for healthier alternatives for growing their food. 

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. This documentation is crucial for applying for government subsidies or loans, which are often available for agricultural projects in India. Make sure your land meets all regulatory requirements, including zoning laws, to avoid potential legal issues later on.

Step 3 – Research and identify the potential markets and its requirements to cater to. Consider local demand trends, pricing fluctuations, and the influence of festivals and seasons on market dynamics, which can significantly impact sales in India. Networking with local farmers and market associations can provide insights into consumer preferences and emerging opportunities.

Step 4 – Take into account your expertise, ability, knowledge and access to professional assistance before finalising the commodity for your business plan. Engaging with local agricultural extension services can provide valuable insights and guidance tailored to your specific region and crop types. Plus, participating in workshops or training programs can enhance your skills and knowledge base.

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. Utilise government reports and agricultural research publications to better understand market demands that may affect your crops. Incorporating a risk assessment will also help you prepare for potential market fluctuations or crop failures.

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. This includes sourcing high-quality seeds or seedlings, fertilisers, and equipment from local suppliers or cooperatives to ensure sustainability and cost-effectiveness. Forming partnerships with local agricultural cooperatives can also help reduce costs and increase resource accessibility.

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. Depending on your business structure, you may also need to apply for specific licences related to food safety, environmental regulations, or agricultural practices in India. Keeping abreast of local laws and regulations is essential to avoid penalties and ensure compliance.

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. Explore various options such as government schemes, bank loans, and cooperative funding tailored for agricultural enterprises to secure the necessary capital. Preparing a detailed financial plan will help in convincing potential investors or lenders of your business’s viability.

Step-by-Step Process of Creating an Agricultural Business Plan

Creating a comprehensive agricultural business plan is crucial to understand how to start farming in India. This agribusiness plan serves as a roadmap, outlining your business goals and strategies, while also attracting potential investors.

Mission Statement and Goals

Your mission statement should define the core purpose of your agricultural business. It should clearly explain why you are starting the business and what you hope to achieve. Whether you plan to focus on organic farming, poultry, or crop cultivation, the mission should reflect your values and the needs of the market you are targeting.

Business Details

This section provides a detailed overview of your business. It includes the location, the land you own or lease, the nature of your agricultural activities, and the operational timeline. You should also highlight other factors such as marketing strategies and any potential environmental impact. 

Market Analysis

Conducting a thorough market analysis is essential for understanding the demand, competition and trends in the agricultural sector. By studying the market, you can identify the needs of your target customers. This also enables you to evaluate the supply-demand balance. A SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) can help you pinpoint internal and external factors that could impact your business. For instance, the increasing demand for organic food could present a significant opportunity. 

Business Strategy 

Your business strategy should align with your mission and goals. Think about the products and services you will offer and how you will differentiate yourself from competitors. Consider factors such as pricing, distribution, and promotion. Think about how you will reach your customers and what will make them choose your product over others. Having a clear marketing strategy will help you navigate the competitive landscape.

Marketing Strategy and Distribution Plans

A successful agricultural business requires not just quality products but also an effective marketing and distribution plan. It is important to emphasise the unique selling points, such as product quality, location advantages, or any other feature that sets your business apart from competitors. Agribusiness today can leverage online platforms to expand their reach. Using e-commerce or online distribution partners can help get the best deals and ensure a wider customer base. A strong strategy ensures visibility and smooth delivery of products to customers. 

Finances

The financial section is crucial in determining the viability of your agriculture business. You need to assess your current financial resources, project future income, and plan your expenditure. For example, if you are starting a dairy farm, you will need to account for the costs of the livestock, feed, and facilities. It is also important to explore investment options, such as bank loans, loans from non-banking financial companies (NFBCs) or partnerships to support your growth. 

Summary

The summary wraps up your business plan by highlighting key achievements and potential growth areas. This section is especially important for attracting investors, as it demonstrates the sustainability and profitability of your business. Showcasing your financial projections and past successes can convince investors that your agriculture business is a solid investment opportunity. 

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.


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Conclusion

Developing a successful agricultural business plan requires careful research, strategic planning, and a clear understanding of the target market. Identifying the right commodities, assessing available resources, and calculating both short-term and long-term economic potential are essential steps. Ensuring compliance with legal and regulatory requirements safeguards your business from future obstacles. Creating a thorough marketing strategy will further enhance your chances of success. Plus, regularly reviewing and adapting your plan as the market evolves is key to sustaining growth. You also need to do careful financial planning and resource management to achieve long-term sustainability. Lendingkart can support your agribusiness journey by offering flexible financial solutions tailored to your specific needs. We help you grow and scale your operations effectively. 

Agriculture Business Plan FAQs:

1. How do I start an agriculture business?

To start an agriculture business, begin by crafting a detailed agri farming business plan, focusing on your goals, resources, and market analysis. In India, leverage available agricultural planning resources. Secure funding through agriculture business loans, ensuring a comprehensive proposal highlighting your startup’s potential. Execute your plan diligently, considering sustainable practices. This approach maximizes your chances of success in the agriculture sector.

2. Which agriculture business is most profitable?

Determining the most profitable agriculture business depends on factors like location, market demand, and crop choice. Conduct thorough research, create a solid business plan, and consider seeking an agriculture business loan to start. In India, agriculture planning varies, but sectors like organic farming, greenhouse cultivation, and high-value crops tend to yield promising returns.

3. 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

4. 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.

5. 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.

6. 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.

7. 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.

8. 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.

9. 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

10. 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.

11. 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.

12. 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.

13. 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.

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