Agriculture involves a lot of movement of goods, therefore, there is a need for investment in logistics. Logistics is the process of coordinating and moving resources, be it people, materials, inventory, and equipment from one location to another. Logistics in agriculture includes purchasing and delivery of raw materials and finished products to the end-users. It involves planning, purchasing, packaging, and transporting to the desired destination.
There are some investments in agricultural logistics but there are many untapped areas under this subject I will want to draw readers’ attention to. Agricultural logistics comprises transportation, warehousing, material handling, planning, and demand and order fulfillment.
We need people and organisations to invest in providing transport services for the agricultural industry. It entails providing suitable and affordable means of transportation to cart goods from farm gates to the markets, warehouses, processing centers, ports, supermarkets to deliver to the final consumer. Transport services are not only needed for carting goods in agriculture but also to convey workers in the agricultural fields to and from the farms, research stations, etc.
There is a need for people and organisations to provide motorbikes, tricycles, vans, trucks of various tonnage capacities, cold vans or reefers, cargo planes, and cargo ship services for the agricultural sector. The need for investing in these means of transportation depends on the kind of demand for transport services in a designated area. Farmers in Sekesua may appreciate an investment in tricycles as they need such means of transport to cart harvested cassava to the community processing center. Just as a cassava dough seller will need a 10-ton truck to send her dough to Kasoa market from Kissifli to sell. A start-up fish farm does not need to worry about purchasing cold vans to transport the fish to Kaneshie market to sell, because someone is into the business of providing reefer vans for rentals. We have companies providing such transportation services to a section of the agricultural industry, with some notable ones in the cocoa sector.
There are also a lot of informal companies or sole-proprietor enterprises, where an individual buys a truck to cart foodstuff from the areas where they are grown to the city centers. There are opportunities in this sector and I encourage you to invest in it. Many agricultural trades are halted or delayed due to a lack of access to transportation services. Foodstuffs perish on the way to the market because of frequent breakdowns of the trucks or vehicles conveying them. Food and raw material prices are high because of exorbitant and unstable charges from the existing individual transport operators.
Invest in providing transport services to curtail these challenges, make a profit, and make agriculture beneficial and fulfilling. We need transport services to be provided by companies who have stable and predictable charges or fares, well-serviced vehicles, trustworthy operators, and scheduled deliveries. Such investment should not be headquartered in the city center but in the agriculturally dominated areas to provide readily available solutions to the sector. You can start small and grow to be a household name in the agricultural transportation service space.
There is also the urgent need for investments in warehousing. The private sector must invest in providing warehouses for agricultural commodities just like we have for cocoa sheds across the cocoa-growing areas in the country. It is profitable and must not be left to the government alone to build warehouses for farmers.
In 2020, the minister of Food and Agriculture announced that the government was putting up 80 warehouses with the capacity of storing about 80,000 metric tonnes of food items, meaning one warehouse will have the capacity of 1,000 metric tonnes. But we need more than that in the country, with farmers producing about 650,000 metric tonnes of rice and 3,000,000 metric tonnes of maize in 2019 alone.
A graduate sets out to be an aggregator, buying maize, soybeans, rice, and groundnut for sale. After moving to the field, he is faced with the problem of where to keep the truck full of maize he has bought from the field. He is then forced to sell cheap to the market to release the truck to go or choose to buy smaller quantities and store in a rented store. His potential in the industry is curtailed by lack of storage space so he will eventually move his little capital out of the business and go and look for a non-existent office job.
Let us invest in putting up warehouses in vantage places in communities where agricultural production is massive. This will solve more than half of the post-harvest losses and improve food availability in the country. Investors must look at new and affordable technologies of building cost-effective warehouses, which can store different kinds of foodstuff and are suited to the new challenges in agriculture.
Recent warehouses being built elsewhere are not solely with concrete blocks but with other materials metal sheets, tents, fiberglass with the provision of a conducive environment in it for holding food items.
A year ago, an investor from the US wanted to build a cold-room warehouse across the country to preserve and store fruits and vegetables, post-harvest, and market use. Imagine what this would have done for the market women who go to sell tomatoes at Agbobloshie, with the assurance of having a cold room to store the leftover from the market day for a fee.
A very critical area that we need investment and new technologies to make better is agricultural material handling. The poor handling of agricultural goods or materials increases the rate of deterioration and brings losses to the owners. Proper loading of fruits from the farm gate to the market or the processing center would see fruits packed in crates or cartons before being loaded into the trucks.
The opposite is often the case, with trucks fully loaded with pineapples, exposed to the sun, and at every speed rump, the pineapples on top of others will be jumping and hitting the down ones. Before the driver reaches the market, most of the fruits will be damaged and eventually go bad if not consumed on time.
Until we invest in material handling in agriculture, we will keep getting contaminated and bruised products on our market, reducing the value of the products and posing health challenges to the consumers.
One can invest in building a company specialised in movement, protection, storage, and control of agricultural materials and products from the farm to the market, processing centers, and the final consumer. With well-organised and coordinated ‘loading boys’ in the system, we can ensure that our agricultural materials and products would be safe and well arranged for easy transport or movement. A company with forklifts, pallets, crates, conveying belts, scales, covering materials available for agricultural goods and materials movement will save the industry a lot of money wasted and maximize profits.
Demand and Order Fulfillment
A fruit processing company is having a challenge meeting the demand of its consumers because there is a shortage of raw materials (fruits) for processing. The company keeps shutting down and keeps disappointing its new consumer base all the time. The solution to the challenge the company is facing lies with Agricultural Logistics. We need investments in demand and order fulfillment companies or raw material sourcing companies. One can set up a company with the sole aim of using data from the processing company to determine its raw material needs.
With such data and securing contracts from the processing company, you set out to source raw material for the processing company to ensure that they keep on processing to satisfy their consumers and be in business always. Some companies have an in-house team that handles this component of logistics but they are limited. The fruit processing company may be relying on its cultivated farms or nearby out-growers. It may not be enough for the company’s operational target and may have a low reach in the raw material sourcing business. A well-connected demand and order fulfillment company would be able to provide the raw materials for the fruit processing company because of its wide network of operations. The company may even import the raw materials for the fruit processing company if their analysis favors such an option. For our processing companies to thrive, we must invest in demand and order fulfillment companies.
Investing in agricultural logistics ensures continuity in agricultural operations and brings improvement in the entire industry. It reduces stress and losses in agriculture. It generates employment for those in dedicated agricultural production and those in the logistics sector.
Investments in agricultural logistics create global businesses and enhance trading between nations. Of course, with good management practices, sound decisions, and perseverance, such investments will yield much profit and build conglomerates for generations to come. May you generate a business idea from reading this article.
The writer is an agribusiness analyst. He can be reached at [email protected],0249014342