AgCLIR Chapter: Starting A Business
Starting an agribusiness can be as simple as clearing an unclaimed plot of land, growing a crop of potatoes, and selling them in a nearby retail market or as complex as investing in a sophisticated manufacturing plant capable of using complex chemical extraction to turn tons of corn into products for consumption or industrial use. Most agricultural enterprises, even when oriented to production for the market, are managed by individual farmers or households who produce crops on land secured only with traditional tenure rights. They rarely enter into written contracts, have little access to formal credit, insurance, or other means to manage business risks, and rely upon unpaid, family labor in the production process. Similarly, most traders in agricultural products, also agribusinesses, operate through informal networks that collect products from producers, process them minimally (if at all), store commodities for only short periods, and resell them in local or regional markets with little regard for quality standards or packaging.
Those countries that encourage agribusinesses to move beyond informal status—to register within a state-operated registry, acquire licenses, and pay taxes—set the stage for a variety of positive outcomes. When such measures are made available and promoted, agribusinesses are better able to:
- Access external financing for start-up investment and growth;
- Manage their business risks; and
- Expand their access to market opportunities.
It follows that national treasuries are then in a better position to receive the taxes they need to support the country’s infrastructure— roads, ports, electrical lines, and other resources that support a vibrant economy. Workers can be protected from abuse and can access health care, pensions, and other social benefits. Basic necessities will become safer through fair regulation. Important environmental values and ecosystem services can be protected. And those who own or operate such agribusinesses are likely to become more engaged local and national political life.
For more information, please see the Starting a Business – Lessons from the Field Briefer.
AgCLIR Case Studies
AgCLIR assessments on ‘Starting a Business’ have been conducted in the following countries: