Who doesn’t like the idea of making money work for them? I love exploring investment opportunities. Some investments turn out profitable while others either break even or comes with losses. One of the industries I’ve been actively investing in over the past 3 years is agriculture.
I believe there is every reason to be interested in agriculture, especially for ambitious people living in Africa. The agric industry is predicted to be worth over a trillion dollars by 2030 and a lot of innovation is already ongoing. The industry has huge profit potential and if you don’t have the time to get into the business of farming and the related value chain, putting your money to work is definitely the smart thing to do. That was exactly what I have done over the past 3 years.
In this video, I’m going to share 5 lessons I learned after investing a cumulative $56,000 dollars in agriculture without going to the farm. Before we get to it, be sure to subscribe to After School TV for more insightful videos like this.
1. You can invest in agriculture without farming
As I have mentioned, you don’t have to be fully involved in the agric industry to tap into its huge profit potential. This is thanks to innovative agric-technology startups offering crowdfunding services. These startups provide the opportunity to invest in farming projects for agreed duration and interest.
Since I’m not experienced in the business of farming and don’t have the time to equip myself with enough knowledge to play in the industry, the investment options these startups provide are simply ideal for people like me.
At first, I was skeptical about the idea of agric crowdfunding. The thought of parting with my money, and having to wait for 6 to 12 months to confirm if it was legit or not wasn’t exactly appealing. To determine if the risk was worth taking, I researched the most popular crowdfunding platforms in Nigeria and came down to two of them.
Now, I have to say this; I am not endorsing any of these platforms. I’m simply sharing based on my past experience. My future experience may differ from what I have experienced in the past. If you want to consider crowdfunding farming projects, please do your own research and invest at your own risk.
With that said. From my research, I came down to two agric crowdfunding companies; Farmcrowdy and ThriveAgric. My observation at the time was that ThriveAgric paid a higher interest rate than Farmcrowdy. While ThriveAgric was offering up to 14% interest for 6 months, Farmcrowdy was offering 11%.
Since I was 80 percent convinced of the legitimacy of both companies, I decided to start with ThriveAgric. I have since invested a cumulative $44,600 on-farm projects with ThriveAgric and I have received my payment on schedule every single time except on one occasion. I will tell you more about that later. The point is that you can invest in agriculture without getting involved with any part of the farming and production process.
2. Farming is risky but it is manageable
Whether you invest in low or high interest projects, agriculture crowdfunding is risky. The lockdown due to the COVID-19 pandemic dealt a serious blow on the farming industry. There is also the risk of herdsmen and their cattle encroaching farmlands and destroying crops. There are natural and environmental risks.
However, most crowdfunding companies implement a modern approach to farming which mitigates most of these risks. In addition to that, they all claim to have the farms insured. So in the event of loss, investors will still get back their capital but without interest. I’m not experienced enough to talk about the efficiency of the insurance policies. I just know that I haven’t been deprived of my capital or interest since I started investing, even with the long period of lockdown.
3. Lower your risk with your choice of investment partners
I had a discussion with a full-time farmer sometime ago and mentioned my indirect involvement in farming. He told me very confidently that he could easily deliver double of the interest I was getting if I invest with him directly. In other words, what I was getting from my current investment was a little part of the overall profit.
I decided not to take his offer for simple reasons. Anyone can promise you an outrageous return on investment. They can even deliver on their promise. But is it sustainable? For example, we both know that the lockdown due to the COVID-19 pandemic affected a lot of businesses especially farmers. A lot of farmers lost their crops and livestock because of low market demand, restricted movement, and poor storage facilities.
It would take a company with a strong financial capacity to be able to pay investors during this period. For instance, my last investment with Thriveagric was due in May 2020 but they were able to repay 20 percent around July and the remaining 80 percent in October. In fact, at the time of creating this content, many of their investors whose payment is long overdue are yet to receive their fund. The company was hit hard due to the lockdown and is promising to credit all investors over a period of 24 months. They have a brand to protect and evidently working towards redeeming its image. However, an average farmer or a lesser-known company may not be able to bear such risk which would mean losing your money. Farmcrowdy seemed to be doing better in spite of the pandemic. Their interest has also increased from the usual 11% to 14%. I used them for the first time after the delayed payment from ThriveAgric and have had a positive experience so far.
The point is this; don’t be in a hurry to put your money into a business simple because they are offering huge return on investment. Rather look for a company that has a reputation to protect.
4. 30% interest per year is not bad at all
I’ve seen agric crowdfunding platforms promising as high as 28 percent interest in 6 months. While it may be practical to generate more than that return on investment, promising such return to investors is highly risky. What I have noticed is that new crowdfunding platforms often want to use high interest rates to attract investors. But be careful not to give in to greed. Those that have been around for a longer period often don’t offer more than 15% interest in 6 months. It’s not that they cannot offer more. But as a business, they also need to keep their financial risk within manageable limits.
Personally, I think if you can get 30 percent interest of your money working for you in a year, you are not doing badly at all. It is safer to accept lower interest from a company with a level of public trust than to go for higher interest from a random company.
5. There is money to be made in farming
All I can say is that there is money in agribusiness. With the level of innovation going into the business of farming and production, farming is without a doubt the future. There is a huge deficit in food production, especially in Africa. We don’t produce enough to feed ourselves let alone to feed people outside the continent. A significant percentage of food and agric raw materials we consume in Africa are imported.
When you think about this, the only thing you should see is opportunity. There is a market that is ready to accommodate increasing local production. The local and international demand is huge.
If you are considering investing in agriculture, from my little experience, in addition to available data, there is money to be made from farming. And the goodness is that you don’t have to run a farm or farm production to benefit from this lucrative industry. There are opportunities to send your money to do the work for you, while you partake in sharing the profit.
But remember to do your own due diligence. Don’t get swayed by higher interest rates. Rely on company reputation and minimize your risk. Some crowdfunding platforms allow you to start with as low as $30 or 10,000 naira. So you can start small. What are you going to do now? Have you invested in agric crowdfunding before? If yes, what was your experience? If no, is it something you want to consider? Let us know in the comment section below. If you are yet to subscribe to After School TV, now is a good time to hit the subscribe button. Until next time, YOUR SUCCESS MATTERS!