Owning land is not a good reason to start farming, but market is

Farming should start from the market and flow to the farm

What motivates you to get into farming? Your land or your market?

Nowadays, owning a small piece of land is fashionable, especially if you buy it yourself instead of inheriting it from your parents. In Kenya for example, most middle-class income earners are in rush to buy land with the intention of putting up a building in the future or resell it when the value appreciates. It is common to hear people saying that no one should ever buy a car before buying land.

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For this reason, I have heard people saying that they have a piece of land lying idle somewhere and that they wish to do some farming activities as they wait for the next step. While it is a good idea to keep thinking about how to add value to your idle land, it is equally very risky to do speculative farming.

With or without a land title deed, you can become a farmer as long as you start your value chain from the market. Actually, a critical market-based analysis may lead you to a conclusion that the best place to start your farm is not the location where you own land. You might need to hire land in a different location for you to grow what the market needs.

Therefore, if becoming a farmer is something you wish to do one day, focus your mind on what you can sell rather than what can grow on your farm.

Please read this extract from Andrew Ahiaku’s article on why most farmers never pass the agricultural lending test from commercial banks.

Have you wondered why your request for a facility especially with a commercial bank is declined? Here are a few pointers:

 1. Banks do not undertake speculative lending. That is, you must have a fair idea of where and how your produce will be sold before you approach the bank. Thus, if you approached a lender and you don’t know who is buying your product, the lender is likely to decline your facility.

Read also: How to finance agriculture sustainably

 To overcome this, start your value chain or agricultural activity from the market. Know the products the market needs and produce that bearing in mind the “cobweb effect”. Note that this strategy can also be tricky. Commercial Banks especially will only support value chains that have commercial value. If the produce cannot attract an off-taker, chances are it will not be supported.

 An example will do better. In my home country Ghana, we eat lots of yams. Sadly, they are sold in the market as tubers. I’m yet to chance on a yam processing facility in Ghana. Based on this, it will be difficult for a bank to fund the commercial production of yam in anticipation that it would be sold in the “open market”. The same was the case for Cassava before it found its use in industrial starch, ethanol, and root beer. Access to the market is critical in Agri Lending.

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