Big mis­takes in agribusi­ness can be dev­as­tat­ing

Agriculture - - Contents -

IT IS NO JOKE to com­mit big mis­takes in farm­ing be­cause that can be very dev­as­tat­ing, es­pe­cially if some­one is just start­ing in agribusi­ness. Just like a cou­ple who once came to see us be­cause they wanted to find out if it is re­ally good to plant Gmelina, one of the com­mer­cial tree species rec­om­mended for plant­ing in plan­ta­tions.

Gmelina is fast grow­ing and can be used for mak­ing lum­ber, fur­ni­ture, even wooden coffins, banana props and other uses. The cou­ple who were in their early 40s, and re­sid­ing in a well-off sub­di­vi­sion south of Manila, were vis­i­bly wor­ried when they ap­proached us be­cause they had a huge money prob­lem. You see, their bank had given them no­tice that it will be fore­clos­ing their 16-hectare prop­erty in Tar­lac if they can­not pay their R10- mil­lion loan which had bal­looned to R16- mil­lion by 1998 be­cause of the float­ing in­ter­est rate that went as high as 42 per­cent a year.

We re­mem­bered the cou­ple while lis­ten­ing to Jess Domingo at the Agribiz Kapi­han re­cently. Their har­ried coun­te­nance ap­peared so fresh in our mem­ory while Domingo was giv­ing his sage ad­vice re­gard­ing peo­ple who are just start­ing in agribusi­ness.

The cou­ple did not have any ex­pe­ri­ence in agribusi­ness but they were ex­cited to be­come broiler con­tract grow­ers be­cause their neigh­bor was mak­ing a lot of money as a con­tract grower of a big com­pany. They put up two huge tun­nel-vent poul­try houses that could ac­com­mo­date at about 100,000 chicks per load­ing. They had fig­ured out that if they could net even just R10 per bird, that would give them at least a mil­lion bucks in a grow­ing cy­cle of 1.5 months.

But that did not hap­pen. Be­cause of the fi­nan­cial cri­sis, busi­ness was slow and the in­te­gra­tors re­duced their pro­duc­tion tar­gets. And so not all the ex­pen­sive chicken houses were filled up. That meant that the own­ers of the poul­try houses did not make any in­come from the un­used build­ings.

Why did the lec­ture of Domingo re­mind us of the wor­ried cou­ple? Be­cause they did the op­po­site of what Jess stressed in his talk. The two were just start­ing in agribusi­ness and they started too big. Jess em­pha­sized that if you are new in farm­ing, you should start small and ex­pand as you get to know the ins and outs of the busi­ness.

Jess also em­pha­sized that if you are just a neo­phyte, it is best to use your own money. Don’t bor­row, es­pe­cially from the bank. If you must, bor­row from your rel­a­tives and friends who would not be as ag­gres­sive as the bank in go­ing af­ter your col­lat­eral.

Jess Domingo (right) with Toto Barcelona at the lat­ter’s roofdeck green­house af­ter the Agribiz Kapi­han lec­ture.

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