Agro commodity trading is a trading system where middlemen buy agricultural commodities where and when they are been produced and selling where and when they are scarce. The middlemen often go as far as getting the commodities directly from the area where they are surplus and store till when they are scarce. The main aim is to make more profit and make the commodities more available and accessible for people even when they are not in their season. Agro commodity trading in Nigeria is a very lucrative system that serves as a means where people make money with calculated risks.
In the light of this, the middlemen take advantage of bumper harvest seasons, buying agro commodities from farmers in their season at a reduced price. This gives the middlemen a lot of profit to leverage on because they are aiming to sell at a much better price where there is high demand for them. In agro commodity trading in Nigeria, not only tangible products are being sold. Services relating to agribusiness are also being rendered. For example, the agricultural consultants do render service.
In Nigeria, some of the main Agricultural products are:
Food crops: e.g. maize, beans, soybeans, millet, rice, etc.
Livestock- e.g. cattle, sheep, goat, chicken, pork, etc.
Industrial crops: basically cash crops e.g. Cocoa, cassava, cashew, yam, rubber, etc.
HOW TO KNOW WHICH COMMODITY TO GO INTO
Here are few things to put into consideration before setting out:
i. Conduct market research to know how people demand for a particular produce or make use of it (maybe as raw material)
ii. Study trends of Agricultural produce and prices
iii. Understanding the seasonality of crops
iv. Post-harvest losses: this is a very critical point to note because it will help you to know how much loss you are going to make while storing the commodity for the scarce season.
Easy Ways To Market Your Farm Produce
i. Marketing through social media app is easy these days. It helps you to reach out to a wider target audience.
ii. Look for where it is needed and plan how to solve the problem.
iii. Contact Companies/industries that make use of the produce as raw material.
How To Go Into Agro Commodity Trading In Nigeria
There are four ways to go into agro commodity trading in Nigeria. There are stages to this and one will have to choose the most suitable.
i. Intrastate trading: this is a trading system where a trader goes to a rural area to buy commodities in large quantities and sell them off in the urban area.
ii. Interstate trading: this is more advance than the former because one will have to do an understudy of a pressing need in a state and another state producing such commodity with ease. E.g. Transportation of tomato from the north to Oyo-state
iii. LPO trading- Local Purchase Order is when you have to go to a company and be their major supplier. The trader will have to take his sample to the company and be sure of the quality he wants to sell to them and there will be an agreement on the quantity to supply, variety/breed of produce, and time of supply, etc. The contract can be for several years while some that be in form of a partnership. e.g
supplying maize to feed millers
iv. Exportation: this is the most lucrative because of the bulkiness of the products in the transaction. In Nigeria, we produce a lot but we export a little not because of the higher rate of consumption within the state but because of post-harvest losses.
HOW TO TRADE IN AGRO COMMUNITY MARKET
There are two types of trading markets in Nigeria:
Open market: Open markets are a walk-in market that buyers buy their products at a minimal price.
Regulated market: Regulated markets: just like the name implies, everything is regulated i.e. the price is standardized, products are safe.
In conclusion, agro commodity trading in Nigeria is very lucrative and it’s a way people can generate a lot of money by buying commodities from areas where they are surplus and cheap and selling them when they are scarce and there is high demand for them. Moreover, these middlemen also help make available some commodities when it’s not their season. Though, there is a lot of risks embedded in this business that is why it is important to calculate your risks and strategize your marketing plan well.