Starting the Urban Agriculture Enterprise
The most difficult part of enterprise development is starting out. This is a real dilemma. Most new farmers do not have the capital to make good investments on their farms, and often, the produce is eaten and not sold, taking away the opportunity to establish an enterprise.
This is the hardest part of urban agriculture. On the 20th of July we will devote the iZindaba Zokudla to those who have to start out, and they may not have the means to establish an enterprise, making this an intriguing proposition.
We will meet in B2 at 9:00 for 9:30 at the University of Johannesburg Soweto Campus. Please bring an ID document, Passport, Birth Certificate or generic identification to gain access to campus.
To join by Facebook click this link: https://www.facebook.com/events/875447387387995
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In this workshop we will try to figure out how an emergent entrepreneur can start to establish an urban agricultural enterprise. As I am not an urban farmer, I can only use the academic and theoretical resources at my disposal to assist those who aim to establish a new urban agriculture enterprise. However, the insights from academia are valuable. These insights point away from an enterprise development strategy based-on a “big bang” launch where all systems and processes are in place. We should avoid mobilising debts, as the enterprise is small, and any debt will negatively affect the profit profile of the enterprise. We need to find a way to start with “Zero Budget”!
The reality is that enterprises development is a messy affair full of failures and new attempts. You should allow yourself to fail and make mistakes in selling, buying, producing and engagement. You should take one step forward, and two back, until you have figured out how to produce, sell and engage profitably in your local area. The path of enterprise development is iterative, with small steps forward, and deep meaningful reflection on what worked and what did not. Note the saying here: “If you do not have money to move forward, find someone to engage in a partnership”. This is important in the latter stages of your enterprise. Once you have established a customer base, you can engage in valuable activities like selling staples alongside your own produce. However, today we focus on how to establish the trade that will eventually become the urban agricultural enterprise.
Where do you want to be in 5 years from now?
How your enterprise develops depend on how it interacts with those around it, from other businesses to customers and stakeholders. However, develop a mission and vision for your farm, and base this on the Unique Value Proposition that urban agriculture can realise. This UVP is not only your vision and mission, but also the framework you will use to guide you in setting up your enterprise.
When you do set up this enterprise, you will have to engage with many others. This interactive engagement creates space for you to experiment and try new ways of producing and selling. Use this to-and-fro of engagement with others to develop prices, selling strategies, engagement means, communications, and also your own systems.
For instance, start with recording sales, volumes and amounts. Once you are able to do this, expand this record keeping. Add times of the day, gender and also notes from conversations to your records. Take a look at them again with this additional information. Can you identify what customers are doing with your produce? If someone repeatedly comes and buys large volumes, they may be re-selling it. This indicates your prices are too low, as someone can re-sell your produce. Think about the times of day people buy (which could reveal that they buy when coming back from work). This could enable you to develop a product focussed on those who come home from work, and this could mean that you harvest late in the day so these “coming from work” customers can pick up a fresh bunch of produce. This is what you need to do: create information on your enterprise and use this to develop good products and services.
However, the most difficult activity is to start producing, trading, engaging and implementing technology, and all this has to be done more or less at the same time to establish an enterprise. How can someone go about doing this from nothing?
Understand what you are aiming for: a small enterprise with a steep profit structure and almost zero input costs. Such an enterprise will have the following
· Transactions will include both cash and barter or exchange: How do we establish a structure for such transactions? This can be done once customers understand how you are selling and producing. This calls for community education.
· Waste has to be harvested to ensure low input costs: how do we establish a waste exchange mechanism? You would have to educate customers about this exchange mechanism, and they will have to see lower process to support this.
· The waste exchange mechanism has to feed into the input production system for crops. In this regard your waste processing systems, both for composting and for recyclables need to be presented to the community, and it has to integrate with production.
· A dedicated sales strategy: From lower prices, to discounts on waste, to selling staples and through loyalty programmes. You need to develop these products and services (a waste exchange service). Here you would need both community education, partnerships with bakkie traders, and also clear products and services based-on this waste exchange mechanism.
· A dedicated engagement process to market produce and educate customers. This can be implemented with social media and events on the farm.
· A means to stimulate the local circulation of capital and value. This points to regenerative and circular systems for the enterprise. The integration of waste and production does this, but additional means can be created. This relates to how the customer completes the processes of the enterprise. They bring waste and this is processed to inputs. This leads to lower process and better human development of the customer. Remember this when you reflect on the impact of your enterprise.
As you can see, the vision and mission accompanying the UVP is quite comprehensive, and this can lead you in developing the enterprise. Once you have established a base for trading, the abovementioned systems, and others, can be created.
This is how your enterprise may look like eventually. However, this still leaves open the question of how to start if we have very little means.
Before you start: preparation
Your first steps must always be done very carefully, and you need to keep your risks low to succeed. Think of failure and what you will do if you “fail”. All you can do is reflect and learn on what you have done. When starting to trade, always engage with the customer. You need to find out how they feel about this particular transaction. Focus on what they want, and inquire about their habits. For instance, if you are developing a product for “customers coming from work”, you could consider many things: you could have such customers on a database, and this can ensure they receive their product every day. Make sure they understand the payment and pick-up for the product. You may even want to allow them to pay at the end of the month. You could also create a pre-payment system.
You can learn a lot by talking to a potential or actual customer, and use the conversation to find out exactly why your products were not sold, or why they were indeed sold. Engage with them, as there may be a particular way they would like to receive their produce, and you can be very imaginative in selling it to them.
When you think of your enterprise, think of how you can sustain low prices. This can only be done in one way: Somewhere in your own supply chains you need inputs to be available at below market prices. The practice of selling competitively depends on sustaining a below market price for an input throughout the whole value chain, so it translates to a below market price for a product. The importance of below market prices, both for produce and inputs into the enterprise is supremely important. Business is nothing but sustaining below market prices in the enterprise. How to sustain a below market price for goods and inputs? This can be done by the waste exchange mechanism. The value of the biological waste for your production needs to be more than the discount you give. This is hard to determine, as your production system is without cash, and it is difficult to see how much it would cost you to produce. However, this can be determined in interaction with a reclaimer and passing this information to the customer, so we can arrive at the right price for waste. This must benefit both the farmer and the customer and the reclaimer. This can only be done with a long process of interaction where we compare and evaluate prices over time. This would need some adjustment to take place, but this may just enable you to find the sweet spot amongst these competing interests for the right price for waste exchange and sales.
Starting the business
Start with planning: planning will enable you to make investments on the farm, mainly to acquire the materials needed for a deep trench bed. You should accumulate the materials for a deep trench bed all the time, but you should plan to build your trenches, and aim to have all materials available when you do. This could take time and effort, but the local environment must be scoured for inputs, and you should be familiar with what is available in your area.
The planning however should focus on the immediate problem: how to mobilise capital and value to engage in investments on the farm so that trade and production can commence?
To commence with the enterprise, you need a source of value. This can be in the form of lots of waste (see the planning above), but this may take time to realise value. One way to mobilise enough value to start an urban agricultural enterprise is to invest in seeds, and lots of them. In your planning you should have noted the proliferation of Spinach, Chomolia and Muchaina seeds at the end of the last season. Make a point to harvest very large quantities of seeds, in anticipation of starting a farm next season. Acquiring lots of seeds, and there are many ways this can be done, sets you up to produce a lot of value that can be exchanged. This is the value you need to start the enterprise.
Sprouting lots of seeds thus opens up two possibilities:
· To sell seedlings (a lot); and,
· To plant large quantities of easy to grow crops, like Spinach, Chomolia and Muchaina. If you have lots of seeds from other plants, use them! Do not invest a lot of time or effort in this planting, as you would rather plant more plants on more land than planting in a few in a fertile deep trench bed. Here you are focussing on more volumes than effort, and the idea is to sell this to mobilise capital to sustain you so you can invest in deep trenches.
The above strategy is thus aimed at using 90% of the land to grown low input rainfed crops. The 10% left out, will be subject to significant investment. So, as you sell the rainfed crops, you are creating space for yourself to invest in the deep trenches on the 10% of land that you have. The sales of these rainfed crops must sustain your gathering of inputs for the next deep trench and the technology that will accompany it.
Selling seedlings to other farmers is very important. This creates a system of mutual exchange amongst farmers. If you grew a lot of seedlings, and are selling them to mobilise capital, note that those who buy these seedlings will be looking for additional products to grow the seedlings. Compost, worms, liquid manure and other technologies can now be sold or exchanged with these farmers. This will create a system of mutual interaction and you could be the apex farmer who supplies seedlings to others who then sell food to the community. Such a groups will be in the market for sophisticated products like liquid manure. Such complex systems are very resilient. Having someone regularly supply seedlings and fertilisers will stimulate additional farmers. This will create a system that is robust and multiple farmers will be producing, and they will be supported by secondary activities like seedling and fertiliser production. To be viable, you also need a conducive context wherein you operate. You may decide to only grow seedlings in your enterprise!
What is important is that you can create a lot of excess value by strategic investments (like in seeds) and this is the value you need to set up an enterprise.
In subsequent years you need to expand the 10% used for deep trenches so you create more of them, which are more fertile and will multiply your own efforts in the ground. However, as you move forward, you could find ways to stimulate the rain-fed crops, which you will be planting for the next few years until you have enough deep trenches to focus only on those. Here you could use compost extracts and liquid manures, and also considering irrigation or even chemical fertilisers. Note chemical fertilisers will be costly and you should check their use especially on school grounds. Be moderate in use. The point is to gain a profit from the low input rainfed crops so you can invest in deep trenches and additional technologies that bring higher returns. These higher returns enable the creation of an enterprise.
Building the enterprise further
It is important to build this base described above, so you can create enough value to invest in the future productivity of your farm. This base will need you to engage in sales, and you should thus start setting up the systems of the enterprise as soon as you are starting to sell. The first transaction may not include waste exchange but encourage this. You will quickly see how this transaction works. The food sold needs to be balanced with the harvesting of inputs and focus on harvesting as much waste as possible in the beginning, so you are safe. Establish this in the minds of the first customers, until you are ready to host a community event where you can present this system to the customers and find the right price for this exchange.
Use the event to then also establish a system of recyclables harvesting, and for this you really only need a big box to place the cans and other recyclables in. People’s understanding of how this works is the gold standard. If they understand, then you have set up this system.
Once you have established a tradition of hosting community events, you can also start setting up an engagement system with SMS or WhatsApp. This then immediately becomes a loyalty programme and database of customers.
Start processing waste into products: Build compost cages either with metal or with old pallets, this needs to look good. Build a wormery, not only for processing waste and creating liquid manure, but also as an educational installation so people see what happens with their food waste once they exchange it. You can also start making a liquid manure, and this can be sold firstly to those who bought your seedlings. In all your activities, you should be mindful that you are not only selling, but creating the market wherein you operate. The more information you give to customers, the more layers of farmers and suppliers, the more activity there is, the more dynamic the market will be, and with this the potential for higher returns.
The Future of the Enterprise
It is important to always plan ahead and think of the future. Any enterprise is a lappieskombers or Bricolage of activities, systems, people and things. Keep it like this as this is flexible and allows you to change things. Be flexible in the way you interact, as a flexible organisation can respond better to new opportunities.
Think of the future when you set up your enterprise. The future systems need to be birthed early in the game: Set up waste exchange, set up community events, set up selling strategies, set up your investments, esp. in deep trenches and irrigation. Invest in a record keeping, as you can learn a lot from records. However, to guarantee your future enterprise, it may be better to focus on your ability to change than your ability to control things. We do not know what the future holds, but it will certainly be different.
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