We organize a business for the production and sale of fertilizers

* The calculations use the average data for the World

Fertilizers are used in almost all sectors of crop production, so the demand for them is always stable. Farmers are interested in buying high-quality fertilizer, especially often they are interested in organic fertilizers, which improve soil performance without introducing harmful substances into it. In this regard, a novice entrepreneur can engage in the sale of fertilizers to both individuals and large resellers, it all depends on the amount of raw materials that he can purchase. This business is relatively simple, although it can be organized in completely different ways. In any case, such an initiative can be called very promising, and for this it is not necessary to launch your own production line or conduct complex laboratory research.

The sale of fertilizers is most relevant, of course, in rural areas, in large cities fertilizers are bought only by amateur gardeners and owners of private houses, and their purchase volumes are an order of magnitude less than that of farmers who are engaged in full-fledged farming. Several companies that are engaged in this type of business may already be represented on the market, but not always a potential buyer can find the product that suits him. Fertilizers can be very different, organic and mineral, enriched in phosphorus, potassium or nitrogen, with completely different properties. Therefore, there may be a shortage of one kind or another on the market, and the desired product can be imported from other regions, and therefore cost an order of magnitude more expensive. The pricing policy of some manufacturers also does not always meet the expectations of customers, and they are interested in the emergence of a new player. However, it is still impossible to say that the market is experiencing a shortage of such a product, and the entrepreneur will have to carefully study the market before starting work and identify the feasibility of his undertaking.

You should also decide on the format of work. You can engage in the sale of fertilizers as a simple reseller, although it is much more profitable to obtain raw materials on farms and to make their simple processing. A full-fledged business involves the launch and production, but it is more suitable for the manufacture of mineral fertilizers, which are obtained in a chemical laboratory. There are more complex options when you have to pre-harvest the raw materials, prepare and process it, pack it up, and only then put it on the market, and in this case, it will require multimillion-dollar investments not only in organizing production and supply, but also in developing a production site.

To get started, you need to register as a business entity. It is easiest to register as an individual entrepreneur, although if there is a need to register a legal entity, it is better to choose a limited liability company. The point is to work on a simplified taxation system, transferring to the state’s benefit no more than 6% of revenues or 15% of operating profit. It is necessary to choose the OKVED codes correctly, but they are determined by the format of work, and this can be in-house production, wholesale or retail. In some cases, you may need permission to conduct a particular production activity. For example, if you extract sapropel, which is a bottom mud, you need to get permission from the Ecology and Nature Conservation Service.

For the sale of fertilizers, in any case, you will need your own premises, only it can be a simple retail store and several ares of land for the production complex. Retailing is usually carried out in specialized stores, which, in addition to fertilizers, sell even more variety of goods - from large garden or even agricultural machinery to seeds of cultivated plants. In other words, the retail sale of fertilizers is most relevant in horticultural stores; farmers themselves often turn directly to producers or large resellers for fertilizers, because they themselves buy them in large volumes. Some entrepreneurs just do it, especially at the beginning of their work, that they themselves visit collective farms and private farms with offers of their goods. However, we must not forget that a sufficiently large percentage of farmers do not need to buy fertilizers, because they receive them virtually free in the process of their work. If production is established, it is most often better to open it in rural areas near a large number of farms, but here it may be difficult to buy land, because land from agricultural funds cannot be occupied by production and capital buildings.

As already noted, the format of work can be completely different, and investments in your own business will become different. What is needed in virtually any production is a full-fledged packaging line, and for 100 thousand rubles you can buy quite good equipment. In the future, investments are calculated according to which fertilizers will be obtained.

The smallest production business in this area is the use of manure from its livestock farm. An entrepreneur whose main line of business is animal breeding receives a sufficiently large number of their livelihood products, the resulting manure can be disinfected, disinfected and subjected to biochemical stabilization (which can be achieved simply by using special reagents), after which it is dried, packaged and sent for sale.

Another option for organizing your own business is close to this. For this, the entrepreneur visits all livestock farms, buys manure and sends it to his production line. In most cases, farms will give manure for free or at a very low price, because for them it is of no value. This applies to those farms that are engaged in animal husbandry, but do not engage in crop production. Otherwise, the economy will require either significant funds, or even refuse to sell. But in most cases, the entrepreneur simply saves the company from unnecessary cleaning work. Especially relevant today is the production of biohumus, or vermicompost. It is a product of the processing of various biological waste by earthworms. To establish such a production, it is necessary to allocate a sufficiently large area to accommodate soil with earthworm crops, vermicompost is obtained naturally, and often several hectares are often needed to obtain a large amount of it. However, the entrepreneur himself determines the volume of his production, and if he expects to trade with individuals or in small wholesale, a few ares of land will be enough for him.

More complex production can be called obtaining sapropel. This will require not only its own line for processing the obtained material with its subsequent packaging, but also special equipment for mining, which is usually represented by dredgers. The machine removes the sludge, sorts and collects it immediately, after which the raw materials are sent to production. To be able to extract sludge, you need to agree with the owners of the reservoirs about the work, but often these entrepreneurs themselves are interested in such work being carried out - the extraction of sapropel positively affects the performance of the reservoir and leads to the reproduction of fish. Therefore, you need to contact primarily fisheries or entrepreneurs who earn private fishing.

The cost of a fully equipped and ready for extraction sapropel dredger starts from 5 million rubles, the fertilizer production line itself can cost several hundred thousand rubles (for fertilizers obtained naturally), and several million or even tens of millions of rubles - it all depends on complexity and volume. A large plant engaged in the production of mineral fertilizers can cost even more significant amounts, especially if a laboratory department is opened and there is a desire to work for export. Also, one should not forget about the need to purchase or lease land, but the state can help in this matter, which can allocate land for long-term lease on favorable terms.

To work in this direction, additional employees may be required, although in the simplest options for organizing a business, an entrepreneur can cope on his own. Usually, a team of no more than 10 people working at the same time is not required to service even relatively complex production. However, the entrepreneur should consider the need to organize departments in his enterprise for the distribution of responsibilities, and here it may be necessary to highlight the functions of procurement and marketing, as well as the service that deals with the promotion of products on the market (in other words, the marketing department). All business processes that are not related to profit-making by an organization must be outsourced.

It should be noted that such a business may be seasonal. This concerns primarily simple fertilizers obtained from manure, because they are usually applied at certain times of the year, although this indicator may be different for different plants. The production of vermicompost is primarily focused on the greenhouse industry, therefore, fluctuations in demand can also be observed here. Sapropel is used not only as fertilizer, but also in many other areas of human activity, therefore, at different times of the year, production can be focused on different consumers, which means it will be slightly reconfigured. However, the undoubted advantage of this direction is that it is often possible to get raw materials at a low price or even free of charge, which significantly increases the profitability of this initiative. Such a business in its small forms should be considered by all already working livestock farmers, as well as all entrepreneurs who wish to work in the field of agriculture.

Matthias Laudanum

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08/18/2019


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