The Importance of feasibility studies in any agribusiness venture


As the name implies, a feasibility study is an analysis of the viability of an agribusiness idea. The feasibility study focuses on helping answer the essential question of “should we proceed with this agribusiness idea?” All activities of the study are directed toward helping answer this question.

Farmers and others with a business idea should conduct a feasibility study to determine the viability of their idea before proceeding with the development of the business. Determining early that a business idea will not work saves time, money and heartache later.

A feasible agribusiness venture is one which will generate adequate cash-flow and profits, withstand the risks it will encounter, remain viable in the long-term and meet the goals of the founders or owners. The  agribusiness venture can be either a start-up business, the purchase of an existing farm, an expansion of current agribusiness operations or a new enterprise for an existing business.

In other words, you don't just wake up and start a poultry farm or rice farm in an area without evaluating a lot of factors. Factors which will determine if your business will actually be successful or a total failure. That's where feasibility study comes in.

Market Assessment/ Research

The first time I  started a fish farm, stocked fishes and spent money to grow them. As these fishes grew and became ready for market, I remembered that I have no idea who to  sell this fishes to.
I tried all I could but couldn’t find profitable buyers. I ended up selling at a loss.

Trust me, this story is not a one-off. There are so many farmers like this in Nigeria.

They read online or are told that rice farming, poultry farming, pig farming or cucumber farming is profitable, and then they get started, without knowing who to sell to.

As a business person (not a mere farmer), you have to know who and where your farm produce will be sold, even before you get started in whatever agricultural venture you choose.

 Taking a market assessment will help to identify opportunities in a market(buyers). If no opportunities are found, there may be no reason to proceed with a feasibility study. If opportunities are found, the market assessment can give focus on whom the target buyers are how to sell to them.

A market assessment will provide much of the information for the marketing feasibility section of the feasibility study.

Feasibility Study vs. Business Plan

 A feasibility study is not a business plan. The separate roles of the feasibility study and the business plan are frequently misunderstood. The feasibility study provides an investigating function. It addresses the question of “Is this a viable business venture?” The business plan provides a planning function. The business plan outlines the actions needed to take the proposal from “idea” to “reality.”

The feasibility study outlines and analyzes several alternatives or methods of achieving business success.

Exceptions to feasibility studies

You may find yourself under pressure to skip the “feasibility analysis” step and go directly to building your agribusiness enterprise. Sometimes a feasibility study might be skipped. Reasons given for not doing a feasibility analysis include:
  • We know it’s feasible.  An existing business is already doing it.
  • An existing business has done one already.
  • Feasibility studies are just a way for agric. consultants to make money.
  • The market analysis has already been done by the firm that is going to sell us the equipment.
  • There is a general manager who can do the study?
  • Feasibility studies are a waste of time seems a waste of time for some people.
The reasons given above should not dissuade you from conducting a meaningful and accurate feasibility study. Once decisions have been made about proceeding with a proposed business, they are often very difficult to change. You may need to live with these decisions for a long time.

Importance of conducting feasibility studies before embarking on an agribusiness venture

Conducting a feasibility study is a good business practice. If you examine successful businesses, you will find that they did not go into a new business venture without first thoroughly examining all of the issues and assessing the probability of business success.

Here are some other reasons to conduct a feasibility study.
  • Gives focus to the project and outline alternatives.
  • Narrows business alternatives
  • Identifies new opportunities through the investigative process.
  • Identifies reasons not to proceed.
  • Enhances the probability of success by addressing and mitigating factors early on that could affect the project. 
  • Provides quality information for decision making.
  • Provides documentation that the business venture was thoroughly investigated.
  • Helps in securing funding from lending institutions and other monetary sources.
  • Helps to attract equity investment.
The feasibility study is a critical step in the business assessment process. If properly conducted, it may be the best investment you ever made.


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