Some Thoughts on Agriculture and Agricultural Business
Bangladesh is an agrarian country and its economy is primarily based on agriculture. Largest share of the economy is derived from agriculture since it comprises about 30% of the country's GDP and employs around 60% of the total labour force. The performance of this sector has an overwhelming impact on major macroeconomic objectives like employment generation, poverty alleviation, human resources development and food security.
In recent years there has been substantial increase in grain production in Bangladesh. Our hats off to those farmers all over the country and the agro-researchers for their splendid works and inventions. However, due to natural calamities like flood, torrential rains, drought etc. are recurring which disrupts the growth of the economy significantly.
Although, through cooperatives, the use of modern machinery has gained popularity over the decade. Large agricultural firms in Bangladesh are generally scarce. Rice, Jute, Tea, Wheat, Potato, Tobacco etc. are the principal crops. The crop sub-sector leads the agriculture sector contributing almost 72% of total production, while fisheries, livestock and forestry sub-sectors contribute 11%, 10% and 7% respectively.
Future outcomes are a function of today’s decisions. Although there is a high degree of uncertainty associated with the future of business, it is possible to increase the probability of a successful outcome by planning ahead. This is true in nearly every aspect of our lives, both personal and professional. People who operate their own businesses, planning becomes increasingly important because the personal and professional aspects become harder to segregate. In agricultural businesses, planning may be even more important because of the inherent uncertainty associated with agricultural production. Some important sources of uncertainty include production risk, price risk and/or financial risk, and uncertainty in government regulations / programs.
This short paper discusses the significance of business planning for agricultural firms and describes the steps needed to prepare such plan. The general process of business planning is the same for each type of firm. However, each may have distinct differing aspects that affect its contents. This paper uses examples from the wide variety of agribusinesses to provide a broad framework to the general theme of business planning.
One of the most important documents for any business is the business plan. It is common practice for a business-associated individual to request a written business plan so as to make an informed decision concerning their relationship with a business. However, business plans have multi-dimensional links for the business owner and other associates. The planning process allows the owners to become more knowledgeable regarding the business, the industry, and the market environment and resolve various problems analytically. Most importantly, the written plan offers a precise direction for the business. Writing a business plan can be painstaking, but well worth the effort; because, businesses operate in a dynamic environment. The plan should be reviewed periodically to ensure the business is headed in the proper direction. Again, the systematic review of the business plan forces the owner, and potentially others, to look at the business as a whole and make better-informed decisions.
Performing a SWOT analysis, which stands for strengths, weaknesses, opportunities, and threats, lays the foundation for the business plan. Four separate SWOT analyses should be performed, each related to one of the four functional areas of management: marketing, production/operations, finances, and human resources.