Chapter Two

Development of Agribusiness Enterprise

Development of Agribusiness Enterprise:
Focus on several steps involved in starting an
agribusiness
•Start-up Plan
•Preparation of Enterprise Plan
•Setting the Business Plan
•Forms and Ownership of Agribusiness Enterprise
 Start-up Plan:
•Thisis the initial step where you create a detailed
plan on how to start your agribusiness. You decide
on things like what products you'll sell, what
resources you need, and your target customers.

•In the context of Bangladesh, creating a start-up

plan for agribusiness involves taking into account
several key factors such as the agricultural
resources, local market demand, climate, and
infrastructure.
Steps in a Start-up Plan for
Agribusiness in Bangladesh:
1. Identifying the Product:
•In Bangladesh, the choice of agricultural product is crucial,
as the country's climate and soil conditions are highly
favorable for certain crops. Rice, jute, vegetables, fruits (like
mangoes and jackfruits), and fish farming are popular
choices. Entrepreneurs should consider what type of product
they want to cultivate or produce based on the region’s
suitability and market demand.
•Example: Suppose you decide to start an agribusiness
focusing on growing seasonal vegetables, such as
tomatoes, cucumbers, and spinach, because these have high
demand in both local and urban markets.
2. Analyzing Resources:
•Resources include the land, labor, equipment, seeds,
fertilizers, water supply, and other farming essentials. You
need to determine the size of the land required for your
chosen crop and the availability of skilled labor. In
Bangladesh, access to irrigation is critical, especially in dry
regions, while in some areas, monsoon water management
is a key consideration.
•Example: For growing vegetables, you might require 1-2
acres of fertile land in a rural area.
3. Market Research and Target Customers:
•Conducting market research helps understand who your
buyers are, how much they are willing to pay, and how much
competition exists. In Bangladesh, the market for agricultural
products can be:
•Local (selling directly to rural communities),
•Urban (selling to city dwellers through markets or
supermarkets), or even
•International (for products like mangoes or jute, which
have export potential).
•Example: If you grow seasonal vegetables, your target
customers could include urban grocery markets in cities
like Dhaka or Chattogram, where demand for fresh
vegetables is high.
•You might also supply to supermarkets or start selling
through online grocery platforms (which have seen growth
in recent years).
4. Assessing Financial Requirements:
•Financial planning is essential for ensuring that your
start-up can run without issues. This step involves
creating a budget for land, seeds, fertilizers, labor
costs, transport, and storage. Additionally, you
should consider the need for financing or
government agricultural subsidies, which are
available in Bangladesh for small farmers and
agripreneurs.
•Example: You estimate that the initial investment
will be BDT 2-5 lakhs (Bangladeshi Taka) to cover
land lease, seeds, equipment, labor, and transport.
You may also explore options like microfinance
loans or government subsidies provided through
programs like the Bangladesh Krishi Bank.
5. Considering Risk Factors and Sustainability:
A good start-up plan also involves understanding
potential risks like unpredictable weather, market
fluctuations etc. In Bangladesh, unpredictable
monsoons and floods are common risks. You might
plan for sustainable practices, such as rainwater
harvesting or using greenhouses, to mitigate these
risks and protect your crops.
•Example: To ensure a steady supply of vegetables
even during harsh weather, you might invest in
greenhouse farming on part of your land. This will
allow you to control the growing conditions and
ensure a more consistent output year-round.
6. Distribution and Sales Plan:
•A start-up plan should include a strategy for selling
the products. In Bangladesh, many farmers sell
through intermediaries (middlemen), but direct
selling to local markets, city-based distributors, or
even through online platforms can increase
profitability.
•Example: You decide to set up a direct distribution
channel where you sell your vegetables directly to
retailers in Dhaka to avoid middlemen. Additionally,
you plan to partner with a local e-commerce
platform to sell your vegetables to consumers who
prefer online shopping, which has grown in popularity
due to urbanization and the pandemic.
 Agribusiness Start up plan with a real life example
• Start-up Plan for Organic Vegetable Farming: In Barishal, Bangladesh, a
young entrepreneur Rina Ahmed decides to start an organic vegetable
farming business. After researching, she finds that tomatoes, cucumbers,
and spinach(পালং শাক) are in high demand, especially among urban
dwellers who prefer organic produce. She leases 2 acres of land near a
river, ensuring she has a natural water supply for irrigation.
• Her next step is to create a budget. She calculates that she'll need BDT 4
lakhs to cover the cost of seeds, organic fertilizers, labor, and the initial
lease of land. She approaches the Bangladesh Krishi Bank for a small
agricultural loan.
• The entrepreneur conducts market research and identifies potential buyers
in Dhaka, where organic food is becoming popular. She plans to sell directly
to local markets and supermarkets, bypassing middlemen to increase profits.
Additionally, she starts an agreement with an online grocery service, which
will allow her to sell her produce directly to consumers.
• To manage risks, she sets aside part of her budget for greenhouse
construction, which will allow her to grow vegetables even during the
monsoon season. She also implements rainwater harvesting to reduce
reliance on irrigation during dry periods.
• By taking these steps, she develops a comprehensive start-up plan that
prepares her for the challenges and opportunities in the agribusiness sector
in Bangladesh.
Preparation of Enterprise Plan

•Once the idea is clear, you prepare a formal

enterprise (business) plan. This plan includes
details like the budget, expected income,
production methods, and marketing strategies.
1. Budget Planning: A detailed budget outlines all the expected
expenses for starting and running the agribusiness. This includes
costs for land, seeds, fertilizers, labor, equipment, transport, and other
operational expenses. In Bangladesh, costs can vary depending on
the location and the type of agribusiness. The budget should also
include any financial assistance the entrepreneur plans to seek, such
as loans or government subsidies.
•Example: Rina Ahmed, our young entrepreneur, prepares a budget
for her organic vegetable farm. She calculates the following costs for
her 2-acre farm:
• Land lease: BDT 1,00,000 per year.
• Organic seeds and fertilizers: BDT 50,000.
• Labor costs: BDT 1,50,000.
• Greenhouse setup: BDT 1,00,000.
• Miscellaneous expenses (irrigation, transportation, packaging):
BDT 50,000. Her total budget is BDT 4,50,000, and she plans
to apply for a BDT 2,00,000 loan from Bangladesh Krishi
Bank.
2. Expected Income Projections: After budgeting, the
entrepreneur needs to estimate the income that can be generated
from the business. This involves forecasting the yield, market
prices, and demand for the products. In Bangladesh, this step
might include researching local markets, consumer preferences,
and seasonal demand.
•Example: Rina estimates the following income for her vegetable
farm:
• Yield: 20 tons of vegetables per season (split among
tomatoes, cucumbers, and spinach).
• Market price: BDT 40 per kilogram on average for organic
vegetables.
• Expected revenue: 20,000 kg × BDT 40 = BDT 8,00,000
per season. Considering two crop seasons in a year, her
projected annual income is BDT 16,00,000.
3. Production Methods: This section details the farming
techniques and technologies that will be used in production. In
Bangladesh, traditional farming methods are still widely used,
but new technologies like greenhouse farming, drip irrigation,
and organic farming methods are gaining popularity. The
enterprise plan should specify how the business will maintain
productivity and quality, such as pest control measures,
irrigation systems, and sustainability practices.
•Example: Rina plans to adopt organic farming methods,
avoiding chemical fertilizers and pesticides to cater to the
growing demand for organic produce in Bangladesh. She also
decides to set up drip irrigation to conserve water and reduce
wastage. Additionally, Rina invests in a greenhouse for part of
her farm to protect her crops during extreme weather and ensure
year-round production.
4. Marketing Strategies: A comprehensive marketing strategy is critical for
the success of the agribusiness. This section should outline how the products
will be sold and promoted. In Bangladesh, farmers typically sell through
local markets, middlemen, and increasingly through online platforms. The
enterprise plan should consider the sales channels, pricing strategies, and any
promotional efforts that will help the business stand out.
•Example: Rina’s marketing strategy includes the following:
• Local markets: She plans to sell directly to wholesale markets in
Dhaka and Chattogram, bypassing middlemen to increase her profit
margins.
• Supermarkets: She approaches local supermarket chains to sell her
organic produce, positioning it as premium quality due to its organic
nature.
• Online platforms: Rina also partners with online grocery platforms
such as Chaldal and Daraz to sell her vegetables directly to urban
consumers who prefer home delivery.
• Branding: She creates a brand called "Rina’s Organic Greens" and
designs attractive, eco-friendly packaging to appeal to health-
conscious consumers.
5. Risk Management: Agribusiness is vulnerable to several risks,
including weather conditions, pest infestations, price fluctuations,
and market competition. The enterprise plan must address these risks
and include contingency plans to mitigate them. In Bangladesh,
common risks include flooding, drought, and market volatility.
•Example: Rina includes the following risk management strategies
in her plan:
• Weather-related risks: She uses greenhouses to protect her
crops from floods and excessive rains, and rainwater
harvesting systems to ensure a steady water supply during the
dry season.
• Price fluctuations: To mitigate the risk of price drops, she
enters into a contractual agreement with a large retailer,
ensuring a fixed price for her products.
• Pests and diseases: Rina adopts natural pest control
methods, such as crop rotation and using biopesticides to
keep her crops safe while maintaining organic certification.
6. Operational Plan: This section of the enterprise plan lays out
the day-to-day operations of the agribusiness. It includes the
planting schedule, harvesting periods, supply chain management,
and labor management. It’s important to organize the timeline and
responsibilities efficiently to ensure smooth operations.
•Example: Rina sets a detailed farming calendar for her
business:
• Planting season: Rina plants the vegetables in February
and June, ensuring two major harvests per year.
• Harvesting: She plans to harvest in April and August,
targeting the periods when market demand for fresh
vegetables is high.
• Labor management: Rina hires local workers during the
peak planting and harvesting seasons but handles operations
herself during the off-season to minimize labor costs.
7. Legal and Regulatory Considerations: In Bangladesh,
certain legal and regulatory frameworks need to be followed.
These include business registration, acquiring land leases, and
adhering to environmental laws if using fertilizers or
pesticides. In addition, certification for organic farming is
necessary if you want to market the produce as organic.
•Example: Rina registers her agribusiness as a sole
proprietorship and leases land under the Agriculture Land
Lease Act. Since she is running an organic farm, she applies
for organic certification from the Bangladesh Standards and
Testing Institution (BSTI) to validate her products in the
market.
•This comprehensive enterprise plan prepares Rina for a
successful launch of her organic vegetable business in
Bangladesh, ensuring that all aspects, from financial planning
to risk management, are well-covered.
•Setting the Business Plan:

•After preparing, you finalize the business plan,

which acts as a roadmap for your business
operations, guiding your decisions and helping
secure investment or loans if needed.
1. Executive Summary:
•This is a brief summary of the entire business plan. It provides an
overview of the business idea, the target market, the products or
services offered, and the financial goals. The executive summary is
often used to quickly inform investors or financial institutions about
the business potential.
•Example:
•Rina Ahmed’s executive summary for her organic vegetable
farming business would explain the high demand for organic
produce in Bangladesh’s urban areas, her target customers
(supermarkets and online platforms), and her plan to generate
revenue through organic farming.
•Summary:
• Business Name: Rina’s Organic Greens.
• Location: Barishal, Bangladesh.
• Product: Organic vegetables (tomatoes, cucumbers,
spinach).
• Target market: Urban areas like Dhaka and
Chattogram.
• Annual projected revenue: BDT 16,00,000.
2. Business Description: This section describes the business in
more detail, including its goals, vision, mission, and core values.
It should also include an explanation of the unique selling
proposition (USP)—what makes your business different from
competitors.
•Example: Rina’s business aims to provide fresh, organic
vegetables to health-conscious consumers, with an emphasis on
sustainable farming practices and eco-friendly packaging. Her USP
is that she grows 100% organic vegetables in a controlled
greenhouse environment, ensuring premium quality.
•Mission: To produce and supply high-quality organic vegetables
to the urban market, promoting healthy eating and sustainability.
Vision: To become one of Bangladesh's leading organic farming
businesses, recognized for innovation in agriculture and
environmental responsibility. Core Values: Sustainability, quality,
integrity, and customer satisfaction.
3. Market Research and Analysis: A comprehensive market
analysis shows that the entrepreneur understands the current
market trends, consumer preferences, competition, and the
overall demand for the product. In Bangladesh, the market for
organic products is growing, especially among the urban
middle and upper classes.
•Example: Rina analyzes the demand for organic produce in
cities like Dhaka and Chattogram. Her research shows that
many urban dwellers are becoming more health-conscious and
are willing to pay a premium for organic products. She also
notes that supermarkets and e-commerce platforms have
increased their organic product offerings. Competitors include
small organic farms, but Rina plans to differentiate herself
through consistent supply and premium quality.
4. Organization and Management: This section details
the business structure and management team. It
should specify the roles and responsibilities of each
person involved. In Bangladesh, most agribusinesses are
run as sole proprietorships or family businesses, but
partnerships and cooperatives are also common.
•Example: Rina Ahmed registers her business as a sole
proprietorship. She manages the day-to-day
operations, including overseeing the farming process,
marketing, and sales. She hires a few farm workers
during peak seasons and plans to collaborate with local
suppliers and distributors.
5. Products or Services: This section explains what
products or services the business will offer. It should
cover details about product features, production
methods, pricing strategies, and any additional services
such as packaging or delivery.
•Example: Rina’s farm offers a variety of organic
vegetables, such as tomatoes, cucumbers, and spinach,
grown using sustainable farming methods. She plans to
price her vegetables slightly higher than conventional
produce due to their organic nature and premium
quality. Rina also offers free delivery to retailers within
Barishal and eco-friendly packaging to appeal to
environmentally conscious consumers.
6. Marketing and Sales Strategy: This section outlines how the
business plans to market its products, including branding, sales
channels, promotion strategies, and pricing. In Bangladesh,
marketing strategies often involve direct selling at local markets,
partnering with supermarkets, and using digital platforms for
advertising.
•Example: Rina’s marketing strategy focuses on three main areas:
• Direct sales to supermarkets in Dhaka and Chattogram.
• Partnerships with online grocery platforms such as
Chaldal and Daraz, which have expanded significantly in
urban Bangladesh.
• Social media marketing: Rina uses Facebook and Instagram
to promote her brand, targeting health-conscious urbanites
with posts about organic farming and healthy eating.
• Pricing: She sets her prices around 10-15% higher than
conventional vegetables due to the premium quality and
organic certification.
•7. Operations Plan: This section details how the
business will function on a day-to-day basis. It includes
information about production schedules, supply chain
management, inventory, logistics, and employee
management. For an agribusiness in Bangladesh, the
operations plan will include planting and harvesting
schedules, transportation logistics, and quality control
measures.
• Example: Rina plans to plant her crops in February and
June to have two major harvest seasons. She hires local
workers during these peak periods but manages the
farm herself during off-seasons to cut costs. She also
partners with a local transport company to ensure
timely delivery to retailers and uses quality control
methods like crop rotation and organic pesticides.
8. Financial Plan: The financial plan is perhaps the most critical
part of the business plan, especially when seeking investment or
loans. This section includes income statements, cash flow
projections, balance sheets, and a break-even analysis. The
financial plan shows how the business will be profitable and
sustainable over time.
•Example: Rina’s financial plan for her organic vegetable farm
includes the following projections:
• Total initial investment: BDT 4,50,000.
• Expected annual revenue: BDT 16,00,000 (from selling 20
tons of vegetables per season).
• Net profit: After deducting operating costs (labor,
transportation, packaging), Rina expects to make a net profit
of BDT 8,00,000 per year.
• Break-even analysis: Rina calculates that she needs to sell 10
tons of vegetables in the first season to break even on her
initial investment.
9. Funding Request (if applicable): If the business plan is being
used to seek loans or investment, this section will outline the amount
of funding required, how it will be used, and the terms of repayment
or return on investment.
•Example: Rina applies for a BDT 2,00,000 loan from Bangladesh
Krishi Bank to cover part of her initial setup costs, including the
greenhouse and organic seeds. She details how the loan will be
repaid over the next two years from her projected profits.
10. Appendix: The appendix contains any supporting documents or
additional information, such as market research data, licenses,
permits, and certification documents.
•Example: Rina includes her organic farming certification from
BSTI, the lease agreement for the land, and market research data
showing the growing demand for organic vegetables in Bangladesh.
•Forms and Ownership of Agribusiness Enterprise:

•Forms and Ownership of Agribusiness Enterprise refers to

deciding the legal structure under which the agribusiness will
operate. This choice affects the ownership, management, taxes,
liability, and the overall running of the business. In Bangladesh,
like in most countries, businesses can operate under several legal
structures, each with its own advantages and challenges.
•1. Sole Proprietorship
•A sole proprietorship is the simplest and most common form of
business ownership, especially in rural areas of Bangladesh. It is
owned and operated by a single person. The owner is
responsible for all aspects of the business, including debts and
liabilities. This form is easy to set up and operate, making it
popular for small-scale agribusiness ventures.
•Key Characteristics:
• Easy to Start: Minimal paperwork is required, and the owner has
full control over the business.
• Full Ownership: The sole owner gets all profits but is also
responsible for all losses.
• Unlimited Liability: The owner is personally liable for any debts
the business incurs.
• Taxation: Profits are taxed as personal income.
•Example:
•Hasina’s Organic Poultry Farm in Sylhet is a sole
proprietorship. Hasina runs the business herself, selling
organic chicken and eggs to local markets. Since the
farm is relatively small, she prefers to keep things simple
and retain full control. She handles everything from
production to sales and uses her personal savings to run
the farm. However, as a sole proprietor, Hasina is
personally liable if the farm faces any debts or legal
issues.
• 2. Partnership
• In a partnership, two or more individuals share ownership of the business.
Partnerships are common for medium-sized agribusiness ventures, where
pooling resources, skills, and responsibilities can lead to greater success.
Partnerships can be either general or limited.
• General Partnership: All partners share equal responsibility for management
and liabilities.
• Limited Partnership: One or more partners have limited liability, meaning they
only lose their initial investment in the case of a business failure, while the
general partners manage the business.
• Key Characteristics:
• Shared Responsibility: Partners share the profits, losses, and decision-making
processes.
• Combined Resources: Partners pool their money, knowledge, and skills.
• Legal Agreement: It is advisable to have a partnership deed that outlines the
roles, responsibilities, and profit-sharing ratio among the partners.
• Unlimited Liability: In a general partnership, each partner is personally liable
for the debts of the business.
•Example:
•Ahmed & Karim Dairy Farm in Gazipur is a
partnership between two brothers, Ahmed and Karim.
They share the costs of maintaining the dairy farm,
including livestock care, feed, and transportation.
While Ahmed manages the day-to-day operations,
Karim handles the sales and marketing. The profits are
split equally between them. However, since it is a
general partnership, both are jointly liable if the
business incurs any debts or faces legal issues.
•3. Private Limited Company (PLC)
•A private limited company is a separate legal entity from its owners.
In this structure, shareholders own the company, but their liability is
limited to the value of their shares. This form of business is more
suitable for larger agribusiness ventures that require substantial
capital and are looking for long-term growth.
•Key Characteristics:
• Limited Liability: The personal assets of shareholders are protected,
and they are only responsible for the amount they invested.
• Separate Legal Entity: The company is considered a separate entity
from its owners, meaning it can own property, sue, and be sued in its
own name.
• Capital Raising: Private limited companies can raise capital by issuing
shares.
• Regulation and Compliance: The company is subject to more
regulations, including filing annual returns and holding board
meetings.
•Example:
•Green Agro Bangladesh Ltd. is a private limited
company involved in commercial fish farming in
Khulna. The company has several shareholders,
including local investors. It has invested heavily in
modern fish farming technology and employs around 50
workers. The company plans to expand its operations by
exporting fish to international markets. Since it is a
private limited company, the owners’ personal assets are
protected if the business incurs any debts.
•4. Cooperative Society
•A cooperative society is a voluntary association of individuals
with similar business interests. They pool their resources to achieve
a common goal, and profits are shared among the members.
Cooperative societies are common in the agriculture sector of
Bangladesh, particularly for small farmers who band together to
improve their access to markets and resources.
•Key Characteristics:
• Voluntary Membership: Farmers and agribusiness owners come
together voluntarily to form the cooperative.
• Equal Voting Rights: Each member has an equal say in the
decision-making process, regardless of their investment.
• Shared Profits: Profits are distributed among the members based
on their participation in the business.
• Legal Registration: Cooperative societies must be registered under
the Co-operative Societies Act.
•Example:
•Sylhet Tea Farmers Cooperative is a cooperative
society formed by small tea farmers in the Sylhet
region. The members of the cooperative pool their
resources to buy equipment, share knowledge, and
market their tea collectively. This has allowed them to
secure better prices from international buyers and
improve their production methods. Each member of
the cooperative gets a share of the profits based on the
volume of tea they produce.
•5. Joint Venture
•A joint venture is a business arrangement where two or more
parties come together to undertake a specific business project.
In the agribusiness sector, joint ventures are common when local
farmers collaborate with foreign investors or agribusiness
companies to share resources, technology, and knowledge.
•Key Characteristics:
• Shared Control: Both parties have control over the business.
• Limited Duration: Joint ventures are often formed for a specific
period or project.
• Shared Resources: The partners pool resources, including
capital, expertise, and technology.
•Example:
•A Bangladeshi dairy company enters into a joint
venture with an Indian agribusiness company to
introduce high-tech dairy farming techniques in
Rajshahi. The Indian company provides modern
farming equipment and expertise, while the
Bangladeshi partner manages the local operations and
market distribution. Both partners share the profits
from the venture.
•Importance of Choosing the Right Business Structure in Bangladesh:
[Link] Protection: Agribusinesses, especially those involving
livestock, crops, and fisheries, can face unexpected challenges like bad
weather or disease outbreaks. Choosing a legal structure like a private
limited company can protect the owner’s personal assets in case the
business fails.
[Link] to Finance: Many agribusiness owners in Bangladesh need loans
to grow their businesses. Banks and financial institutions may be more
willing to offer loans to companies that are registered as private limited
companies because of the structure's legal protections.
[Link] Considerations: Different business structures have different tax
implications. A sole proprietorship may have lower tax rates but offers
less protection, while a private limited company is taxed at a corporate rate
but has more legal benefits.
[Link] and Expansion: As agribusinesses grow, their needs change.
While a sole proprietorship might be suitable for a small farm, a larger
enterprise will benefit from the added protection, easier access to
investment, and formal structure of a private limited company or a
cooperative.
Thank You