Cluster Farming & Agriculture  Investments  

Sphere on Spiral Stairs

Cluster Farming / Contract Farming

Farmers Pride International Investments funds and  promotes Agricultural cluster systems, an advanced type of agricultural industrialization. It is of great significance in promoting regional economic growth, enhancing the rural competitive strength, advancing the specialization of agriculture production, and increasing the incomes of the farmers. Read more>>>

 

FPI investments in agriculture projects will generate a wide range of benefits such as higher productivity, increased food availability, employment creation, poverty reduction, technology transfer, and access to capital and markets. Read more>>>

Angel Investments in Clusters: 

An angel investment is whereby FPI-I invests money in a small agribusiness in exchange for a minority stake (usually between 25% and 35%). We are developing  entrepreneurs with extensive Agribusiness experience in the business world.

 

Investments in agroforestry systems are growing along with the recognition that this model of farming is climate-friendly, environmentally sustainable, and profitable. Read more>>>

Investing in Agriculture Research: 

We will also invest in agricultural research that has proven to be particularly impactful in developing countries with robust agriculture sectors that provide a significant number of the country's jobs. Therefore, even small productivity gains create large ripples of prosperity throughout a developing economy. Read more>>>

 

Image by Tomasz Bazylinski

Why We Are Investing In Small Holder Farmers 

FPI-I believes that Cluster farming promotes productivity and encourages the participation of large numbers of smallholder farmers into the agriculture value chain. According to the Food and Agriculture Organization of the United Nations (FAO), over 70 per cent of the world’s food needs are met by small farmers.

Agriculture is the economic sector that employs the most people in the world and the main source of food and income for many people living in poverty.  Thus, investing in agriculture is not only one of the most effective strategies to improve food security and promote sustainability, it is also essential to many countries’ economic development. Policies designed to promote agribusiness and sustainable food value chains play a crucial role in achieving SDGs. To achieve sustainability in the farming sector, FPI introduced cluster farming to its activities in the year 2020 and has been training farmers across the world. We invite the funding and investment communities to support its efforts in clustering. 

Investing Through The Cluster Farming:

 

FPI-I invests its financial and technical resources through the clustering of farms as business units. Farm Clusters are a way to go and a way to bring farming communities together, this might provide not only important and wide-ranging ecological benefits but also prove sociable, communitarian, efficient, and fun. 

The cluster is a  geographically proximate group of interconnected farmers, companies, and associated institutions in a  particular field,  linked by commonalities and complementarities  (Michael  E. Porter, 2000). In recent years, more and more researchers and related institutes, such as policymakers,  legislatures,  business leaders,  academics,  economic development practitioners, and development agencies have paid substantial attention to industry clusters.  In China, arrays of articles are about industry clusters. With the development of the agricultural industrialization process, we need highly emphasis on the agricultural clusters. 

 

Agricultural clusters mainly consist of a group of city enterprises,  township enterprises,  the other groups of enterprises that gather together around the rural cities and towns or surrounding areas,  and related or complementary organizations and institutes. During their forming and developing processes, plenty of units and related organizations aggregate in a particular rural region according to definite economic ties, thus forming industrial communities similar to organisms (OECD, 2001).  In some American and European countries, agricultural clusters grow quite well, such as Dutch flower clusters, French wine clusters, American corns, and wine clusters, Polish farmer groups and Agrotourism, etc.

 

To those in the industry, farming is a way of life. Yet as farms consolidate and city populations grow, the farming lifestyle is becoming more and more unique. Investors looking to diversify have multiple options when it comes to investing in farmland. Here are the main options:

The Great Value of Agricultural Clusters

The agricultural cluster is the trend of modern agricultural development. It is of great significance in promoting regional economic growth,  enhancing the competitive strength,  advancing the specialization of agriculture production and increasing the incomes of the peasants.

First of all, the agricultural clusters can push forward the development of regional economies Localization economy is the chief pattern of cluster economy  (Isard, W.,  1956). The related businesses gather in one area because they produce the same or homogeneous products. Their aggregations come into being economics of scale. This will help to decrease costs and absorb more clients. Based on mutual trust and confidence, the actors arrange an economic network. They cooperate and compete in the net.

 

The Catch-Up Effect derives from their competition. At the same time, it will be easy for the actors to adopt new technologies and organizational forms based on the knowledge spillover and diffusion to increase production. More and more empirical and theoretical research identified that the information exchange and adjustment that come from external is very important for the successful innovation within the cluster area.  This synergy enhances the regional innovation capability and pushes lots of clusters to get the regional brand effect.

The main products produced by the clusters have stronger competitive strength. They have high brand recognition. Especially the new clusters which include the development of some industries related to agriculture, such as agricultural service, are more influential because of their products possessing innovative activities. So it is easy for them to form a local brand. The local brand will help the region to enhance and consolidate its image to investors and consumers, and it will be helpful for the branding area to develop synthetically and harmoniously.  Secondly, Agricultural Cluster is Favorable toward Promoting Competition Strength of Cluster Enterprises

 

GETTING PROFITS THROUGH YIELDS 

Investors can make money from cash flow from crops that are harvested. Most crops are annual, but in some locations there can be multiple harvests per year. In certain cases, these yields are secured via long-term contracts with tenant farmers or from customers who agree to purchase the crops. It is also important to note that crop insurance, which protects the farmer in the event of a catastrophe, also protects the investor. This means that even if crops are destroyed or their revenue declines due to declines in commodity prices, the farmer will still receive funds with which they can pay their lease.

 HOW TO START AND MANAGE CLUSTER FARMING IN YOUR AREA:

 

Cluster Farming formation:

Farmers are asked to establish and register clusters. It’s a bottom-up initiative.

What benefits do clusters bring to members?

Through clusters, small-scale farmers and SMEs can win together on things such as negotiating discounts on inputs, marketing their products, or lobbying policymakers.

For example, clustered agribusinesses can share workers amongst themselves. If these businesses were on their own, they might not have been able to offer full-time jobs individually. At the same time, these jobs provide a solution to rural unemployment and migration, which municipalities struggle to deal with. Local universities and extension services benefit from a growing agriculture sector that employs its students and drives policy dialogue on research and innovation.

  1. The cluster is composed of 6  to 10 individuals and existing local farmers who are practising small-scale agriculture and link them to Hub Farm, they must organise themselves in a committee with leaders from Chairperson, vice, secretary, vice, treasure and 3 committee members.

  2. These farmers will become Cluster Farms/ satellite farms or out-growers, together they will form a solid entrepreneurial group capable of sharing both the benefits and burdens.

  3. The Satellite Farms must be within a radius of 50 km to Hub Farm and will be set up as a mixed farming company;  producing a variety of crops, animals, and other products such as fish, grass,  crops,  goats, sheep and crops and others will be poultry farms for broiler and other poultry products, etc.

  4. The Hub farm will supply Satellite Farms with training and inputs.

  5. To match all products that are produced and grown on Hub Farm to ensure quality and sustainability.

  6. Next to this, the Hub Farm will provide the necessary infrastructure such as barns and/or fish ponds.

  7. The Satellite farmers will be trained by Hub Farm in the field of animal husbandry, preparing feed schedules, identifying diseases, record keeping, accounting, management and planning in order to promote their independence.

  8. Distribution, marketing, and trading of the products are done by the Hub farm, allowing the Satellite Farms to focus on the production of their crops and animals.

 

FPI's main focus is on clustering  to build the capacity of the urban and rural farmers and open up  domestic and international markets for them through the following steps :

 

  1. Providing funds and incentives for farmers

  2. Finance the Hub farm:

  3. Finance of Satellite Farms:

  4. Investment period of 5 years;

  5. Takes 20% profits from all sales and investments ;

  6. Annual interest ___ %;

  7. All loans issued out must be paid back at agreed interest and during agreed periods.



We believe that our approach shall support the building of sustainable food systems across the world, besides meeting  SDG 1 and 2 Targets, the project shall enable Africa to feed its continent and the world at large. 

Clustering is a great way to formally organise a complex sector like agriculture, promote development and accelerate change. To quote the old proverb: if you want to run fast, go alone; if you want to go far, run together.

Citrus

Agriculture Investment Returns

Investing in agriculture may not provide immediate returns, but over the long-term, it can pay off greatly. There is much less volatility in farmland and timberland than in other types of investments, meaning adding agriculture to your investment portfolio can provide continual stability with the potential for an annual income.