Entering the Ag Industry during a Gold Rush - Bootstrap Farmer

Markets within a Market: Entering the Industry during a Gold Rush

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The new industries in ag are booming and everyone knows someone looking to get in on the action. In this article, you'll learn about the ancillary markets of these industries and why you might want to consider a different approach to your entrepreneurial endeavors.

  

Massive Growth Predicted for the New Farming Industries

According to a 2016 report by Arcview Market Research, North American marijuana sales were $6.7 billion in 2016 and expected to top $20.2 billionby 2021. It’s hard to know how much the growers or wholesalers are profiting, but the consumer sales data gives us a pretty good idea. 

 

Small New Tech Farmers Already Competing with Big Ag

 There is a considerable investment required to produce a crop that will command a high value at market. Unfortunately, due to continued federal and state complications, it can be hard navigating the red tape while focusing on fetching a good price for your product. As more and more growers get into the game, laws will be changed, created and forgone as consumers desires evolve. 

 

The 'Easy' Way is Not Easy

 There are big risks and uncertainties when trying to get a new farm start up off the ground. After all, you’re working with plants, marketing, financial planning, the list goes on. One infestation of mites or moths can mean the loss of your whole crop- and your business. Lots of people see dollar signs when they hear of one particular farmer growing in a hot market for a few seasons, but later find themselves pulling their hair out trying to manage the competition that comes with continued success. When long term smart business principals are not applied, you are building on shaky foundations. 

However, if you are set on stepping into the arena and getting in on the action there are other paths, and these paths have less risk, less start-up investment meaning a better chance of making it in the long run. Let’s take a look at the ag's industry’s ancillary markets.

 

Business Opportunities

 

Breeders, Clones, and Seeds

As we advance along the path of a further refined need for plant health, patients and consumers are also advancing in regards to what they seek from their plant medicines. Different plants hold different genes that can help with various ailments, which can vary from person to person.

Medical marijuana breeders for example have learned how to develop strains that can treat specific symptoms, ailments, and even chronic disorders like Parkinson’s disease.  Recreational consumers are growing refined tastes for specific terpene profiles and THC/CBD ratios. 

 

Soils, Amendments, and Fertilizers

The number of hydroponic, aquaponic & microgreen growers are blossoming out of control, which creates an opportunity to serve them. All those growers, unless they have the time and knowledge, are buying copious amounts of quality soils, amendments, and fertilizers. That’s an enormous market opportunity. The best growers know that the key to quality plants and production starts at the roots. This niche industry has already got plenty of well-established brands, but think locally and you may be able to create a business that supplies farmers in your area with the key nutrients, minerals, and grow mediums that they seek. Knowing how to create organic compost, soil, and fertilizer is not only an essential skill for anyone looking to get into growing plants, but it could as be the path to success for many entrepreneurs. Locally made compost can be much cheaper than shipping it across the country, so there may be an opportunity to provide high-quality compost at a better price point than any national brand can compete with.

 

Processing – Extraction, Concentrates, and Edibles.

Many consumers are finding new consumables in plants never before imagined. Growers, or producers, sell flowers or fruits to processors. A processor is someone who takes the plant material and processes it into a new product like creams, oils, wax, tinctures, or edibles. Plenty of entrepreneurs are creating thriving businesses as processors. Some states restrict the number of licensees and have tight regulations on who can apply. A decent investment is still needed, but the risk can be much lower than growing. 

  

Distribution and Wholesale

The middleman. The classic business model of buying low and selling high is in full swing in many industries. Laws vary from state to state and there can be new restrictions in this niche, but the entrepreneurs of this market can do really well. Often, a wholesaler goes to a grower and picks up your products and will get a commission once it’s sold. Again, this entrepreneur needs to be a great salesperson and they need to know the difference between amazing and decent. A grower can have a great crop one harvest and then have the next taste completely different, even if it looks the same. 

 

Catering to Consumers

Catering to consumers in news is an ever developing niche and there is plenty of room for your business. Here are some ideas to get the ideas rolling, but if your creative there are plenty of other micro-niches for you to explore.

 

  • Bed & Breakfast– Easily done through Airbnb with that complimentary farm fresh breakfast.
  • Tours – Take tourists on an adventure exploring your local towns farms. 
  • Delivery – This might be tricky in some states, but make it as easy as ordering pizza and your much more likely to be successful.
  • Farm Themed Classes– Video editing, building, marketing, etc. Take any normal class, include farm life, and watch your attendance grow.
  • Florist– What connoisseur wouldn’t want a beautiful bouquet of peony, hydrangea, or even a bouquet of lettuce for the home, office, or event?

 

Cater to Producers and Processors

The list of needs for growers and processors seems to be never-ending. They are also the ones creating tons of jobs. There is a tremendous amount of opportunity in catering to growers and producers. Here is a short list of just some of the types of entrepreneurial start-ups you could explore:

 

  • Apps & Software– Techies, get to work! Growers need sophisticated apps to help them keep up with their soils, canopies, harvests, and so much more. Data aggregation and analytics could be key areas for software developers.
  • Accounting and Legal Services– It’s a full-time job keeping up with the books, licensing, regulations, renewals, staffing, payroll, etc. Develop a company that caters specifically to the cannabis industry and you’ll have plenty of clients in no time.
  • Branding & Packaging- Each new company or product that enters the market needs a unique image. This niche is for graphic designers, advertising and marketing experts, etc. Can we get some sustainably sourced recyclable packaging or labels for our pre-rolls?
  • Security– Where there are large amounts of product, cash, and expensive equipment there is a risk of being targeted by those who might want what you have. Products and companies dedicated to this niche are guaranteed clients. Camera systems, secure transport, and security guards are just a few examples of the possibilities.

 

Be Creative, Make a Plan, and Go for it!

These are just a few areas of opportunity in the ancillary markets of the ag industry. As with any start-up business, you’ll need to study your market, invest money, time and energy, and weigh the risks. Find your niche market and define your target audience. Be unique and creative with your brand and marketing. It all really comes down to this. What do you enjoy doing? What is your passion? Do what you love, and you’ll never work a day in your life.

by: Aaron Herlocker
Aaron is a freelance writer for all things related to the cannabis industry.


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