What Are the Cons of Agribusiness?
1. How the individual business is structured can directly affect results.
Agribusiness requires performance. If a business isn’t structure to provide that performance in any way, then losses can be obtained even when the foundation for profits has been laid. Good assets in this industry can only be realized when there is a good structure in place to support them.
2. There are more risks.
Agribusiness faces numerous risks over every growing season. From the weather to insect infestations to unexpected livestock death from disease, there are numerous influences that can shape profits. Even simple climate changes, like having a little too much rain, can create risk. A natural disaster could potentially wipe out an entire investment or employment opportunity for good.
3. Assets are not generally liquid.
This industry is based on assets that essentially have zero liquidity. Imagine having a tree farm that you’re going to turn into lumber one day. Until those trees mature, there are no profits coming in whatsoever unless supplemental agricultural products are developed. This makes it difficult for investors to obtain a quick exit and employees to find consistent work.
4. It typically requires a high level of borrowing before any profits can be achieved.
For agribusiness to begin, the structure of the business must first be developed. This means obtaining land, structures, and growing products that can be consumed later on. Once the business can create annual seasons, it can turn profits and be highly lucrative. Until that happens, debt must be taken on in some form or equity sold in future profits so the business can continue to exist.
5. There are high levels of personal risk involved.
If you are milking a cow, there’s a chance you might get kicked. A tractor might flip over. Animals may carry diseases that can be transferred to workers. Agribusiness will always contain a high level of personal risk for those who are directly responsible for the care and maintenance of the individual enterprises.
The pros and cons of agribusiness show an industry that has risk, but will also always have potential. People need to eat, which means the agribusiness sector will always exist in some form. That’s the best kind of job and investment security that can be had today.
About The Author
Although millions of people visit Brandon’s blog each month, his path to success was not easy. Go here to read his incredible story, “From Disabled and $500k in Debt to a Pro Blogger with 5 Million Monthly Visitors.”
