How to open a grain business. How to make money on the "ruthless" grain market Wholesale retail grain warehouse business project
True, now the situation has begun to change for the better. Those who manage to take advantage of this opportunity will find their place in the agricultural market. What is needed for this? The first step is to draw up a business plan, which will cover all stages of creating an enterprise. And for starters, you can get acquainted with a similar project developed for a farm operating in the Central Black Earth Region.
Sample business plan "Wheat" - summary
The goal of the project is to open a farm for growing wheat, barley and sunflower. This will require 3,500 million rubles in the first year of work. The planned profit will be 2 million rubles annually.
Company details
PFH "Privolye" was founded by 2 investors who will carry out general management. For work, you will need to purchase land, build a barn, purchase equipment and hire workers. The grain is planned to be grown with the aim of subsequent sale to the elevator. KFK will sell sunflower seeds to the creamery.
Business environment
Russia is the world's largest wheat exporter. Barley exports are also high. But sunflower is mainly consumed domestically.
Farmers in the region sell their products to so-called grain elevators - wholesale intermediaries. Grain is often delivered to the milling plant hundreds of kilometers from the place of cultivation. Sunflower is usually processed in the region where it was grown.
Thus, the current state of the market allows new players to enter it. The main thing is to be able to organize sales.
Marketing and sales plan
If the enterprise is relatively small, then it is impractical to build processing shops. Therefore, the sale of products will be carried out relatively cheaply. The cost of a ton of barley and wheat ranges from 6 to 10 thousand, depending on the type of grain. A ton of sunflower costs 2.5 times more. In addition, the price of grain is highly dependent on the time of sale. Prices usually fall in autumn and rise by spring, but this is not always the case. The grain yield is from 10 to 40 centners per hectare, but, as a rule, farmers manage to collect 15-20 centners. Sunflower gives 12 centners per hectare. But it is necessary to plan incomes in the agricultural business taking into account the possible crop failure. Our wheat business plan is based on a low yield. Thus, the income of 1 year will be 2 million rubles.
Operational plan
After settling the formalities, you will need to move on to finding a suitable piece of land that you can buy or rent. The cost of a hectare varies greatly depending on the infrastructure of the settlement, to which the arable land is adjacent. For a start, it is advisable to stay on a lease. Later, when the project starts to generate income, it will be possible to gradually start buying the land. Next, you should decide on a wheat variety, and also choose crops that will also be planted, since you cannot grow only wheat. Some crops can be grown in one place for years, such as potatoes, and some, such as wheat, cannot grow on the same land from year to year. Typically, farmers use a 4-year crop rotation cycle. It can be reduced, but without significant losses, wheat cannot be planted in one area for more than 2 years in a row. In order to comply with this norm, we will divide our 200 hectare plot into 4 parts: 50 hectares will be planted with wheat, 50 hectares with barley, 50 hectares with sunflower and 50 hectares will rest (fallow). If this rule is violated, then the yield will fall from year to year, and the number of pests will also increase.
Workforce plan
To work on the farm, 7 workers will be required, half of whom will be involved only during the harvest. The functions of an agronomist, sales manager and manager will be shared by investors. Find in countryside skilled workers to perform such duties is quite realistic.
Financial plan
As the wheat business plan shows, the costs of the 1st year will be (thousand rubles):
In 2017, a record grain harvest was harvested - about 128 million tons. The farmers plan to bring the figure to 150-160 million in the near future, which will make our country the undisputed world leader in the production of this crop. These volumes imply an increase in sales abroad and the emergence of new players specializing in foreign supplies.
The conditions for starting a grain export business are now excellent. However, this entrepreneurship is more complex than it seems. Those who plan to become an international grain trader will definitely find our article useful.
Only soldiers become generals
Grain trader Artur Koloskov from Rostov-on-Don advises to start by studying the regional market and only after that make a decision to start your own business. “Try to find already established rich reseller exporters and enter into agency agreements with them,” he says. - Firstly, you will gain the necessary experience, and secondly, you will form your own, albeit a small client base. According to Koloskov, the domestic grain market is divided between large companies. They own linear elevators, port terminals and key grain carriers.
On the one hand, this complicates the rules of the game - however, experienced grain traders are confident that, given the current favorable market conditions, agile newcomers have good chances of success. You can not only earn an agency fee, but also get a decent margin due to the difference between farm and stock prices. The cost of grain crops in regional markets (especially in the outback), subject to instant calculation, differs by 5-15% from futures quotes.
How to get away from an omnipotent mediator
In order to have a higher profit, it is reasonable to register your company in one of the Black Sea countries. This can be done, for example, in Romania in the cities of Braila and Galati, where a local grain exchange is being formed. The company must have the form of ownership of SRL - the Russian analogue of LLC, as well as the name and logo registered with the national Trademark Office. By the way, Romania has begun a large-scale reconstruction of the Danube port infrastructure specifically for the reception and transshipment of grain, which speaks of Bucharest's aspiration to become a European grain hub. Experts say that it will be more difficult to open a representative office in Turkey or Egypt.
Responsible trading
The purchase of grain for subsequent export implies the conclusion of a sale and purchase agreement with Russian farmers. However, it is not a fact that such a contract will be executed in good faith. The forums are filled with angry reviews from deceived grain traders. Most often, small companies are "thrown". To avoid cheating, you need to adhere to a number of rules.
“Open a letter of credit for the seller against providing them with shipping documents, starting with a bill of lading and ending with a phytosanitary certificate,” advises Artur Koloskov. - In the contract, write down the delivery schedule, having previously coordinated it with the survey company. The latter should appear when loading at your first call. The seller is not responsible for disruption of delivery if the ship or wagons are not delivered on time. His obligations are considered fulfilled from the moment the grain is handed over to the carrier. "
This commentary shows that grain trading requires utmost responsibility from a businessman and well-coordinated work from his team. A mistake made by a large company will be compensated for by other contracts. But a beginner will have to be extremely careful and attentive - he does not have such extensive opportunities.
How to hedge risks
The grain exporter must understand hedging. If a businessman holds in the elevator the grain he bought in the fall, which he plans to sell in winter or early spring at a higher price, this is called a “long position”. Opening a “long position” is a big risk; market prices can fall at any time.
“The easiest way is to sell 20-30% of the volume in order to buy it back in the spring. This is called risk hedging, - advises stock broker Ilya Borodavnikov. - If a farmer comes to you and asks for money, promising to ship a certain amount of grain of the new harvest at a discount in the fall, then, agreeing, you open him a position on a futures contract. In other words, a grain trader can first buy a future crop cheaply, and then, at a peak of demand, sell it at a high price. Or first sell the grain that has not yet been harvested and only then buy it from the farmer, manipulating the "long" and "short" positions. It is necessary to carefully monitor the quotes on grain exchanges (including on virtual platforms), where trade is carried out according to advertisements. "
How to become a grain trader
Organization of grain export implies active activity in the domestic market - both for speculative purposes and for sales abroad. For such a business, not so much space is needed - 2-3 rooms of 10-15 sq. meters. The location is more important: it is desirable to place the office in the center of the regional capital. This will make it easier to interact with other companies for document flow and logistics operations.
“By the end of the agricultural year, the grain export business provides from 40 percent profitability,” explains Ilya Borodavnikov, “which means that with loans at the level of 10 percent per annum, you can safely use bank money. I know people (the real "sharks" of the market) who made over 70% of the profit at higher lending rates, with an emphasis on short and ruthless speculation. But for beginners it is better not to take such risks. "
Arthur Koloskov urges to work only with your own finances. “If you don’t have money, become an agent,” the grain trader advises. - this market is ruled by tough unwritten laws, and banks will not meet halfway without double collateral. If you have an extra 5-7 million rubles or a wealthy partner, why not give it a try? " An experienced entrepreneur is confident that investments in the grain business will pay off in 2 years of hard work.
Conclusion
There are ample opportunities for grain exports in Russia, but these are easier to exploit for experienced and reputable traders working with small farmers. It is better for beginners to gain experience as agents of large grain traders - and only after that think about entering the foreign market.
Speculative operations with grain can be compared to gambling on the stock exchange, only here all participants are bullish. At the same time, it is absolutely not necessary to look for signs of growth. Everything is extremely simple: buy during the harvest season and sell at the end of winter - early spring. We will reveal all the secrets of how to open a grain business from scratch.
Business principles
Where to start speculative agribusiness? As in any commercial business, the grain reseller is the link between farmers and processing enterprises. The question arises why farmers cannot sell grain on their own? The answer is simple: mills need huge volumes, and it is simply unprofitable to contact small farms. This function is taken over by the wholesaler. He buys grain from several dozen private organizations in the summer and accumulates it until the peak of the price - in the spring.
Purchasing territories - South and North Caucasian federal districts, sales territories - other states and northern regions of the country. The intermediary in this matter is facilitated by the work of many specialized sites, where you can find up-to-date information, prices and buyers.
Of course, before entering the grain resale business, it is worthwhile to study the topic, familiarize yourself with the chemical and physical properties grades, with methods of storage and proper transportation, so as not to get into a mess and not to buy low grade grain.
Hangar
A step-by-step guide to a grain resale business begins with finding an area. The main asset of the reseller will be a 1000 square meter hangar. In such a room, you can store up to 2000 tons of grain. However, the requirements for long storage grains are high enough:
- The room must be well ventilated.
- The hangar must be kept at a constant temperature and humidity.
- The hangar should be disinfected periodically.
The storage method also depends on the type and type of grain. Wheat, rye, barley are stored in bulk. Corn, poppy seeds and elite grain varieties are stored in canvas bags up to 15 rows separately from the embankments. So if you are going to be engaged in the resale of several varieties, separate storage should be taken into account when building a hangar. For survey and design work, for the construction of the foundation and installation, 3.5-4 million rubles should be allocated.
Organizational moments
The business idea begins to take shape at the registration stage. It is important to choose the appropriate organizational and legal form. The best option will become an LLC with a simplified taxation system. This makes it possible to conclude contacts with foreign companies and large Russian organizations. The state duty for registration of an LLC will cost 4,000 rubles. The OKVED code corresponds to the selected activity - 46.21.1 "Wholesale trade in grain, seeds and animal feed". It is also worth making a seal and opening a bank account. All organizational documents, as well as the conclusion of the necessary contracts for the lease of land, checking ventilation, disinfection will require about 160 thousand rubles.
We buy equipment
One of the advantages of this business is that it does not require special equipment. It is enough to purchase:
- Truck ("GAZ" or "KamAZ").
- Grain loader.
- Small household inventory.
In addition to work equipment, it is necessary to equip the administrative building with printers, computers, furniture and work communications. All equipment will require about 3,500,000 rubles.
Looking for staff
For the full functioning of the enterprise, only 6 people are needed:
- 2 drivers.
- 2 handymen.
- 2 sales managers.
It is noteworthy that the small business selling grain is also seasonal, along with the cultivation cereals... The hottest time for dealers is summer and the first spring months. At this time, there will be a lot of work to be done. For the greater interest of the staff, it is better to establish a bonus payment system for the performed volumes. To retain staff throughout the year, pay a minimum wage or recruit people for other work. For example, to engage in the resale of other agricultural products. Average monthly fund wages together with deductions will be about 170 thousand rubles. An entrepreneur can conduct accounting independently using online programs.
Forecasted income
Is it profitable to spend so much money on starting a grain business? Definitely beneficial. The cost during the harvest period is 50-70% lower than in winter and spring. However, in order to fill the hangar, it will take about 15,000,000 rubles. If the price rises by a modest 58 percent in the spring, then it is quite possible to earn 25,500,000 rubles. Let's clear the proceeds from all expenses for:
- Land lease.
- Wages.
- Utilities.
- Purchasing materials.
- Taxes.
- Unexpected expenses.
On average, 19,800,000 rubles will be required for all costs per year. The net profit will amount to 5,700,000 rubles. The profitability will be 22%. If an entrepreneur manages to sell grain at the best price for a year, then the profitability can rise to 60%.
Advantages and disadvantages
Like any other business, there are pros and cons.
- High profitability.
- An economically advantageous situation for working with foreign partners.
- Unoccupied niche.
- An impressive capital investment is required to open a business.
- Speculative business - you can stay in the red by the end of the year.
- Natural loss of production.
Eventually
To open a business selling grain, it is not enough to be able to establish diplomatic contacts with people. It is necessary to study all the intricacies of growing and storing each of the varieties of grain, familiarize yourself with safe methods of transportation and loading, and understand all the intricacies of the process. In addition, you need to have large initial funds. This business is not for one or two years, investments will pay off in at least 9-10 seasons.
Currently, the agro-industrial market, especially in the segment of grain crops, is in a very unfavorable situation for producers. The fact is that up to 3/4 of all irrecoverable grain losses are associated with the low quality of its processing after harvesting, and often with its complete absence. Equipment for the primary processing of grain is not present in all, even large organizations on its cultivation, and among individual farmers there are literally few such machines.
This applies in particular to processes such as grain drying and cleaning. Manufacturers in most cases simply cannot afford quite expensive equipment, and it also happens that they simply do not want to complicate the production process and add unnecessary stages to it.
Meanwhile, if grain is not dried on time and with high quality, it qualifies not as food, but as fodder, and at the same time its value on the grain market drops by at least 600 rubles per ton. This leads to significant losses for producers, so many farmer enterprises lose interest in growing, for example, wheat and leave the market, which in turn leads to a further rise in the price of grain products and their derivatives, including bread.
Therefore, the organization of an enterprise for the collection and primary processing of grain will become not only profitable, but also useful from the point of view of the standard of living and well-being of citizens as a business.
Own grain business: Organization of a grain processing collection point
In fact, having relatively small investments and wisely investing them in grain processing, you can get a fairly high income by producing practically nothing (except, in fact, services for grain drying and cleaning).
In many cities of our country, elevators that have become unnecessary, etc. are still idle. enterprises, which are not to be rented or even redeemed big money... Of course, such an acquisition will require additional investments in repairs, but do not forget that the grain, and practically bread business is one of the most profitable in the food sector, and if we consider that it comes not about production, but only about the processing of raw materials, then the profitability of such an enterprise is even higher than that of any bakery and even higher than in the field of grain trade.
Own grain business: Equipment for primary grain processing
The main operation for the primary processing of grain is drying it. It is produced on a stationary sectional dryer. Such equipment is usually universal, that is, it is suitable not only for cereals and legumes, but also for herbs. The cost of a universal dryer is from 950 to 1000 thousand rubles, and in terms of the type of fuel used, it is also universal - both gas and liquid fuel, electricity, solid fuel (wood, peat, etc.) are suitable.
Dryer productivity (with an initial moisture content of up to 26% - it is considered normal) - 40 tons of grain per day. When opening your own enterprise, you should take care not only to calculate how many such dryers will be required in accordance with the expected volume of receipts, but also to provide a place for the installation of additional dryers, which have a very useful property: the number of lines in the complex is not limited, so there will be no problems with connection and joining - the main thing is that there is enough space.
Further equipment for grain processing consists of a cleaning complex, represented by two units: a grain pre-cleaning machine and a secondary grain cleaning machine. Dry grain, passing through cleaning machines, is cleaned of impurities and, as an option, is calibrated, which allows to obtain not only high-quality grain, but also high-quality seed material - as you know, the largest grains are left for seeds.
But even not calibrated, but cleaned from impurities, grain is considered a higher class and is estimated much more expensive than unrefined. The productivity of grain cleaning machines is from 30 to 60 tons per hour, the price, as you would expect, directly depends on the capacity: if a grain cleaning machine of the first type costs about 550-650 thousand rubles, then the machines of the second type are already 900- 950 thousand rubles.
As you can see, one pre-cleaning machine is easily enough for at least one and a half to two dozen dryers. Secondary grain cleaning machines are slightly more expensive than those described above, and they are somewhat inferior to them in productivity: for example, a machine with a capacity of 8-10 tons per hour will cost no less than 700 thousand rubles, and a machine with a capacity of 16-20 tons per hour - in 1050-1100 thousand rubles, and in the fractionation mode, i.e., in fact, grain calibration, the productivity will drop by about 20%. Therefore, you should carefully calculate the number of used secondary grain cleaning machines in order to avoid interruptions and "lame", i.e. asynchronous operation of the line as a whole.
If, for example, you have many orders for fractionation to obtain seed, it would be more rational to allocate a separate machine for this purpose, while others will work as usual.
In addition to the listed machines included in the line, you should immediately or gradually, with the development of business, purchase optional equipment: a pneumatic separator for cleaning the seeds of the main crops from hard-to-separate impurities that differ in aerodynamic properties (from 140 to 450-460 thousand rubles, depending on the productivity - 2-15 tons per hour), a grain conditioner (about 250-325 thousand rubles, depending on productivity - 3-7 tons per hour) and a clover roll - a machine for wiping seeds from the wad of clover and other legumes and cereal grasses (about 120-130 thousand rubles). These units are in demand in agriculture, therefore, they will serve you as a source of additional, but by no means small, income.
Among other things, in order not to manually load the products received for processing, a receiving device with a fan and a dust removal system should be installed as a link between the dryer and the cleaning workshop. The drying machines will be unloaded directly into it, while the supply for cleaning is carried out in automatic mode. Such a device costs about 420 thousand rubles.
Prospects for the development of grain processing business
The most striking and attractive perspective is the support of your enterprise at the state level. As you know, now the government Russian Federation both at the central and local levels, it implements many programs to support agribusiness. Perhaps your company will become a grant recipient, for example, to expand the material and technical base or preferential terms for equipment leasing.
In addition, there is a serious prospect of starting a large-scale trade in seed material: most likely, it will not be very profitable for producers to pay for the services provided by your enterprise immediately: after all, the grain still needs to be sold. Therefore, it is possible to withdraw from them a part of the grain, or seed material, as agreed.
Despite the various economic difficulties in the Russian economy, grain business is always relevant and also quite profitable.
All these goods are dynamically sold not only within the state, but are also exported. In this regard, the sale of grain as a business is able to provide a merchant with a decent profit.
It is worth noting that the resale of grain and other similar products has the particular benefit of going to an intermediary. For the buying side, the difference in value charged by direct growers-farmers and large exporters-traders can be a compelling reason. Often, this difference is presented in the form of one ruble per kilogram, and from a theoretical point of view, this looks insignificant. But if we are talking about hundreds or thousands of tons, then the difference becomes striking and forces buyers to look for more acceptable alternatives to purchase. However, among them may come across poor quality products. The solution to this issue falls on the shoulders of an intermediary who is constantly monitoring suppliers and studying the quality of their assortment.
Grain business: what is required to start?
An interesting point is that the resale of grain as a business does not provide for the availability of start-up capital for the businessman. All that a businessman who decides to make money in this area will need is a phone, informational information and his own head. That is, the set of necessary items for a grain business includes:
1. Directory with data on suppliers of a particular region. It is not at all necessary to immediately begin to act at long distances - there are cases when a successful operation is carried out fifty kilometers from the point of direct stay.
2. A telephone set with a tariff that provides for the possibility of making unlimited calls, since the intermediary will need to talk with clients for a very long time.
3. Resale of grain - this type of business requires the skills of negotiation and persuasion.
4. Your own car will not hurt - you need to make trips to suppliers and purchasers for the purpose of personal negotiations and implementation of transactions.
Now let's get acquainted with the process of making a deal, as a result of which the intermediary receives his income.
Profit formation procedure
So how to make money selling grain? First of all, let's say that intermediary services do not cost that much. For example, within the framework of the purchase of 100 tons of wheat in the amount of five hundred and thirty thousand rubles, the commission fee for the businessman who "introduced" the seller to the buyer will be presented in the form of thirty thousand. Let's take a look at how the mediator works. Suppose there is a buyer who wants to buy one hundred tons of grain. The entrepreneur must act as follows:
1. Conclusion with the purchasing side of an agency agreement, which specifies in detail the moment that during the validity of this paper, the client purchases only under the condition of the intermediary of the entrepreneur.
2. Finding a producer farmer who is ready to give the required assortment size. Finding out from him the price for which he can sell grain, its further discussion with the buyer.
3. When the customer is satisfied with the cost, the intermediary personally goes to the supplier in order to take samples of the goods. Here he must be extremely careful, choose grain in small quantities from different places of storage. This can reduce the likelihood of marriage.
4. Submission of the taken samples (two to three kilograms) to the elevator, where the examination is carried out according to all the required criteria. The price of such a procedure is two hundred (three hundred) rubles. In the event that the examination has confirmed the established quality of the goods, then the operation is being completed. The mediator again contacts the client with information about the work done.
4. If the buyer is satisfied with the quality of the desired product, then the businessman contacts the farmer to sign a purchase (sale) agreement. As a result, the intermediary receives his percentage of the transaction, which is negotiated in advance with the client-buyer.
The grain resale business is a completely profitable activity, which requires a person to have certain abilities. Among them are increased communication skills, the ability to persuade, comprehensive knowledge of all the necessary information related to the functioning of this industry. An attractive point is that such employment does not require personal financial investments in the very process of carrying out transactions.
