Entrepreneurship Zone: 07 November 2024: Ghana: Entrepreneur builds rice brand to over $1m in yearly sales

Thu Nov 7 12:28:38 CAT 2024

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Entrepreneurship Zone: 07 November 2024:  Ghana: Entrepreneur builds rice brand to over $1m in yearly sales

Nana Owusu-Achau

Interview with Nana Owusu-Achau
FOUNDER, AGRO KINGS

Lives in: Ghana

  _____  

Entrepreneur Nana Owusu-Achau is the founder of Agro Kings, a Ghana-based company that produces the Nana’s Rice brand, among other food products. Last year, it sold over $1 million worth of rice. Jaco Maritz spoke to Owusu-Achau about how he built the business.

Topics discussed during the interview include:

·         His decision to return to Ghana instead of pursuing a Wall Street career

·         Early setbacks in cattle and maize farming – and what went wrong

·         Starting small in the rice business, selling through WhatsApp

·         Scaling up by acquiring farmland

·         Creative strategies for financing the company’s farming operations

·         Breaking into retail: getting Nana’s Rice onto store shelves

Watch the full interview below:

Interview summary

Ditching Wall Street for Ghana

Owusu-Achau was born and raised in Ghana, but completed his university degree in information systems in the US. He secured a position at a Wall Street firm after graduation but chose to return to Ghana. In 2012, he joined his father’s real estate business and the following year started his own property firm.

Early farming failures

Despite his success in real estate, Owusu-Achau always had an interest in agriculture. In 2015, he ventured into farming, starting with cattle-rearing. His plan was to buy livestock from northern Ghana, transport them to the south, fatten them, and sell the meat. However, the venture did not turn out as expected, as a herdsman lost some of the cattle under unexplained circumstances. He then tried maize farming, but this, too, was unsuccessful.

Reflecting on these setbacks, Owusu-Achau attributes them to his lack of on-site involvement. “I was doing what they call absentee farming. So you have the farming happening in the rural part … and then you are in the city doing your usual business … That model doesn’t work, especially not for Ghana … If you treat agriculture as a side, its money will also come to you as a side. It will not give you what it can potentially give you.”

Seeing an opportunity in rice

In 2017, while on his way to a property project in a rural area, a local chief handed Owusu-Achau some rice grown by smallholder farmers in the region. Impressed by the quality after cooking it at home, he saw a potential business opportunity. He decided to support two small-scale farmers by providing them with financing, seeds, and training (offered by another organisation) to produce high-quality rice. The plan was to use some for his personal needs and sell the rest, sharing the profits.

Packaged Nana’s Rice.

Scaling up production

After the first harvest, the farmers delivered Owusu-Achau’s share and assured him that the rest would come after a middleman sold the rice at the market. Realising he could bypass the middleman, he decided to sell the rice himself. Using basic packaging, he promoted the rice to his WhatsApp contacts and sold all his stock within two hours. “That’s when I saw we have a business,” he recalls.

With growing demand, Owusu-Achau expanded his operations, increasing the number of farmers in his network to 25. By this stage, he was still primarily focused on his real estate ventures.

To scale up production, Owusu-Achau began the process of acquiring land for Agro Kings in 2019. The property, located in Kasunya, about two hours from central Accra, includes 350 acres dedicated to the company’s commercial farming operations. The remaining land is leased to over 300 small-scale farmers who supply their harvest to Agro Kings. The company now works with around 5,000 small-scale farmers, both on and off its property.

Financing the farming activities

The acquisition of the farm and equipment like tractors were financed through his real estate activities as well as backing from family and friends. The company also received an award of about $15,000 from a financial institution. Agro Kings managed to secure financial support for the small-scale farmers by acting as a guarantor for their loans. “So in the event that they defaulted or in the event that they were not able to honour their payments, then that payment would fall back on us. And because we monitor the farmers closely … we don’t really have any defaults,” Owusu-Achau explains.

For equipment needs, instead of buying everything outright, he invited friends to purchase tractors or harvesters and charge Agro Kings a fee each time they were used. This arrangement provided access to essential machinery without requiring a large upfront investment from the company.

Building a retail footprint

Getting Nana’s Rice into retail stores has been one of the most challenging aspects of the business. Initially, many shops were only willing to stock the product on credit, but several failed to pay Agro Kings once they sold the products. “A lot of the clients were not paying. So those people who took their rice on credit had sold the product, but they were not paying us. And when we went back to try to reclaim or recover the debt, it was very difficult and almost impossible. And so a lot of that debt had to be written off, which was a big blow for us,” Owusu-Achau explains.

As a result, the company scaled back its retail distribution, focusing instead on online sales and a few trusted shops.

In May this year, Agro Kings achieved a major breakthrough when Nana’s Rice secured a partnership with one of the largest consumer goods distributors in Ghana. It now has nationwide distribution.

Nana Owusu-Achau on the company’s farm

In addition, Nana’s Rice is available in Europe and the US, primarily in stores catering to African communities. Owusu-Achau explains that these shopkeepers typically purchase the product directly from Agro Kings and handle the shipping logistics themselves.

Revenues from the company’s rice business have grown significantly, from around $2,500 in 2018 to just over $14,000 the following year, and exceeding $1 million last year.

Diversifying the product line

In addition to rice, the company has also launched several other products. After every four rice cropping seasons, it plants soya beans to replenish the soil. This left the company with soya beans on its hands that it didn’t know how to utilise. The company started using the soya to manufacture breakfast cereals. It has also introduced a sauce for cooking jollof rice, a popular West African dish.

Navigating economic headwinds

Ghanaian consumers have been under significant financial pressure recently, as the country grappled with one of its worst economic crises. Although inflation eased for the fifth consecutive month in August, falling to 20.4% year-on-year from 20.9% in July, it remains well above the central bank’s medium-term target of 8%. The cedi has depreciated by more than 35% against the US dollar over the past year.

Owusu-Achau notes that the depreciating currency has impacted Agro Kings, which relies on imported agricultural inputs. To manage these rising costs, the company has been purchasing inputs in bulk and producing some of its own necessities, such as food for the farmers. Agro Kings is also considering converting some of its equipment to electric. The company already utilises solar energy extensively on the farm, which has helped mitigate rising electricity costs. Additionally, it uses electric motorbikes, reducing its reliance on fuel.

—Howwemadeitinafrica

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