How to Make Money from Agricultural Commodities’ Storage
Do you know that you can make good money from buying agricultural commodities and selling them later?
A lot of smart Nigerians are making serious money from this business. All you need to do is to study the trend in the prices of the commodities you prefer to trade in.
Commodities’ prices go very low at some times of the year and they go very high at some other times of the year.
Some Agricultural commodities you can make profit on
Nigeria produces about 7.2 million metric tons of maize in 2017 (According to Statista). The annual maize demand in Nigeria is about 15 million metric tons.
The gap in supply of maize is met by importation principally from the US and Brazil.
As at April 2018, Nigeria spent $407.8 million on the importation of maize.
Maize is principally used for the production of animal feeds in Nigeria. A significant percentage serves as food for Nigerians.
Like other grains, maize is one of the commodities traders actively trade with the aim of making returns through speculation.
Due to the fact that maize is an internationally tradable commodity, happenings in the international market can impact the prices of maize in Nigeria.
Soybeans (Soya beans)
Nigeria is the largest producer of soybean in Africa. Though Nigeria produces a lot of soybean, it can only meet 25% of its annual demand.
A large chunk of the soybeans grown in Nigeria is used for the production of oil and animal feed. It is one of the cheapest sources of protein for animal feeds in Nigeria.
Harvest of soybeans is usually from September-December. It is principally grown in the guinea savannah region of Nigeria which falls in the North Central geopolitical zone.
Like maize, soybean is an international traded commodity. Happenings in the international market can have effects on the local pricing in Nigeria.
Cowpea (beans) is the most widely eaten type of beans in Nigeria. All tribes in Nigeria eat beans.
Nigeria also is the world’s largest producer of cowpea with an annual production of 47 million tonnes (Daily Trust, Oct 8., 2017). Though, its production cannot satisfy the total demand annually.
Nigeria imports cowpea from The Republic of Niger and as far as Burkina Faso during the lean times of the year.
Nigeria also exports cowpea to some western nations like the US and the UK. With the planned export of cowpea to India, there may be a significant rise in the price of cowpea.
Groundnut is one of the most consumed leguminous foods in Nigeria. Nigeria is the largest producer of Groundnut in West Africa.
Groundnut is mainly used for oil production, human food and the kernel and wastes are used for animal feed production.
It is very difficult to store groundnut over a long time because of its easy susceptibility to aflatoxin.
Nigeria is one of the largest producers of ginger in Africa. Nigeria’s ginger is termed as one of the best due to its unique taste and aroma.
Kaduna remains the hub of ginger farming in Nigeria.
The price of ginger is Nigeria is significantly lower than the international price; this is due to the low demand for the commodity in Nigeria and the activities of middlemen.
Most large scale ginger traders have good export markets.
Roselle or Hibiscus flowers or Zobo as it is called in Nigeria is also one of the commodities traders actively trade in.
Nigeria exported about 2,000 containers of Zobo to Mexico in 2007/2008 with a value of over $35 million.
Zobo is mainly used for the production of edible drink and wine.
Nigeria produces about 300,000 tonnes of sesame seeds annually.
Sesame is hardly consumed in Nigeria. Almost all the sesame seeds produced in Nigeria are exported. Sesame is harvested around September-November. Prices are low during harvest and high during the lean times.
Sesame is an internationally traded commodity and happenings in the global market can impact the price locally.
Key locations to buy commodities and logistics
|Key Growing Areas/Markets
|Kaduna, Gombe, Plateau, Kano, Nasarawa, Bauchi, Niger, Kogi, Zamfara, Jigawa, Kebbi, Benue, Taraba and Katsina
|Benue, Nasarawa, Kaduna, Niger and Plateau
|Kaduna, Kano, Borno, Adamawa, kebbi, Katsina, Benue, Nasarawa, Taraba, Gombe, Niger, Zamfara, Abuja and Kogi
|Niger, Kaduna, Benue, Nasarawa, Kano, Gombe, Katsina and Jigawa
|Benue and Nasarawa
|Nasarawa and Niger
Storage of commodities
Most traders who speculate on the prices of agricultural commodities in Nigeria do short term storage. They store the commodities for periods ranging from 1 month to 8 months.
Most of these commodities are stored in the market they bought them or in warehouses very near to the markets or villages where the commodities were bought. This is to reduce the cost of logistics.
Most of the commodities are stored with pesticides in order to guard against weevils and other pests.
Your commodities must also be properly dried before bagging and storage.
Price Trend of some commodities
|Melon (Egusi) Bag
Some commodities’ traders make as high as 100% Returns on Investment (ROI) within 6 months when they buy cheap at harvest time (September-November) and sell at the lean months of February-June.
You can make millions of naira from buy, store and sell later commodities trading strategy.