Fertilizer distribution business in India is highly controlled by Government regulation. The world uses more than 85 million tons of fertilizer a year just on cereal crops such as corn, paddy, and wheat. In our country, over 70% of the total population live in villages. There are states like U.P, M.P, Bihar, Orissa, and Rajasthan where rural population varies from 80 to 90 percent.
Agriculture and agriculture-related activities contribute to about 75% of the income in rural areas. Fertilizer is a steady business that shows no signs of fading. The growth is mainly driven by the increase in global population which is increasing the food demand. Fertilizers are extensively being used to improve per hectare production of crops that can be used for food and industrial applications.
If you like the idea of making a profit by helping people work with the soil, you might enjoy being a part of the fertilizer industry by starting fertilizer distribution business. Entrepreneurs can initiate fertilizer distribution business with a proper selection of products from any location.
Research and Plan for Fertilizer Distribution Business
In starting fertilizer distribution business do some research prior. Try to find out the major cash crops of your location. What are the problems farmers are facing? What are the specific products that have already an existing market demand? In addition, what products and services they are lacking from the existing fertilizer distributors. This research will help you to craft a business plan more confidently.
Write a business plan for your fertilizer distribution business. A well-written plan will help you to convince investors that your company is worth putting money into. It will also help you to make a specific plan. What kind of fertilizer do you want to choose for your distribution business such as chemical or organic fertilizer or both? What will be your geographic region you want to cover? How are you going to compete with established distributors? What will be your promotional strategy?
Legal Compliance for Fertilizer Distribution Business
As a startup first decide whether you want to run a sole proprietorship, a partnership, an LLP, a Pvt Ltd or an LTD company. Accordingly, register your firm. In starting fertilizer distribution business apply for a license from the states or local authority in which you plan to do business. West Bengal state, for example, requires a marketing license to do business in the entire state from the Directorate of agriculture govt. of West Bengal. Otherwise, you can also obtain a marketing license from the local authority to do business within a particular block or subdivision.
To get a marketing license you should have a trade license from the local body of your store and go down. Apply for a “certificate of source” (as per f.c.o) means a certificate given by the manufacturer, importer, pool handling agencies or as the case may be, wholesale dealer indicating therein the source from which fertilizer for purpose of sale is obtained. Fertilizer distribution business attracts Sales Tax. Consult with a small business attorney to craft a legal ‘Dealership Agreement’. Joining a business association like www.faidelhi.org will definitely provide you the necessary information for business growth.
Operations of Fertilizer Distribution Business
Find suppliers willing to do business at a suitable price in your area. Obtain quality products at a reasonable price from a reliable source. You can go for import also in the case of bulk purchase. In fertilizer distribution business, the source you choose will depend on your start-up budget.
Store fertilizers separate from any other component in dry conditions. Extra care needs to be given to keep the floor damp proof. Provide pallets to keep the drums or bags off the floor.
How you distribute your products and deliver your services can affect your cost and your client satisfaction. Arrange appropriate transport facility. Choosing the correct mode of transport means striking a balance between time and budgetary constraints.
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Promotion of Fertilizer Distribution Business
Define your customer base. You can sell fertilizers to farmers, garden stores, nurseries, and Krishi Samiti groups directly from your store. Concentrate on field trials for the products. Focus on organizing farmers meeting frequently. Farmers confidence and trust towards your products are the main criteria for getting success in fertilizer distribution business.
To make your fertilizer distribution business a profitable venture it requires a strong dealer network. Contact the dealers and retailers in your area and let them know how you will give them better product on a better price and better schemes than their current distributors.
You can initiate this fertilizer distribution business with a start-up capital of 5 lakh rupees onwards. The minimum period needed to achieve break even in this business is 5 months and expected gross profit is 30-35 percent.