Where are the agricultural profits?

Why do a large number of well-known enterprises choose to invest in agriculture in recent years? They are interested in the profits of modern agriculture.

In addition to a large number of grain, oil and agricultural products, the profit margins measured by most cash crop cultivation and animal husbandry are not low, which is also an important reason why agriculture attracts a lot of capital investment.

Liu Chuanzhi, chairman of Lenovo Holdings, even said that modern agriculture may be more profitable than selling computers.

For example, the annual gross profit margin of greenhouse vegetables can reach more than 40%, and the gross profit margin of characteristic fruits may exceed 100%. But that's not the case when it comes to doing it. Many people who invest rashly in agriculture have lost a lot of money, and they still don't understand how they "died."

And this raises a question worth reflecting on: where are the profits of agriculture?

A lying gross profit margin

The profits calculated on paper may be reliable for the secondary and tertiary industries, but not necessarily for agriculture. For example, the general gross profit margin of the supermarket must be kept between 20% and 25% in order to ensure a net profit of around 3% to 5%.

So how much gross profit margin does agriculture need to make money? This is a question that is difficult to answer in practice, because this kind of calculation can only serve as a reference, but it is not applicable at all. The agricultural market is volatile and difficult to predict. To some extent, it is no less than a stroke of luck. "garlic is tough" and "Jiang your army" is like this.

Agricultural products are not entirely priced by the market

Grain, pigs and other major agricultural products, because it involves the fundamental issue of social stability, so every country will not be fully market-oriented, but need to carry out macro-control to ensure that the quantity of supply is guaranteed and prices tend to be stable. Some economists joke that a pig can kidnap CPI. As pork is the main meat variety in the diet of Chinese residents, and the price fluctuates violently in recent years, it does have a great impact on the overall price index. Therefore, as long as pig prices emerge, they have to be suppressed, subsidized in the field of production, put in reserve meat, and imported to supplement. We have to bring the price down. Once production has come down, subsidies will be abolished and pork stocks will be frozen, but it is difficult to expand exports. Therefore, the profits of agricultural products will inevitably be affected by the national macro-control, which is an important factor that can not be ignored.

Labor is a big cost that can not be ignored.

Enterprises may not necessarily do what farmers can do. Because farmers do not ask for wages from themselves, it is their own to earn more and less. Profit margins in many industries look beautiful before deducting labor costs.

The most typical is the beef cattle industry, when the price of beef in the market is high and very tight, outsiders must be good profits, but few enterprises are interested in this industry, the fundamental reason is not to make money. Because the cycle of raising cattle is too long, it takes at least more than two years to see benefits, and the cost of raising enterprises is too high. Only farmers in mountainous areas can raise it, and the site does not need to be built. The principle of fodder is mainly nearby to solve the problem. The labor cost is also very low, and the final profit is not bad.

If the enterprise raises, it needs to calculate the cost of site, forage, labor, capital and so on. As far as the current market situation is concerned, it is also difficult to make money. If we look at the rising prices of agricultural products on the market, there is basically a rule that if they can be industrialized and mechanized, they will rise slowly. What can not be industrialized and mechanized, the market price is more expensive, and a year is as expensive as a year. In the past, it was ridiculed that water is more expensive than milk and food is more expensive than meat in developed countries, but now it is almost done in China.

The storage loss should also be calculated.

The biggest difference between agricultural products and industrial products is the freshness, preservation and storage is not only technically difficult, but also the cost remains high, the final storage loss is not a small number. Even for storage-resistant agricultural products such as grain, the loss in storage is 8% to 10%, not to mention all kinds of fresh agricultural products that are not easy to store and transport.

How much do ordinary vegetables have to lose from the fields to long-distance trafficking, then to the vegetable market and then to the hands of consumers? For example, how many layers of common Chinese cabbage will be peeled off in the process from the ground to the hands of consumers? There is also water loss, the water content of vegetables and fruits is generally more than 90%, water loss during transportation is common, not only the weight decreases, but also the appearance is easy to deteriorate.

What is mentioned above is still normal wear and tear, which is usually about 30%. Now you can see why all the fresh e-commerce companies in the early days have fallen out. Because they naively compete with the vegetable market, thinking that the Taobao model can be copied to agricultural products, they do not know that the wholesale and retail model of the vegetable market is precisely the most efficient and lowest-cost agricultural product sales link.

People who sell vegetables all the year round know that they must not let the fresh vegetables of the day stay overnight, and the fresh agricultural products sold online will take several days before they can be transferred to consumers. Can there be any good results?.

As for the worst-case scenario, it cannot be sold. For industrial products, the market is not good, so they can only reduce prices, but once there is a surplus of agricultural products, they can only compete to see it rot in the storehouse and in the ground, because long-distance transportation is more expensive than vegetables. Moreover, as soon as the season is over, we have to plant the next crop of crops, so we can only mechanically plough into the soil and make green manure. The painstaking efforts of the whole season are wasted, and the expenses of fertilizers, pesticides, labor, machinery and so on are included.

If you can afford it, you can't afford it.

It is not easy to make money in agriculture, but it is much easier to lose money. Good profits simply cannot withstand the impact of risk. The risk of agriculture is really difficult to control. Natural disasters account for about 1 percent of the crops in the country every year, mainly including droughts, floods, hail, frost, diseases and insect pests, and so on.

For example, a late spring cold in spring may cause the flower buds of economic trees such as walnut, apple and pepper to freeze to death, directly affecting the yield of the year, and serious may lead to no harvest. For example, a hailstorm can scar an apple that could have been sold for three yuan a jin overnight, but it can only be disposed of to the juice factory at a price of a few cents.

At present, the coverage of agricultural insurance is still very limited. In most cases of disaster, there is no insurance to pay for it. This risk can only be borne by ourselves.

You're in a duel with interest.

The financing cost of agriculture is very high, and if it can have as much money as Lenovo, it will settle down and be prepared not to make money for ten years. However, most operators who invest in agriculture do not have this strength and can only struggle with the issue of funds. Under the circumstances that farmland cannot be mortgaged and it is difficult to guarantee, the key farming season can only rely on private financing, and the high interest costs alone can devour a lot of profits. Once the market situation does not meet expectations, only the story of "cheap grain hurts farmers" can be staged. And the investment cycle is so long that falling before dawn has become an important phenomenon of agricultural investment.