In the picturesque lush lands of East Africa, an agricultural revolution is taking place as farmers are turning their idle lands into thriving avocado orchards. This transformation has positioned the avocado industry as one of the fastest-growing sectors across the region, with an estimated Compound Annual Growth Rate (CAGR) of 12%. In this article, we will delve into the avocado farming boom, explore the impressive growth potential, and examine the financial aspects of this venture compared to traditional investment options.

The Kenyan Transformation

Take the example of Kenya, known for its stunning landscapes, advanced technological space and excellence in athleticism, is fast becoming synonymous with avocado farming. Farmers are recognizing the untapped potential of their land, previously deemed idle or underutilized, exporters are tapping into huge markets; avocado farming has emerged as a sustainable and profitable alternative. The industry is poised for exceptional growth, boasting earnings of $125 million in 2023 up from $95 million in 2022. This 33% growth rate is among the highest in the country and demonstrates the immense potential for both small-scale and large-scale farmers in Kenya. The reasons behind this growth are multifaceted:

• High Global Demand: The international demand for avocados continues to rise, with consumers increasingly valuing their health benefits and versatility in culinary applications.
• Favorable Climate: The climate and altitude of a significant part of the country are ideal for avocado cultivation, resulting in high-quality yields and consistent production.
• Export Opportunities: Kenya’s proximity to international markets, such as Europe and the Middle East, positions it as a significant player in the global avocado export market.

Avocado Farming vs Traditional Investments

To highlight the potential returns on avocado farming, let’s compare it to two common investment options: investing in a 10-year government bond paying an interest rate of 16.722% or putting money in a Money Market Fund (MMF) offering a 10% interest rate. Let’s say hypothetically, we invest $1,000 in the three ventures. By the end of 10 years, a Treasury Bond which uses simple interest will have yielded cumulative interest of $1,672.20 bringing a total of $2,672.20 Shifting gears to MMF, after the 10-year period the total amount will be $2,593.74. The difference between the two is brought about by the difference in interest rates even though most MMFs use compounding interest rather than the simple interest offered by Treasury Bonds. In contrast with the green gold, with the same initial capital and at least an acre of arable land, at least 100 trees can be planted. An average output of 13 Kgs per tree after the 3rd year can generate $1,300 given the average market price of $1. The beauty of this venture is by the end of the 9th year, total output can stand at a staggering 300 Kgs per tree. The long-term returns can be substantial, making it a highly lucrative venture. Treasury bonds are considered a low-risk investment option. However, they offer relatively modest returns compared to avocado farming. The 16.722% interest rate may seem attractive, but it is significantly lower than the potential returns from avocado farming. MMFs are renowned for their liquidity and safety and while they offer a reasonable 10% interest rate, this return pales in comparison to the exponential growth expected in the avocado industry.

Using Technology to Elevate Quality

In the avocado market, quality is paramount. Buyers are willing to pay a premium for top-tier avocados. This is where One Million Avocados comes into play, leveraging cutting-edge technology to ensure the consistent production of high-quality avocados. Our unique business model involves walking with the farmer every step of the way. We support the farmer with the initial requirements (seedlings, manure, soil test and the expertise to grow) and other maintenance costs. After that, working in partnership with Dimitra, we deploy Blockchain technology for through the Connected Farmer (Available on Android) to monitor and evaluate the crop’s growth. Dimitra’s advanced technology help us understands the need for routinely analyzing the farm, while deploying and leveraging Machine Learning, Artificial Intelligence modules to monitor the tree’s health, and in case of any quality problem, we escalate the problem to our in-house team of agronomists.

Avocados are lining up to be a major investment vehicle. It is our mission to promote the benefits of this superfruit, saving the world, one Avocado at a time. To learn more about our services, email us at hello@onemillionavocados.com

 

The information on this post is intended to be general in nature and is not personal financial advice. It does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs.