Where margin sits in a maize value chain

A household pays for maize flour. Very little of that price stays with the farmer. Most of it is captured in drying, milling, packaging and distribution.

When we look at an agricultural business, we start at the point of sale and work backwards. Who buys, at what price, and how reliably. Then we ask what it costs to get the product there. The answer usually points to one or two steps in the chain where margin is real and defensible.

Processing is where the numbers change

Raw crop is a commodity. Dried, graded and milled crop is a product. The equipment is knowable, the throughput is measurable and the buyer is usually identifiable before the investment is made.

That does not make it easy. Utilisation is the risk. A mill running at a third of capacity loses money regardless of the price of maize.

We would rather hold a smaller position in a plant that runs every day than a large one in a plant that runs in season.

What this means for members

It means slower decisions. We would rather decline an opportunity than commit member capital to a business we cannot measure. Where we do invest, we report what the business does, what it cost and how it is performing.