Hong Kong Farming Business Setup Guide

Hong Kong Farming Business Setup Guide | Bestar

Hong Kong Farming Business Setup Guide

Starting a farming business in Hong Kong, while challenging due to limited land and urban development, is supported by government initiatives and a growing interest in local produce. Here's a comprehensive guide:

1. Pre-establishment Phase: Research and Planning

• Market Research:

  
  

  • Identify market trends and demands for agricultural products in Hong Kong. Consider high-value crops, organic produce, or niche markets like rooftop farming.

  • Analyze potential locations, considering accessibility to markets and sunlight.

  • Assess your target audience's needs and conduct a thorough competitor analysis.

    
    

• Business Model:

  
  

  • Choose a viable business model (e.g., traditional farming, hydroponics, aquaponics, rooftop farming).

  • Consider the resources needed: manpower, machinery, technology, and initial capital.

    
    

• Sustainability:

  
  

  • Plan for sustainable farming practices to minimize environmental impact and enhance efficiency.

  • Consider implementing technology like automation and data analysis.

2. Business Setup: Legal and Regulatory

• Legal Structure:

  
  

  • Choose an appropriate legal structure, such as a limited liability company (LLC), to protect personal assets.

  • You can also consider forming a co-operative society if you are a group of 10 or more individuals looking to promote economic interests in accordance with co-operative principles.

    
    

• Company Registration:

  
  

  • Register your business with the Hong Kong Companies Registry. This is a one-stop service that also registers your business with the Inland Revenue Department for business registration.

    
    

• Licenses and Permits:

  
  

  • Agricultural Production Licenses and Permits: Specific licenses may be required depending on the type of farming (e.g., Livestock Keeping Licence, Marine Fish Culture Licence, Plant Import, Pesticides Import/Export Licence).

  • Food Safety Licenses: If you are processing or selling food, you will need licenses from the Food and Environmental Hygiene Department, such as a Food Factory License, Import License for frozen food, or a Restricted Food Permit for certain items (oysters, sushi, etc.).

  • Environmental Regulations: Comply with environmental regulations to minimize impact.

  • Building Codes: If you're considering rooftop farming, ensure compliance with building codes to confirm the structure can support farming activities safely.

  • Zoning Laws: Adhere to local zoning laws that govern agricultural land use.

  • Pesticide and Fertilizer Standards: Ensure your produce meets health and safety requirements regarding pesticides and fertilizers.

  • You can use the Business Licence Information Service on GovHK to identify the specific licenses required for your business.

3. Operational Planning

• Infrastructure:

  
  

  • Set up necessary infrastructure, including technology and equipment (e.g., irrigation, soil systems, greenhouses).

    
    

• Human Resources:

  
  

  • Hire and train staff. Understand Hong Kong's employment laws and employers' obligations under the MPF (Mandatory Provident Fund) system.

    
    

• Standard Operating Procedures (SOPs):

  
  

  • Develop SOPs for planting, harvesting, packaging, and quality control to maintain consistency and high standards.

4. Financial Planning and Funding

• Initial Investment and Costs:

  
  

  • Calculate initial investment requirements and ongoing operational costs (water, electricity, labor, maintenance).

    
    

• Revenue Projections:

  
  

  • Project revenues and conduct a break-even analysis. Consider various sales channels (direct-to-consumer, partnerships with restaurants, subscription models).

    
    

• Funding Options:

  
  

  • Sustainable Agricultural Development Fund (SADF): This fund supports projects that enhance productivity and competitiveness in the agricultural industry. It's open for application all year round and can provide funding for innovative or application-oriented projects. Projects with commercial elements may receive matching funds (up to two-thirds or half of the total investment).

  • Farm Improvement Scheme (FIS): Under the SADF, the FIS provides direct grants to local farmers for acquiring farming equipment and materials. Eligible farmers can receive up to 90% of the cost, capped at HKD50,000 per production unit (or HKD100,000 for two units).

  • Other Government Funding Schemes: Explore other SME funding schemes like the BUD Fund (Dedicated Fund on Branding, Upgrading and Domestic Sales) or the Innovation and Technology Fund, which might be applicable depending on your business's scope.

  • Private Funding: Consider exploring private investors or crowdfunding campaigns.

5. Land for Farming in Hong Kong

• Hong Kong has limited agricultural land, with only about 18 square kilometers (approximately 3.81% of total land area) actively farmed.

  
  

• Most farming occurs in the urban fringes.

  
  

• Options for land acquisition include:

  
  

  • Leasehold Agricultural Land: If you wish to build agricultural structures (greenhouses, sheds, fish ponds) on leasehold agricultural land, you'll need to apply to the Lands Department for a Letter of Approval for Agricultural Structures. The AFCD assists in assessing these applications.

  • Fallow Land Rehabilitation: The Agriculture, Fisheries and Conservation Department (AFCD) promotes the return of fallow land to cultivation by helping farmers arrange land tenancy, improve soil conditions, and provide technical assistance.

  • Agricultural Park (Agri-Park): The government is developing an Agri-Park to nurture agro-technology, provide farmland, and facilities for commercial farming.

  • Rooftop Farming: A viable option in urban Hong Kong, utilizing building rooftops for growing crops.

6. Marketing and Business Development

• Brand Identity: Develop a strong brand identity that emphasizes sustainability, local sourcing, and the quality of your produce.

  
  

• Marketing Strategy: Create a comprehensive marketing strategy, including digital presence (social media, online platforms).

  
  

• Sales Channels: Plan customer acquisition strategies and build partnerships with local restaurants, supermarkets, or direct-to-consumer sales.

  
  

• "Agri enJoy" Scheme: The AFCD launched this scheme to facilitate farms engaged in commercial agricultural production to operate agriculture-related ancillary businesses to increase income and promote their products.

Key Government Departments and Resources:

• Agriculture, Fisheries and Conservation Department (AFCD): Responsible for promoting and supporting agricultural development, providing technical assistance, and administering funding schemes.

  
  

• Companies Registry: For business registration and incorporation.

  
  

• Inland Revenue Department: For business registration and taxation.

  
  

• Food and Environmental Hygiene Department: For food-related licenses and permits.

  
  

• Lands Department: For land-related approvals.

  
  

• GovHK Portal: Provides comprehensive information on starting a business, licensing, regulations, and funding.

  
  

• SME Link: A web portal for SMEs to access comprehensive information and support services.

Starting a farming business in Hong Kong requires careful planning and navigating various regulations. Leveraging government support and focusing on high-value, sustainable practices can help increase your chances of success.

How Bestar can Help

Hong Kong Farming Business Setup Guide

Setting up a farming business in Hong Kong involves unique challenges, and professional assistance can be invaluable in navigating the complex landscape. Here's how Bestar can help:

Bestar possesses deep knowledge of the agricultural sector, both globally and locally. We can provide:

• Market Research and Feasibility Studies: Helping you understand the specific demands for agricultural products in Hong Kong, identify profitable niches (e.g., organic, high-value crops, vertical farming), and assess the viability of your proposed farm model.

  
  

• Funding Application Support: Assisting with the preparation of strong applications for government funding schemes like the Sustainable Agricultural Development Fund (SADF) or the Farm Improvement Scheme (FIS).

Given the legal requirements for setting up a company in Hong Kong, these services are essential:

• Company Registration: Handling the entire process of incorporating your business with the Companies Registry and registering it with the Inland Revenue Department.

  
  

• Legal Structure Advice: Helping you choose the most appropriate legal entity for your farming business (e.g., limited liability company) based on your liability, ownership, and tax considerations.

  
  

• Company Secretary Services: Fulfilling the mandatory requirement of appointing a company secretary, who ensures compliance with ongoing statutory obligations (e.g., annual returns, keeping company records).

  
  

• Registered Office Address: Providing a registered office address in Hong Kong, which is legally required.

  
  

• Document Preparation: Assisting with the preparation of essential incorporation documents like the Memorandum and Articles of Association.

Agricultural businesses face a range of legal considerations, and Bestar can provide:

• Contract Negotiation and Drafting: Assisting with contracts for land leases, supply agreements with distributors or restaurants, sales agreements, and agreements with technology providers.

• Regulatory Compliance: Ensuring your farming business complies with all relevant Hong Kong laws and regulations, including:

  
  

  • Agricultural Production Licenses: Guiding you through the application for necessary permits for specific farming activities (e.g., livestock, marine fish culture, plant import).

  • Labor Laws: Advising on employment contracts, worker rights, and obligations as an employer in Hong Kong (e.g., MPF contributions).

    
    

• Intellectual Property: If you develop unique farming methods or products, advising on protecting your intellectual property.

Financial management is crucial for any business, and Bestar can offer:

• Business Plan Financials: Developing robust financial projections, including startup costs, operational expenses, revenue forecasts, and break-even analysis.

  
  

• Accounting System Setup: Establishing an efficient accounting system tailored to the specific needs of a farming business (e.g., tracking input costs, harvest yields, inventory).

  
  

• Bookkeeping and Record Keeping: Managing day-to-day financial transactions, ensuring accurate and organized records.

  
  

• Taxation Advice and Compliance:

  
  

  • Advising on Hong Kong's tax regulations, including profits tax.

  • Identifying any potential tax benefits or deductions applicable to agricultural businesses.

  • Ensuring timely and accurate tax filings.

    
    

• Financial Reporting: Preparing financial statements (profit and loss, balance sheet, cash flow) for management, investors, and statutory compliance.

  
  

• Cash Flow Management: Providing strategies to manage cash flow effectively, which is particularly important in agriculture due to seasonal variations.

  
  

• Payroll Services: Managing payroll, including MPF contributions, salaries, and other employee-related expenses.

  
  

• Audit Services: If required, conducting statutory audits of your financial statements (by Bestar's partnered firm).

By engaging Bestar, you can mitigate risks, ensure compliance, optimize your operations, and significantly increase your chances of establishing a successful and sustainable farming business in Hong Kong.

Request for Proposal