Erastus Ngaruka
Farming has for long been perceived as a tradition or a way of life in some societies. On the one hand, such a perception still has an inherent business aspect to it because there is a practice of exchange of goods and services in the form of bartering where no actual monetary value or a profit is attached to the goods, but a transaction to serve the immediate needs or sustain the livelihood of a farmer. For example, a goat can be exchanged for a bag of maize meal. In contemporary business transactions, goods and services are exchanged for money, and a “gain” in the form of a profit is expected. On that, a goat is now sold for money and in turn, the money is used to buy a bag of maize. This is a business practice based on the principles of investment and return.
Agriculture continues to change especially in terms of markets and technologies, thus, influencing farm business operations to respond accordingly. This is where business mindsets and principles are applied to make the best use of the factors of production: land, labour, capital and entrepreneurship. A farmer is an entrepreneur (business person) with abilities and efforts to manage and control land, labour and capital such that they all complement his/her business vision. The land is the primary farm resource on which production takes place; it includes plants, water and soil, amongst others. The labour is the workforce or farmworkers, and the capital represents farm assets such as buildings, machinery, tractors, etc., including money.
The idea of business farming may be well understood and accepted, but becomes cumbersome in practice because of the complexities of record-keeping and financial management. Most farmers have productivity visions, but are not clear on how financially such visions could be achieved, and what the desired financial status of the farm in future is. The farm business decisions should be based on its performance. This is where farm production records (e.g. calving register), and financial records (income & expenses) become handy in making truthful business decisions.
Record-keeping is a farm management guiding tool that enables a farmer to evaluate the performance of the whole farm business and how each enterprise (e.g. cattle, goat, sheep, and crop) is contributing to the overall progress of the farm. A farmer can monitor and determine whether the farm activities are going according to his/her plans.
Records allow a farmer to plan and budget based on own real data. Thus, future financial decisions are always guided and made based on the real information of the farm. On the other hand, a clear and useful farm record-keeping system can create an opportunity for a farmer to receive support services such as finance and advice.
Farming is a business because farmers invest in the land, labour and capital, and market their products in monetary value, and expect an optimal income. Good farm business is one that does not compromise the productive potential of the land, the labour is skilled and motivated, and capital investment is sufficient and appropriate. A good business decision should be made from records and not memory. Lastly, agriculture is an economic pillar of Namibia and it supports all livelihoods although faced by unforgiving climatic conditions. On that, farmers need to explore and use appropriate production methods that will ensure sustainable production and make it their business to feed the nation.
• Erastus Ngaruka is the Technical Officer: Livestock within Agribank’s Agri Advisory Services Division