Mekupi Kambatuku
Diversified and value-added agriculture are secondary agricultural uses that re-allocate some of a farm’s productive resources, such as land, capital, farm equipment and paid labour into new activities.
This can include new crops or livestock products, food processing, energy production, aggregate extraction, eco and agri-tourism, provision of services to other farmers, and non-farming activities such as restaurants and shops.
Diversified farming may provide better financial outcomes than the simplified ones by reducing the risk of profit losses that arise from yield, price, input or output market risks. Reviews show that relative to simplified systems, diversification can lead to higher gross incomes and lower direct production costs.
The point for most is to reach the break-even point, and eventually make a profit. The time to break even (cover costs) is an important point to consider in terms of farm cashflow. The time to break even is influenced by the level of your initial investment and how quickly you can begin to achieve a consistent income, in line with your budgeted expectations.
The benefits of farm diversification include:
More stable or increased farm income
More efficient use of land, machinery, buildings or labour
Reduced need for off-farm work
Opportunities for future growth
Diversification process.
Successful diversification projects are the result of careful planning. They make use of existing interests, skills and resources on the farm. To develop a diversification project, consider the following steps:
Analyse personal and family skills and interests. Analyse available resources such as time, land, labour, equipment, facilities and capital.
Many diversification projects are the result of unusual ideas, which have potential for growth. Examples of diversified and value-added agriculture include diodiesel, new irrigated crops of the future, specialty cosmetics, commercial greenhouse, woody plant production, mushrooms, bedding plants, beekeeping and tree nursery.
However, an expansion of the diversified business should occur gradually, in line with the ability of the business to generate cashflow to support the expansion.
Diversification and benefits thereof have been a discussion lately, as to how we as farmers can gain financial benefits by diversifying our farming enterprises. Perhaps now with the festive season upon us, we can ponder more on such ideas, as we strive for agribusiness profitability.