This is a continuation of the previous article, where we discussed the guide to dealing with financial management in the case of climate change.
The agricultural industry is most affected by the impacts of climate change – and we have witnessed it through drought, rainfall fluctuations, crop failure and livestock losses.
These had an adverse impact on food prices and feeding costs, which led back to higher operational costs for farmers.
Below are some more key points on how to deal with climate change concerning financial management.
Access to financial resources and support programmes
Financial management includes the evaluation of financial options, re-negotiating terms with your lenders, and seeking government support programmes.
This is what the Namibian government offers through the Ministry of Agriculture, Water and Forestry.
Finding subsidy programmes and available grants specifically for climate change adaptation in agriculture. Accurate financial planning will ensure that you, as a farmer, can access the essential resources to implement and consequently remain financially viable during climate-related challenges.
Risk management strategies
Identifying, assessing, treating, monitoring and reporting are the main steps in risk management in any given business, including farming.
These steps enable you to develop risk-mitigating strategies that ensure you are proactive in response to climate change.
Climate change has increased the occurrence and gravity of weather-related risks, and financial management will assist farmers in implementing risk management strategies.
The strategies may vary, and may include but are not limited to developing emergency funds, getting insurance coverage – and protection against price volatility to lessen the financial impact due to climate-related disasters.
Implementation of sustainable practices
Adopting sustainable practices has been a message being driven on a global level that we should adopt, as farmers and business owners, such as reformative agriculture, organic farming and agroecology, which can all improve resilience to climate changes, but more importantly while promoting long-term economic and environmental sustainability.
Financial management will help farmers in budgeting for these investments, and estimating the long-term returns on sustainable practices.
Monitoring and evaluation
Checking key indicators such as revenue, expenditures, the business or farming profitability and return on investmentwill help farmers ensure they make informed decisions, and change their strategies accordingly in a changing climate.
Financial planning and education become important for farmers and businesses in general, which ensures the long-term sustainability and practicability of agricultural operations in a constantly changing climate.
Thus, by adopting these strategies, farmers will improve their financial stability, profitability and resilience during climate change.
Farmers must engage in financial planning and education to better manage their budgets and finances, plan for emergencies, and consequently ensure they make informed decisions about their business investments and expenditures in response to a changing business and farming environment.
*Mekupi Kambatuku is a managing consultant at Simpli Business Advisory. She can be reached at admin@simpliadvisory.com.