As we have emphasised before, a farming business should be treated with utmost seriousness, as with any other business. At the upcoming Strategic Farming Seminar, we will review the importance of strategic farming and what it entails.
We will also be discussing different aspects of farm financial management, the impact of economic downturns on the input costs of farming and how that - in turn - affects agribusiness profitability and survival, and finally what strategies can be put in place to mitigate such risks and conditions. The discussions will also be around the financial implications of strategic farm management, or lack thereof. More, importantly the interaction aims to reiterate the possibility and the know-how of farming for profitability.
How do we manage the new economic realities in agriculture as a consequence of the economic recession? How do we move from subsistence farming, and modernise agriculture as a whole? How do we farm in a profitable way, and ensure business sustainability?
What do I mean by strategic farming and its implication for the profitability of any agribusinesses?
For farm financial management to be implemented accurately, there must have been a farming strategy that was formulated. This can be done at the beginning of each year. The farming strategy in its simplest form includes, but is not limited to steps looking at the market segments, what those segments entail, and what the needs of each segment are a farmer can meet. The strategy is a meticulous layout of what a farmer intends to achieve, how and through what channels.
A business strategy is what guides the financial budgets either planned for a year, or most commonly for five years. Strategic management integrates all functions to ensure the efficient management of the total farming system in coherence with the internal and external environment in achieving the long-term goals of the farming business. This process involves developing a vision and mission of where you see your farming business in three, five and 10 years. Strategic choices and models such as the business model canvas, the SWOT analysis, scenario planning and many other both generic and grant strategies may need to be utilised for agribusinesses. Farming strategies must be created in direct support of the future envisioned, which focuses on significant performance areas, such as agribusiness financial objectives; expansion objectives; and sustainability objectives. Strategy and finance are directly linked, and financial reports are what provide critical information about your farming business unit’s financial position and the financial performance during a given period of strategic execution. More of these will be reviewed in more detail as one of the themes of discussion at the Strategic Farming Seminar on 15 October 2022 at the Agra ring.