• August 7th, 2020

Management enhances profitability in agribusiness

Emilie Abraham

Practically, every farmer’s goal is to farm profitably. A common question farmers ask is, why do some farmers make money and others remain unprofitable? The underlying factor in any farm enterprise is that the enterprise should generate more than it costs to produce the output (profitability). To this end, management plays a vital role in the profitability of any farming enterprise, be it poultry, large and small stock, crop etc. It is worth noting that, farm management is more than simply maintaining farm records and supervising farm labour, it involves a combination and coordination of human, physical and financial resources. 

Neglecting any of these key components can lead to losses. Sound management leads to the production of farm outputs, which are in demand and can be offered at an affordable price to targeted customers, while simultaneously providing a conducive environment for the people involved in the farming process (workers). Whereas poor management leads to the production of products that are in less demand, (e.g. zero graded products) and more costly due to high input costs and high labour turn over. 

As the saying goes, a happy worker is a productive one. Farmworkers should be motivated to the greatest extent possible as farm production is largely dependent on workers performance. Motivation need not be in monetary terms, but motivational words can count too. It is disappointing to note that some farmers see more value in their livestock than their workers and yet, for workers to give their best, they should feel valued. Farmers are therefore advised to introduce some incentive programmes e.g. take them to training, host a farmworkers day and recognize the most hardworking. Ultimately, farmers tend to choose management practices based on their goals and available resources and this in turn influences farm performance.

i)Why some farms prosper while others struggle to exist?
It is interesting to note that some farm businesses prosper and continue to expand well, while others struggle to exist. However, good or bad luck alone cannot explain the differences observed in the profitability of farms, even among farms with similar resources available. Why then the difference? The simple answer to the question is prudent farm management. Traditionally, it is believed that the eye of the owner fattens the cow, meaning when the owner is fully involved in the management of the farm, outputs and profits can be pleasing.

 ii)Management is key
There are still farmers who are unaware of the unprofitability of their farm enterprises due to poor management and record keeping. To this end, farm inputs and outputs should be recorded and monitored to determine efficiency and profitability. Efficiency (using little to achieve more) should be prioritized and monitored in all farm aspects such as the amount of feed versus livestock weight gained. 
Furthermore, enterprise performance should be prudently monitored to determine profitability e.g. mortality rates, increase in calving, lambing and weaning percentage and crop yield etc. Farmers are advised to adopt the following practices amongst others in order to realize efficiency; grazing management in terms of livestock, nutrition (meeting the nutritional needs for your livestock, proper animal/crop management, disease and pest prevention etc.).

 It should, however, be noted that these farm practices do not work in isolation, for instance, the adoption of adequate feeding practice alone, without adequate disease prevention and control in place (vaccination, biosecurity measures etc.) will not achieve optimum efficiency and profitability. 

This is because the feed conversation rate for a sick animal tends to be high, meaning an animal will use more energy to fight off disease pathogens rather than grow efficiently, resulting in poor weight gain and poor returns etc. Fundamentally, farmers should note that there are no universal solutions that can be applied to all farms. Each farm will require individual attention based on unique attributes.

In conclusion, in this age of rapid change in all aspects of farm management, farmers must become aware that there are no quick fixes or specific guidelines for any farm enterprise. Each farm, enterprise and situation require the application of different management skills. It will, therefore, take strategic farm planning and management skills to win the battle.

* Emilie Abraham is the Technical Officer within Agribank’s Agri Advisory Services Division

Staff Reporter
2019-09-03 07:37:12 | 11 months ago

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