Can farming be financially viable?

Farming is a noble profession, truly living off the land in one way or another and feeding the nation or even other countries with your harvest or livestock products such as meat and milk.
There is no one to account to, no boss breathing down your neck and you keep your own hours. Being in the outdoors, never having to worry about getting enough exercise. . . farming takes care of all that. It sounds idyllic and many people dream of owning or running a farm. However, the reality is not quite as rosy as it seems to be.
Running a farm is very hard work, back-breaking in fact. Doing it in Namibia adds a whole level of difficulty in the form of an unforgiving climate, water scarcity and lack of arable land. Farms are often enormous in Namibia, but they have to be productive to yield in the form of return on investment (ROI).
Venturing into the agriculture business without sound financial knowledge about farming and simply knowing the costs involved will bankrupt you before you know it. There are banks that specialise in catering for farmers and some of the largest banks in the world have their origins in agricultural finance.
As a farmer, you need to understand and prepare yourself by estimating risks, reducing losses and anticipating dry/drought conditions. However, how do farmers prepare themselves on how to make well informed financial decisions, if financial aids such as loans, subsidies are available at their disposal? This is where seeking the advice and expertise of an expert becomes essential.
This knowledge does not simply come to a farmer, apart from knowing the ins and outs of having to run a farm. Knowing about animal health and husbandry, crop production, nutrition, rangeland management and labour laws is equally important as understanding farm financial management. This is where Agra ProVision and banks focused on farming come into play. By hosting information sessions for farmers and having experts on hand, farmers are initiated into the financial aspects of farming and the financial viability of their farm enterprises.


Good management
Good farm financial management begins with establishing an “annual farm management plan.” This plan guides the farmer/manager in different activities and responsibilities they need to take into account. For example in livestock, the farmer needs to determine the forage availability, align the cattle herd size accordingly while integrating browsing livestock into the system. Furthermore, the plan should inform on the right licks and quantities for the lick supplementation programme, parasite control, immunisation, bull maintenance and breeding programme. Effective management also involves detailed record keeping on herd performance and having a marketing programme in place. These are all integral parts of livestock management.
Farmers need to know about the value chain of farming and determine their place within it. In agriculture, there’s a general need for a paradigm shift. The mentality and approach has to change, moving away from producing for own consumption to commercial production. This is no longer a suggestion or a “nice to have” but an absolute necessity to start producing on a large scale. Being well-versed in the commercial aspects of farming will lead to more stability as well as socio and economic sustainability for the farmer and the nation.
There are no short cuts in farming and certainly no " get rich quick schemes" . The basic principles of farming set the foundation upon which farming methods and technology are used to increase production for a successful agricultural enterprise. An example of this would be to use other farm resources to generate additional income. The farmer then needs to reinvest at least 50% of income from sales in production inputs for the smooth running of the business.
Farmers aiming to establish a well-run productive business that yields a healthy turnover and profit need to be proactive and take charge and control of their enterprises. This means having a business plan in place for the farm, possibly divesting your resources by not putting all your eggs in one basket. Good farm management requires utilising all resources on the farm in a sustainable manner, while balancing the production costs with the income. Constant investments need to be made on any farm and keeping abreast of new technologies and how to do things better, is the only way in which to survive and be profitable.
Operating any business is tough; operating a farming business is even tougher. Farmers are entrepreneurs who are affected by so many external factors that would make most people break out in a sweat. Therefore, if a farmer fails to plan and manage the finances properly, everything else will crumble. You could have the healthiest livestock, the lushest crops, but if there’s not a viable business plan in place that takes all financial aspects regarding farming into account, the enterprise is at risk. However, how do you draw up a solid business plan, how do you monetise your crops, cattle or turn the various resources of a farm into profit centres and not just cost centres or even worse, loss-making centres?
Getting the right advice from professionals is a great starting point. It is impossible to have all this knowledge yourself and seeking out expertise is the smartest thing a farmer can do. When cattle are sick, a veterinarian is called for an expert opinion and possible treatment. With regards to running farming as a business and managing finances, it is important to have a solid foundation and not see the financial aspect as an afterthought. Farming is exceedingly rewarding as a profession and certainly a noble calling, but too many farmers fall by the wayside due to mismanagement of finances. This is unnecessary. It is also very detrimental to the Namibian economy, as farming employs a third of the Namibian population, and the nation depends on farming as one of the country’s economic drivers.
From best practises, farmers should understand their production systems and how they translate in dollar terms. Livestock farming especially, is about successfully converting grass or forage to animal products in order to earn money for a good living. Sustainable, successful farming is about taking charge of all production and resource avenues, solid financial planning and embracing the principles of commercial livestock production.
*Article contriburted by Agra ProVision.