The importance of good farm record keeping

Keeping records is the backbone of managing one’s agribusiness. Efficient management of a farming operation requires that records be maintained to enable the farmer to make informed decisions affecting their profits.

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Types of Records

There are 2 main types of records that a farmer must keep. These are financial and production records. Financial records concern the financial dealings of the farm. These records show farm income and expenditures. These are a record of produce sales, operating expenses, equipment purchases, depreciation records, inventories and accounts payable or receivable. All these fall into the financial records category.

Production records include things such as crop yields, plant populations, quantities of inputs used and loss through death. Production records can also capture aspects such as how many animals you have, their health history, what you are feeding them and how often. Keeping and analysing accurate production records are essential aspects of farm management.

Both production and financial records are critical to the efficient management of a farm business. When such information is accurately maintained and categorized, it can be used to make useful decisions

Reasons for Keeping Farm Records

There are various reasons why a farmer should keep farm records. The reasons may be summarized as follows:

  1. Farm records are used to evaluate the performance of any farm or farm enterprise within a given period of time. Farm records will enable the farmer to know what each enterprise contributes to the overall progress of the farm.
  2. Records are an aid to managerial control. With the help of records, a farmer can keep a close check on whether work on his/her farm is going according to his/her plans. For instance, checks can be made on whether too much animal feed or too much seed is being used or whether crop and livestock yields are falling. It is important to detect where farm activities are going wrong quickly so that they can be put right before losses occur.
  3. Farm records provide figures for farm planning and budgeting. A farmer making plans to modify any farming activities needs to know what yields can be expected from crops and livestock and what costs and receipts are likely to be received.
  4. Farm records tell a farmer how much is being earned.
  5. Farm records tell a farmer where they are gaining progressively or loosing.
  6. Farm records enable the farmer to obtain loans from banks and other financial institutions. Banks normally give loans if a farmer can produce adequate physical records with the corresponding accounting records as well as the overall farm plan. This is necessary and beneficial to both the bank and the farmer for the good use of the loan which must be repaid with interest.
    It is the lack of accurate records in small scale farm production that makes it difficult for banks to extend credit facilities to small-scale farmers.

Analysing the records

Many farmers cannot list the inputs and associated costs that they have used in production. The inability to recall or record what went where or how much was spent on production operations is the first sign of trouble. Simple record keeping provides the solution to most of the problems farmers face during production.

Decision making can be enhanced by examining both production and financial records and their impact on profitability. The income and expense records can quickly show how a farm business stands on a cash basis, in a week, month or during any period desired. Good records can lead to better decisions.

At YouFarm we promote precision agriculture in order to reduce waste and increase yields. This is why we take record keeping seriously. Through our partnership with Harare Technical Academy we provide farm management courses that farmers must take so that they can understand their business better. Our goal is to create smarter farms and smarter farmers.

Next week we will talk about the importance of forging partnerships in agriculture.

Follow us on Facebook http://www.facebook.com/youfarmzw or on twitter @YouFarmZim. To register as a farmer or investor log onto the website http://www.youfarm.co.zw and fill out the registration forms.

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Types of Agricultural Financing in Zimbabwe

There is a US$223 million agricultural funding shortfall in Zimbabwe affecting thousands of farmers. This week I want to briefly look at the different types of agricultural finance in Zimbabwe and how they compare to the YouFarm Crowd Farming Platform

There are thousands of financially disenfranchised farmers in Zimbabwe. The table below shows the results from a study by Mapfidza et al (2010) showing the percentage of farmers who were interested in seeking funding if it was available

Farm Type Interested in seeking finance if available (%) Not interested due to fear of defaulting (%)
A1  (small holder) 45% 35%
A2 (small scale) 65% 25%
A2 (medium scale) 80%

Bank Finance

For most A2 farmers, bank finance is essential but has been largely unavailable due to many factors. The most important factor is the fact that the farmers do not have collateral and that the 99 year leases are not yet bankable because they are State property hence, can not be sold or sub-let. It is therefore, not clear how the land could be foreclosed to recover unpaid loans. This has made it impossible for banks to lend farmers money for farming activities. Even if government makes the leases bankable, it is still a political hot potato as no bank will want to be seen to be foreclosing and taking land from beneficiaries of the land reform program.

Resultanly, farmers have had to put up other assets in order to get loans. Once the bank provides the loan, it is up to the farmer to use the money for farming operations. The bank does not care if the farmer succeeds or not as long as they get their money back. I came across an interesting statistic, 90-95% of farming loans are repaid by farmers if they are given by the bank directly. Less than 50% of loans that are associated with government programs are paid back. It makes sense. Take a loan and just survive long enough for government to write it off at the next election.

At YouFarm we do not ask the farmer for collateral because we work with the farmer by providing them with technology like drone and satellite data plus expert agronomists so that they can reduce wastage and increase yields by practicing precision farming. We are interested in seeing the farmer succeed because we have to protect the investors money. We also share the profits so we monitor everything from the moment we reach the funding goal for the crop, till the crops get to market.

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Contract Farming

Contract farming has become very popular in Zimbabwe. Tobacco contract farming was vital to the growth of tobacco production in Zimbabwe post land reform. In fact this year, has seen record sales in large part due to contract farming that has provided both large scale and small scale farmers with the means to become tobacco farmers.

There are other crops that are covered by contract farming. These include cotton and sugar cane. One of the biggest complaints by farmers is the lopsided nature of the contracts they end up getting into. In some cases the farmers are paid as little as 8% of the profits. Most farmers sign because they are desperate, other out of ignorance. The other issue is that some of the companies that provide the contracts are run by unscrupulous individuals who fleece farmers by way of giving crops lower grades or in some cases not paying farmers after they have produced. In other cases they over charge farmers for the inputs. One example was given by one of my listeners who called into the agribusiness radio segment that I used to present on Capitalk FM saying that he was doing tobacco contract farming and the company he was contract farming for, was charging him more than double the market price for fertilizer, but he had no choice.

At YouFarm we believe that the farmer is the most important member of the team. That is why the farmer retains the lions share of the profits. We also do not over charge for inputs. In fact we have partnered up with a few companies so that we can get discounts on inputs. Our farmers can also get discounts for inputs beyond YouFarm funded projects. We involve the investor and farmer in all aspects including input purchase so that there is transparency.

Command Agriculture

Command agriculture was a political masterstroke that was accompanied by good rains. It captured the imagination of Zimbabwean farmers. Free inputs and free tillage. All you needed was land. Zimbabweans like free things and better yet free money. It was so successful that command has become a buzzword and now there is talk of command fisheries, command dairy, command beef and command horticulture.

Theoretically command maize should work if managed properly and if farmers receive inputs early. There is no point in providing compound D fertilizer 2 weeks after the farmer has planted. Like YouFarm command agriculture does not ask farmers for collateral. They do provide farmers with agritex officers to monitor the crop production and to insure that the inputs are used correctly and there is no crop insurance. In exchange, depending on the area, government wants 5 tonnes per hectare in return. The rest belongs to the farmer. 2 seasons ago a young farmer did 21 tonnes per hectare. If i recall correctly he planted 120 hectares for command. 120x16x$360=$691,200 not bad considering that the inputs were free. You can see why its popular.

There has been talk about command horticulture for export purposes but that’s a pipe dream. First of all getting the farms Global Gap certification would be too expensive. Secondly finding farms that are not under dispute would prove to be difficult. Lastly we no longer have direct flights to the markets like Amsterdam. It is not impossible but it would take a lot of work to train the farmer in order to get them to produce and meet the standards required for export.

YouFarm ensures that all crops are insured against force majeur and political risk. We are able to provide financing for a variety of crops as long as they have a market. We are not limited to maize or tobacco. While command may provide you with an over worked agritex officer who has to monitor all the farms in a district, YouFarm provides you with a dedicated expert agronomist who’s sole mandate is the success of your crop.

The YouFarm Crowd Farming Platform provides a superior, alternative and disruptive form of collateral free funding for farmers.

Follow us on Facebook http://www.facebook.com/youfarmzw or on twitter @YouFarmZim. To register as a farmer or investor log onto the website http://www.youfarm.co.zw and fill out the registration forms.

Agriculture is everything

A brief history of agriculture….

Last week I spoke about the importance of due dilligence before investing your hard earned money in anything. For those of you who were paying attention, you will also remember that I had said that this week I would be talking about the different types of finance available to farmers in Zimbabwe. I’m going to postpone that topic till next week because I need to talk about why agriculture is EVERYTHING! I’ve been reading an amazing book by Jared Diamond called, ‘Guns, Germs and Steel’. I would recommend it to anyone who has an interest in agriculture.

Agriculture arose independently in different parts of the globe. Some of the centres of origin of food production include:

  1. The Fertile Crescent;
  2. China;
  3. Eastern United States;
  4. Mesoamerica (this is an important historical region and cultural area in the Americas, extending from central Mexico through Belize, Guatemala, El Salvador, Honduras, Nicaragua, and northern Costa Rica, It is one of six areas in the world where ancient civilization arose independently);
  5. Ethiopia; and
  6. West Africa.

There are 11 areas where agriculture is said to have developed independently.

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The Fertile Crescent (also known as the “cradle of civilization”) is a crescent-shaped region where agriculture and early human civilizations like the Sumer and Ancient Egypt flourished. Technological advances in the region include the development of writing, glass, the wheel, agriculture, and the use of irrigation. Agriculture is said to have originated here as early as 9000 BC. From these areas agriculture spread around the globe.

Civilization

In all the areas that agriculture developed so did civilization. Tribes were able to grow into villages, villages grew into towns and so on. There was no longer a need for early humans to move around hunting and gathering food. It also saw the rise of political systems and Chiefs who would oversee the distribution of the food.

Because people did not have to worry about food they were able to invent writing so that they could record their harvest. Humans had the time to pursue things like poetry, art and science. These societies were also able to develop their armies. This is all because farmers produced the food so that others could focus on different activities and not worry about survival.

Domestication brought along disease. Many of the diseases we are immune to today actually came from animals which were domesticated for farming. Why is this important you ask? These civilizations that developed agriculture were able to colonise the rest of the the world by military force and in some cases by (inadvertently) exposing the populations they were trying to control to new diseases. For example the Aztecs were exposed to smallpox by Spanish colonialists. The origin of smallpox as a natural disease is lost in prehistory. It is believed to have appeared around 10,000 bc, at the time of the first agricultural settlements in northeastern Africa. AGRICULTURE IS EVERYTHING!

The Future

By 2030 the worlds population will be over 8 billion and agriculture in Africa will be a US$1 trillion industry. It is no mistake that other nations are investing heavily in this sector and buying up valuable land. Neither is it a mistake that Africa’s richest man is investing heavily into agribusinesses across the continent.

At YouFarm we recognise the importance of agriculture and how it contributes to human civilization and development. This is why we advocate for creating smarter farms and smarter farmers. We believe that by getting people to invest in agriculture they can have a say in how their food is grown and contribute to society while making money. Next week we will go back and talk about the different types of funding options that are available to farmers.

Follow us on Facebook http://www.facebook.com/youfarmzw or on twitter @YouFarmZim. To register as a farmer or investor log onto the website http://www.youfarm.co.zw and fill out the registration forms.

The importance of due diligence

Last week we spoke about how YouFarm is throwing out the rule book in order to provide finance for financially disenfranchised farmers who are failing to access funding from traditional financial institutions. This week I want to focus on the importance of due diligence.

Due diligence is an investigation of a business or person prior to signing a contract.

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YouFarm performs due diligence by vetting farmers and farms in order to protect the investors hard earned money. Our vetting process involves physical farm visits, equipment and infrastructure inspections. We also look at what sort of experience the farmer has. The less experience a farmer has the more we work with the farmer. Security at the farm is also critical. How safe is the produce from wild animals and humans. At YouFarm we promote best practice farming and as such we stand against the use of child labour in agriculture. We ensure our farmers do not use children to produce drops. Lastly we determine if the farmer has permission to use the land.

Partnership

The YouFarm Crowd Farming Platform is a relationship between the investor, the farmer and YouFarm. This is why we do not charge any fees for farmers or investors to register.  Anyone who requires farmers to pay fees for farm inspections is not a genuine partner. We also encourage investors to do due diligence on us before they invest their money. The Cattle Ownership Society is a good example of what happens if you dont do proper due diligence. Many people were swindled by this “fly by night” company.

Before you invest in a crowd farming project in Zimbabwe, it is crucial that you ask yourself the following questions as there are too many snake oil salesmen in the country, who are looking to fleece farmers and investors.

  1. Is the company registered in Zimbabwe as per the Companies Act? If so what is the company registration number?
  2. If the company claims to be registered in another country, a quick google of the address and company details will yield results. Google maps will even show you what the premises looks like. If the company claims it is based in the United Kingdom for example you can use https.//beta.companieshouse.gov.uk to see if the company is registered and if they are up to date with tax returns etc.
  3. If the company is requesting that farmers or investors pay registration fees, alarm bells should immediately start ringing.
  4. Crop insurance is important. If a company claims they have insured the crops you need to demand that you see the insurance certificate.
  5. Does the company have contact telephone numbers or are they only keen to talk via email?
  6. Lastly perform background checks on the Directors. A simple search on google or LinkedIn can yield amazing results. If the company only has one director, take your money and run in the opposite direction.

Any genuine company should be able to provide all this information upon request. At YouFarm we take our partnerships seriously and we are open to scrutiny from anyone. We involve the investor in the project from start to finish.

 Media Coverage

YouFarm has been receiving a lot of positive media coverage because of the innovative way we create financial and technological inclusion. It also helps that we have been rated one of the best tech startups in Zimbabwe. YouFarm began operations in 2017 and is the first crowd farming platform in Zimbabwe. One company has been using press releases banking on the fact that Zimbabwean journalists do not do due diligence to claim that they are the first in Zimbabwe. Imitation is the sincerest form of flattery and while we welcome competition because it keeps us on our toes and brings out the best in us for our customers benefit, we urge investors and farmers alike to be weary and to perform their due diligence.

Next week we will look at the different forms of finance that are available to farmers in Zimbabwe. Follow us on Facebook http://www.facebook.com/youfarmzw or on twitter @YouFarmZim. To register as a farmer or investor log onto the website http://www.youfarm.co.zw and fill out the registration forms.

Throwing out the rule book!

3rd, not bad hey!

In my last post I spoke about the use of technology in agriculture and how YouFarm intends to provide access to technology for Zimbabwean farmers. This week we want to briefly look at how YouFarm is throwing the rule book out the window. But first a bit of housekeeping. Last week was a busy week for the YouFarm team as we went up against Zimbabwe’s top tech startups. A total of 50 teams from across Zimbabwe applied and only 10 made it to the Seedstars Harare final. We went up against some tough competition and seasoned operators. We came in third and will be representing Zimbabwe in Abidjan Ivory Coast later this year! Not bad as it was our first time entering a pitch competition. It also means we are onto something.

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Shortfalls

There is a 40% agricultural funding shortfall in Zimbabwe which mainly affects rural farmers. There are also thousands of financially disenfranchised farmers in Zimbabwe. In short traditional lenders are not catering to the needs of farmers in Zimbabwe. There is an agricultural funding requirement of approximately $549 million. There is a $223 million funding shortfall! Some of the reasons behind loan rejections include:

  • lack of collateral
  • poor past performance
  • lack of farmer experience.

At YouFarm we recognise the needs of farmers. Some of the requirements for farmers to get loans are ridiculous. Its almost as if theres a hidden hand that does not want farmers in Zimbabwe to succeed.reasons for loan rejections At YouFarm we are throwing all these preconditions out of the window. By thinking outside the box we have created a way to fund farmers without excluding them due to social or economic conditions. There are too many hectares of productive farm land lying fallow in Zimbabwe because the system refuses to recognize the needs of farmers.

Thinking outside the box

The YouFarm Crowd Farming Platform provides collateral free finance for farmers by getting people to invest in crops and livestock and share the profits with the farmer when the produce goes to market. In order to ensure that the farmer succeeds we pair them with experienced agronomists. This removes the need for the farmer to be experienced as we work closely with the farmers in order and educate them so that they become better farmers who reduce waste and increase yields.

We believe that all Zimbabweans should be beneficiaries of the land. By getting people to become cellphone farmers we are giving regular Zimbabweans a chance to  earn money form the land. In the next few months, Zimbabweans will be able to earn real foreign currency when YouFarm opens up investment into export crops. Imagine that, getting a piece of that horticultural export action by simply investing using your mobile phone or laptop!

Next week we will talk about profit sharing and how simple it is for you to become a farmer that does not own any land.

Follow us on Facebook http://www.facebook.com/youfarmzw or on twitter @YouFarmZim. To register as a farmer or investor log onto the website http://www.youfarm.co.zw and fill out the registration forms.

Precision Farming and the Internet of Things.

Last week I spoke about how YouFarm mitigates against some of the risks associated with farming. In Zimbabwe some of the risks include: side marketing by farmers, lack of insurance, market access and lack of access to technology. One of the YouFarm core goals and objectives is to create smarter farms and farmers by introducing technology to Zimbabwe’s commercial and small-scale rural farmers so that we can reduce costs and wastage while we increase yields. The day that a rural farmer in the middle of Uzumba-Maramba-Pfungwe has access to drone technology for farming is a day we look forward to with excitement.

Precision farming

Precision farming can be thought of as anything that makes farming more accurate and controlled. A key component of precision farming is the use of technology like drones and low earth orbit satellites. There are other things like soil moisture probes that can optimise water usage, control systems and autonomous vehicles.

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The Internet of Things (IoT) has the capability to transform the world we live in. I feel that IoT will have the greatest impact in agriculture. With the global population set to reach 9 billion in the near future, the agriculture industry needs to embrace IoT and technology to feed all those people. Not only are we faced with a rising population, but we are also fighting the effects of climate change and land degradation.

Smart farming based on IoT technologies will enable farmers to reduce the amount of inputs used and increase productivity. An example of how YouFarm can do this is by using the data we get from drones or satellites to determine which areas in the field need attention, whether that be more irrigation or less fertilizer. The satellites and drones use Normalized Difference Vegetative Index (NDVI) and Near Infrared sensors (NIR) to monitor crop for changes. This data is then used to improve crop production. This is precision farming.

Falling behind

The world is changing fast and so is agriculture as we know it. If Zimbabwean farmers do not start embracing technology we will become irrelevant. In Zimbabwe we tend to be slow at adopting technologies or reacting to trends. We are reactionary and we need to change that mentality. A good example of not adapting to changes or trends is the over reliance on tobacco farming yet the world is moving towards banning tobacco products. Any farmer with an eye on the future must start looking at alternative crops .

The drive towards creating farms that use less space, less water and chemicals has seen the advent of vertical farms. Simply put one day your vegetables will be grown in a factory or warehouse. We are still a long way from this becoming cost effective but before you know it supermarkets will be growing crops in their basement eliminating the need for fresh produce farmers and at the same time, reducing their carbon foot print as they will eliminate the need to import produce from countries like Zimbabwe. Vegetables grown in these vertical farms can take 16 days from seed to supermarket shelf. Makes you think. This is why YouFarm believes that we have to equip our farmers with technology so that we can produce better crops and remain relevant.

Below is an image of a vertical farm

vertical

Conclusion

IoT and precision farming make it possible to reduce waste, grow better crops and improve yields. There is no reason why rural subsistence farmers or commercial farmers in Zimbabwe should not have access to these technologies. The YouFarm Crowd Farming platform provides our farmers with access to financial and technological inclusion. We also provide a way for people who are investing in crops to remotely monitor their crops and literally watch their money grow. Next week we will look at how The YouFarm Crowd Farming Platform is turning agricultural financing for farmers on its head.

Follow us on Facebook http://www.facebook.com/youfarmzw or on twitter @YouFarmZim. To register as a farmer or investor log onto the website http://www.youfarm.co.zw and fill out the registration forms.

Risk mitigation: Insights into Zimbabwean agriculture

Last week I spoke about participatory agriculture and how the time has come for people to have a say in how their food is grown. I also spoke about becoming a part of the agricultural value chain as investing in agriculture is the smart thing to do. One only has to look at a few key statistics to know that it is a profitable choice in the short, medium and long term. Did you know that:

  • Since 2009, investors in the USA, Europe, Middle East and Asia have been buying and leasing millions of hectares of African land for agricultural purposes.
  • Foreign Direct Investment in African agribusiness was $10 billion in 2010 and is projected to reach $45 billion by 2020? Agriculture is taking a huge leap in Africa and investors want a piece of the action too.
  • Africa’s agribusiness industry will be worth $1 trillion by 2030! That’s huge! If this projection by the United Nations comes true, agribusiness will become the ‘new oil’ in Africa!
  • The YouFarm Crowd Farming Platform allows you to become a part of this “gold rush” by creating the next generation of tech savvy, cellphone farmers who do not require land to be a part of the agricultural value chain.

We are our own worst enemies!

Humans have a tendency of letting themselves down. I would say that its a Zimbabwean thing, but I think all humans look for the path of least resistance. Zimbabwean farmers have a nasty reputation for side marketing. For those who do not know whats side marketing is, its when a farmer decides to sell their produce outside the contractual agreement, after being supplied with inputs to grow the crop. Zimbabwean farmers have also been known to sell inputs and there is a tendency to not use agricultural loans for their intended purposes.

Side marketing breaches any contract that a farmer may have with a company or individual that may have supplied inputs. I believe it is theft and as such the farmers should go to jail. Same goes for sale of inputs. Not only does the sale and misuse of inputs deprive the supplier of their return on investment, it results in reduced yields and profits. I can tell wild stories about the abuse of Command Agriculture inputs but thats not why I’m here. Another thing that Zimbabweans do very well is misuse business loans. An agricultural loan is a business loan. There is a tendency to want to pay bills, school fees and buy cars instead of using the money for what it was intended for.

Having said that, there is an interesting statistic that I came across while I was researching this phenomenon of side marketing and how to combat it. Commercial banks have a 95% loan recovery rate when it comes to agricultural loans that they issue themselves and a 50% loan recovery rate when Government is attached to the loan. This tells me that there is a perception that Government loans do not have to be paid back. Lets face it, you only have to survive for 5 years at the most before government forgives debts as an election promise. This tells me that given the right conditions farmers are willing to do the right thing.

YouFarm employs a range of strategies in order to prevent side marketing. These include working closely with the farmer and educating the farmers about the importance of cash flows and budgeting. To us, the farmer is an important member of our family and more importantly a partner. Where others see farmers as a means to an end we see them as the lifeblood and backbone of the YouFarm Crowd Farming Platform.

Agriculture is a science

Back in the day farmers used to plant seeds and pray for rain. But now we have so many ways to maximize yields. The use of agri chemicals, fertilizers and irrigation are the most commonly used methods. But there is so much more that can be done in order to mitigate the risks associated with agriculture and maximize yields and profits. YouFarm provides farmers with the latest farming technology and access to accurate weather data. One of our company goals is to transfer technology to Zimbabwean farmers. Imagine small-scale farmers having access to satellite technology, accurate weather data and mechanization. Add to that, our expert agronomists. This is a recipe for success and financial inclusion!

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Insurance

Crop insurance is a critical part of any farming project. Unfortunately in Zimbabwe we do not take it seriously enough. At YouFarm we make sure that all crops are insured. We do this to protect the investors money and because it makes good business sense. We insure against force majeur (pests, disease, fire etc) and political risk.

Change of culture

YouFarm has a variety of risk mitigation strategies in place in order to protect the investors money and maximize yields. Through extensive research we have gained some valuable insights as to why farmers behave in a certain way and what may tempt a person to side market. We aim to change the farmers mindset. As I said before, one of our core goals is to transfer technology to African farmers. We believe that any farmer can be successful if they have access to finance, guidance and technology. Next week I shall talk about agricultural finance and how it has held back new farmers in Zimbabwe.

Follow us on Facebook http://www.facebook.com/youfarmzw or on twitter @YouFarmZim. To register as a farmer or investor log onto the website http://www.youfarm.co.zw and fill out the registration forms.