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.
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:
- 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.
- 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.
- 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.
- Farm records tell a farmer how much is being earned.
- Farm records tell a farmer where they are gaining progressively or loosing.
- 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.
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