Principles to consider when venturing into farming
By Hanks Saisai |
A new year brings fresh opportunities for growth, learning and positive change. A hope many aspiring agripreneurs carry with them into the new year.
Many will venture into farming in the hope that this new journey can be a lifechanging experience that enables them to envision a better future, as farming is an undertaking that allows one to be self-employed, produce food and generate an income.
However, it is unfortunate that many farmers (aspiring and seasoned) often commit vital mistakes that hinder them from attaining their farming enterprise goals. To this end, there are several crucial errors that beginners or emerging farmers should avoid when establishing a farming business.
The first error made when venturing into farming, is usually building a mansion at the farm. that elaborate farmhouse first. As a beginner, your focus should be on establishing solid business foundations, not on a fancy home. Initial investments should be made towards crucial infrastructure such as kraals, water (borehole, reservoirs, troughs, etc.), and storage facilities.
Investing in infrastructure makes farming easier and directly impacts the output of your farming business. Over time, these assets can contribute to profits that can be used to build you that decent farmhouse.
The second mistake is committed by very ambitious upcoming farmers who often start their farming business at a large scale with no experience.
As the old saying goes “only the grave starts from the top going down”, therefore, it is worth noting that just like everything else, farming begins at a small scale.
Starting small should not be seen as a weakness, but rather as a strategy that allows a farmer to make few mistakes and learn from them without making huge financial losses.
At the end of each production cycle, a farmer is accorded an opportunity to assess how the performance of the farming business. This will ensure that a farmer can adjust his/her production cycle and then with experience expansion can be done without making serious financial losses.
A common challenge that many farming enterprises face is venturing into production without a clear target market. It is always safer to produce for a specific market than to market produce. This can be linked to starting small as it allows real customers to guide a farmer’s production in terms of quantities, quality and how often to produce the desired products.
Once focus is directed on producing for the market, first hand feedback can be obtained on what varieties (crops) and breeds (livestock) are in demand, their prices per kg and the form in which they need to be delivered to the market.
Additionally, when focus is place on producing for a specific market, a farmer gains insight on products in demand and participating producers. This offers farmers insight to develop a niche market with limited competition.
Many aspiring farmers often make the mistake of basing their operations on untested assumptions. This can result in a significant budget commitment to use untested information, leading to low output that can negatively impact the profitability of any enterprise.
Again, starting small allows a farmer to build experience, test, verify and adjust untested assumptions. Another challenge that both new and seasoned farmers face is hiring personnel who may lack the necessary experience or qualifications to manage substantial investments.
It’s essential to entrust your valuable resources to individuals who possess the right expertise, as doing so can significantly enhance returns and overall success. Moreover, it’s wise to consider hiring individuals who can be easily transitioned out if they do not meet performance expectations.
If you view your farming operation as a business, it is advisable to hire competent and qualified individuals. Institutions such as the National Youth Service’s Rietfontein Centre and Vocational Training Centres across the country offer trained graduates who can be hired to ensure that production is mastered.
In so doing, farmers become employment creators whilst protecting their business investments.
Finally, farming is not a get-rich-quick scheme; therefore, farmers need to understand that they are trading in a venture that requires patience, and it must be broken down into milestones over specified timeframes. The primary focus is to break even, secure a market, and align production with market demands.
Additionally, from each production cycle, investments in improving infrastructure should be made using about 35% to 50% of the revenue generated by the previous products sold. Typically, it takes about two years of consistent effort for a farmer to start seeing actual returns on investment after breaking even. You must be willing to play the long game.
In conclusion, embarking on a farming journey demands careful planning and strategic decision-making for aspiring agripreneurs. Key principles include prioritizing essential infrastructure over lavish amenities, starting small to minimize risks, and targeting a specific market to enhance profitability.
Farmers should base their operations on tested information and hire qualified personnel to maximize success.
Additionally, it’s crucial to view farming as a long-term investment, focusing on gradual growth and reinvesting a portion of revenues to improve operations. All while running it as a business with an effective record-keeping system and disciplined financial management, separating business funds from personal expenditure.
– Mr Hanks Saisai is the Technical Advisor on Crops and Poultry at the Agricultural Bank of Namibia.
