Rethink farm management amidst COVID-19
At the time of writing the article we were well into the lockdown caused by the COVID-19 pandemic. When the lockdown will end is anyone’s guess. Perhaps by the time you read this article the lockdown will be a thing of the past, but the virus will still be with us according to the experts. Whatever the case, this article will still be relevant.
However, challenges regarding the management of farm businesses, especially our smaller farm businesses, are already identifiable and will need to be addressed sooner or later to maintain a successful business. And we must realise that the normal life we were used to before the lockdown will never be the same or normal again after the lockdown.
WHAT CHALLENGES CAN BE IDENTIFIED?
The one causing the greater challenge at the moment, is that of cashflow. Some farmers faced difficulties regarding the marketing of their products, and this affected their income. This caused concerns regarding payment of expenses such as wages, electricity, and others. Farmers with perhaps too much debt are also experiencing more cashflow problems than others. One must realise that going forward, whether still in lockdown or thereafter, you must manage your cashflow and debt very thoroughly to succeed with your business.
A certain way to address income-flow is to diversify your business. Instead of producing one or two enterprises with an income once or twice a year, diversify into other enterprises to spread your income. If one product fails, you can at least rely on an income from another product. Please remember to diversify does not mean you must necessarily diversify into more enterprises. You could perhaps diversify into a totally different business. Think out of the box. Consider your talents and those within your family and your resources. What about agri-tourism?
If you have faced challenges with the marketing of your product/s during this time, perhaps you should reconsider your marketing strategy. A definite drive for more products, such as vegetables, fruit, meat, and milk to be marketed directly from producer to consumer is developing. Requests for supply for products direct from farmers to consumers appear daily on Facebook. A report in a recent Landbouweekblad indicates that there are some 150 000 spaza shops in South Africa and there is a drive to assist the owners with technology to manage their shops properly, especially their stock, and many have indicated they will be interested in selling fruit and vegetables. There are other opportunities for marketing available, you must just go and find them.
As far as production is concerned perhaps you should consider your production methods. Are you on your way to applying conservation farming methods or are you still stuck to the old ways of soil tillage? Conservation farming is aimed at producing field crops while minimising soil disturbance, maintaining soil fertility and retaining soil moisture. Minimum soil disturbance, keeping the soil covered (cover crops), mixing and rotating crops, and adding a livestock component have been proven to work efficiently. Due to retaining moisture farmers who apply these methods have found to have good production even in periods of droughts. Due to minimum tillage costs are reduced and production increased. And, by adding a livestock component you are also diversifying your farm. Consumers are also becoming very conscience of eco-friendly farming methods to produce healthy products and are commanding traceability.
Diversify your business to reduce risks.
Another effect of the lockdown is that people are now much more aware of the health and safety at the workplace. Expect this to continue after the lockdown and expect more inspections from the Department of Labour. Thus, be prepared for it.
We want to emphasise that the successful management of your business relies on a thorough physical planning for each year culminating in a proper budget. The budget then being the financial expression of your plans and must include a cashflow budget. Then manage your business according to your plan and budget. As far as the management of your cashflow budget is concerned, be very careful of spontaneous purchases especially purchases on credit. If you are uncertain how to plan and budget properly, get assistance and remember if you do not measure you cannot manage properly. Improve your record-keeping, it is of the utmost importance.
Thus, take note that you will not be able to carry on as you have always done to be a successful farmer. A successful farmer is someone who makes a sustainable profit for many years. The challenge of the COVID-19 pandemic and the lockdown time is to re-think the management of your business in total – production and production methods, marketing, utilisation of resources, health and safety, management of your finances, and record-keeping. The demand for food is on the increase and the pandemic has highlighted food security, thus there are opportunities.
Be compassionate about your business, re-think your business and be prepared for the next disaster, or...!
Publication: September 2020