On the 10th of May 2019, I was privileged to speak at the Youth and Agriculture Symposium organisation by Indaba Agricultural Policy Research Institute (IAPRI) at Radisson Blu. My presentation was on Farm Financial Management and despite this being a heavy topic, I was only allocated 20 minutes. I tried my best and managed to present 15 slides in 18 minutes.
After my presentation I took on a few questions from the audience and later interacted with these young Agripreneurs. As I continued chatting with them, my mind went back to the night before when I was preparing the presentation. In putting my thoughts together that night, I realised that Agriculture is a dynamic industry that is constantly affected by changes in various ways including changes in Climate, Technology, Marketing, Government policy etc.
Nothing in agriculture remains the same for long. In addition, new products and production techniques are being developed all the time. In my 10 years of agriculture finance plus another four years working for the farmer’s union, I have seen big farmers go bust within a short time due to various reasons chief among them financial management or lack thereof.
I have over these years learnt that successful farming requires knowledge not only of the latest techniques for crops and animals but also of how to operate a successful business. I told these young Agripreneurs that, today’s farmer should be familiar with numerous management functions regardless of the size of their farm business. It doesn’t matter how much knowledge a farmer has so far as production and agronomy is concerned, it is the financial management of the farm business that brings everything together. Defining and monitoring farming activities in financial terms will give the farmer an overview of the entire farm business performance.
Financial Management in farming business is undoubtedly one of the most important farm management functions. Financial Management for farmers should help with the following; · Ensures effective utilization of funds owned or borrowed · Its helps in obtaining sufficient funds at a minimum cost · Helps to generate sufficient profits to finance expansion and modernization of the enterprise and secure stable growth · Ensures safety of funds through creation of reserves, re-investment of profits, etc.
I was quick to emphasize that a farmer doesn’t need a sophisticated financial management system. However, the system should be robust enough to provide accurate and effective to provide financial information on historical costs, yields, input use and production, present financial and expected future costs. It is therefore important that a farmer keeps a good record of all production and financial information. It was very exciting to be part of the symposium because in this group lies the future of agriculture in Zambia.
The young farmers shared their various experiences and challenges ranging from poor market structure, lack of capital, exploitation by big corporates and supermarket chains. This group is committed to ensuring that they succeed in farming. They need everyone’s support.
In my view, the Zambian’s agricultural sector is on a growth trajectory and this growth has been recorded over the last decade. However, this growth will only be achieved if certain pain areas such as poor infrastructure, access to finance for smallholders, market structure, government policy inconsistencies, mechanization challenges, storage infrastructure etc. are addressed. New growth areas such as aquaculture and horticulture have remained untapped due to poor investment despite having abundant resources such as water bodies and arable land. For most smallholder and emergent farmers who form the majority of the Agripreneurs in the group yesterday, the main challenge is the lack of capital to produce inputs which, not only affects quality of seed but also the quantity and quality of fertilizer applied per hectare ultimately affecting their yield potential despite having good climatic conditions and the availability of quality arable land which hugely favour agricultural development for various crops i.e. grains, oil seeds, fruits, cane, tobacco etc. Livestock farmers haven’t been spared as quality of breeding stock remains a challenge as most good stock is beyond their reach as it is very expensive.
My call therefore is for the private sector to partner with government to address these challenges which we having been singing about for decades on now. This will be the only way this industry will grow. In the current form, it will be difficult for financial institutions to support these young emerging farmers. Our focus should be improvement of the value chain through development of infrastructure i.e. road, rail and storage infrastructure, to give comfort to financial institutions. Market linkages should also be enhanced where farmers are supported by the private sector through extension services such as soil testing and guaranteed off-take contracts. THESE GUYS CAN FEED US…
The author is a season banker and comments are his own personal views. Currently working as head of Corporate Agriculture. For any feedback, email him on Edwin.Mulenga@zanaco.co.zm