Promoting the prudent use of capital in your farming enterprise

I’m sure you have also seen someone win the lottery, only to lose it all again, sometimes ending up in worse shape than they were before winning. This is mostly due to them not knowing what they want or not having any goals. It is important to remember that the prudent use of capital in your business account will determine the growth and sustainability of the farming enterprise. Don’t get me wrong, cash flow is very important and should not be messed with, but additional capital available can be used to capitalise on some opportunities for growth that are sustainable. There are a few factors to consider working on to promote the growth and sustainability of your own so-called lottery (capital).

“The rich focus on their asset columns while everyone else focuses on their income statements. Buying or building assets that deliver cash flow is putting your money to work for you.”

Robert Kiyosaki

Forage

Planning and investing in fodder flow have always been important. These days, it is not only the winter we have to worry about, but also the drought that extends thereafter, with heavy storms following the drought posing an increasing risk to growing crops. Poor planning may result in outsourcing your fodder supply, which substantially, and unexpectedly, increases the feed bill and may even result in forced culling to balance the budget.

Investing in good genetics

Knowing what you want in your end-product in terms of composition and how much you would like to produce may give you an indication of the breed or breeds you might want to include in your herd. Another indicator could be the climatic conditions of where your farm is located. Therefore, invest your capital in breed(s) and genetics that will help you attain your desired production efficiency and longevity.

Infrastructure

The amount of impact that a simple shade cover will have over your animals is so remarkable – it influences feed intake, efficiency of feed utilisation, and general health, mostly due to heat stress. Your feed bill may contribute approximately 60% of the operating costs of the farming enterprise, and a reduction there as well as on your treatment cost will certainly speak well to your pocket.

Technology

Technology is meant to improve and simplify production and improve efficiency, but if you don’t have good management systems in place already, then adding technology may complicate your system and lead to more errors. For example, you need to start with having the desire to weigh cattle for a good reason, and then invest in a scale, or start by knowing your statistics on fertility and manage them well before adding in synchronisation and hormone treatments and sexed semen.

Labour skills and motivation

On-farm employees spend the majority of their time with or near the cows, as well as handling farm equipment and animal feed. Their animal handling, feed mixing, trough cleaning, and equipment maintenance skills depend on their skill set, motivation, and level of understanding of the farming operation and the role they play in it. Investing in upskilling and motivating farm labourers will have a long-term, sustainable effect on the efficiency and growth potential of the farm.

Understanding the market

Seasonal changes, holidays, and local events all affect the demand for products. Understanding your local market conditions can help you position your operation to supply when demand is high, but supply is low. Not only will this help you avoid the slumps and ride the high price points, it will also create strong relationships with processors and retailers.

Conclusion

See your growing capital as more than simply a lump sum in a banking account somewhere. Rather view it as your growth potential, wisely invested and strategically implemented with cashflow in mind in order to reap better returns for the business and to ensure long-term growth and sustainability.

3 thoughts on “Promoting the prudent use of capital in your farming enterprise

  1. Teboho says:

    I find this information above very vital since i am still a baby in farming.it really inspired me i hope if i can use it and do more consaltations i will develop.

  2. Cleopas Lephallo says:

    Thank you very much ntate Teboho. We would be more than happy to assist in the best way that we can. Please don’t hesitate to make contact

  3. Teboho says:

    This information is very vital especially to me as a small farmer. I hope it will take us to the next level on farming.

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