Cost management is vital to mitigate COVID-19 impact on farm profitability
By Gerhard Mukuahima
Standard Bank’s Head of Agribusiness.
The outbreak of COVID-19 across the globe has raised questions and concerns about how the locking down of countries, including Namibia, has created challenges for farmers to achieve the profits they budgeted at the start of the season.
However, there are a number of ways that farmers can look at to continue making profits without compromising on quality of farm produce. Cutting costs without compromising on quality may seem like an oxymoron, however, you can save money by making small adjustments to various aspects on the farm operations, instead of just slashing costs in a single area.
Here are some of the ways one can implement to manage costs:
Pay less for your inputs : While input costs are rising, your ability to secure inputs such as seeds, fertilizer, animal feeds etc. at the cheapest possible rate is a good place to start saving money. Depending on your supplier, what stops you from negotiating an early order programme with your supplier?
Keep track of key usage: Naturally, you don’t want to deprive your soil/crops or animals of key nutrients which could affect your quality and yield, so it’s important that you keep track of utilisation of key nutrients and prioritise their procurement. Saving on these inputs may seem like a small cost, however, depending on the scale of your operation it can make a difference in the numbers by end of the financial period.
Diversification: So you are a specialist maize farmer. You do this really well and you would rather not venture into growing crops you don’t understand. However, by diversifying your rotation, and including new low-cost crops into your mix, you can spend less on maize related expenses. Same could be done livestock farming operation. Introduce new enterprises (particularly short-term based e.g. high-valued cash crop, Poultry, Hydroponics Fodder production etc. in the Farming operation so as to create mixture of income streams.
Postpone major upgrades and purchases: If you have been planning to upgrade portions of infrastructures on the farm, or buy new equipment, perhaps its best to defer such plans or ideas. Unless it forms an essential part of your operation, and has immediate impact on your bottom line. New technologies and products are coming out regularly, which means there’s always something new and trendy for you to try. Not all technologies will work in your operation, and spending money on products and equipment that don’t contribute to you saving money is not worth the investment.
Keep a close eye on pest management costs: Pest management (weeds, insects and disease) can significantly drive up your costs, and in the dry season it’s important to keep a close eye on how much you’re spending on pesticides. Instead of applying/spraying for prevention on a weekly basis, you can reduce to once every two weeks. If you notice that it’s not working and that you’re inviting pests to the site, then you can revert back to your daily spraying. The less you spend on pest control, the easier it will be for you to reduce costs.
There are a number of ways for you to reduce your costs and save towards new equipment or upgrades for the farm. Your knowledge and experience on the farm can allow you to save money in areas that you probably overlook in haste.