There is little evidence that they treat farming as a business. Most of them do not keep records of what they spend, what they realise from the sale of crops, neither can they tell if they are making profits or not. Most farmers continue to mix their personal income with that from the farm. It therefore, becomes difficult to demarcate between personal and farm funds.
Most farmers have failed to secure loans from the bank because they do not have any accounts to show developments on the farm, let alone audited accounts. They do not have registered companies to run the farm. In case you didn’t know, it doesn’t cost much to register a company. Most bank managers are guided by the track record of what is happening on the farm and in its absence, they are not able to determine whether business is viable or not.
Bank managers always stress that their decisions are mainly based on the viability of a project, rather than whether one is able to produce title deeds. Actually, bank managers request for title deeds to test how serious a farmer is with his/her project proposal.
If you have been doing well with a project, knowing you can achieve the yield and grade and make money, why should you hesitate to give the bankers your title deeds if you have them? Bankers are not monsters, if you fail to deliver due to genuine reasons, they will give you a second or even third chance. They will only sell your house, among other options, as a very last resort. They are also willing to consider contract scheme arrangements as a guarantee.
Farmers should repay loansA lot of farmers have also got into the habit of not paying back loans. Surely, if farming is a business, you should pay back your loan, so that tomorrow you can get more money from the bank or fertiliser company.
Banks have always argued that they hold depositors’ money, even if the money is deposited under some long-term arrangement — one day, the owner will demand his/her money, and if you haven’t paid back, where do you expect the bank to get the money from?
Today many banks simply avoid giving money to new farmers because, due to a few bad apples, farmers are now generally regarded as a group of people who think they can get money and not pay it back.
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One wonders why farmers want to rush to buy a new Range River Sports with money that does not belong to them — simply because a friend owns one. There are a few exceptions of farmers who have established good working relations with banks and their operations show they are doing well. For this group of people, banks will continue to loan to them.
Most farmers will do with a bit of training on what systems to put in place on the farms. it is important to have a records of the fertiliser, diesel etc, in stock and there should be systems in place for workers drawing down these resources.
As a farmer, one should be able to determine how much diesel is required to plough a hectare, how much fertiliser is required per hectare etc.if you don’t know, your workers will recognise it and steal from you. Even if you work in town, have a plan to visit your farm on a regular basis, and don’t make these visits announced every time. A bit of surprise might discover one or two amiss things.
Farming is indeed a business and all farmers should consider treating it so.
