Many times farmers have found themselves pondering on whether their agribusiness enterprise is worth the time and money invested or just a safer way to recycle their cash far away from the banks.
Some have stuck with an agricultural idea not because they are making profits, but either because they are always making something from it or the fear of trying out something different is just overwhelming.
This confusion is confounded further by the fact that their immediate neighbours or friends in the same enterprise seem to be getting better returns or are believed to break-even at least.
Many farmers cannot explicitly list the inputs and the associated costs that they have used in production.
The inability to recall or record what went where or how much was spent on which input or production operation is usually the beginning of the nightmares that most farmers go through.
Simple record-keeping provides the solution to most of the problems that farmers face during production.
Keeping farm records is the backbone of managing the farm business or any farm enterprise. Efficient management of a farming operation today requires that records be maintained to enable the farmers make informed decisions affecting the profitability of their farms.
Keeping records broadly refers to filing, categorising and maintaining agricultural production and financial records. As earlier stated above, recordkeeping need not be a complicated task, if you know what to file.
Record-keeping can be accomplished through a variety of methods ranging from a basic hand recording for small-scale producers to a more detailed computerised style.
One important aspect of farm record-keeping and that goes hand-in-hand with record-keeping is record analysis.
It refers to evaluating farm records to enable the farmer to make informed decisions based on farm performance (actual or projected).
There are two important types of records—financial and production. Financial records concern mainly money or the financial dealings of the farm.
These records justify or prove farm income or expenditures. Product sales, operating expenses, equipment purchases, accounts payable, accounts receivable, inventories, depreciation records, and price information all fall into financial records category.
On the other hand, production records refer to quantities of inputs (seeds, fertilisers, pesticides and the cost of artificial services).
Production records include things such as crop yields, plant populations, calves born, litres of milk produced, weaning weights and death loss.
Production records could also capture important aspects such as how many animals you have, their health history, what you are feeding them and how much/how often, what vegetable varieties you have and how they perform.
Moreover, valuable farm information such as how many animals you have, their health history, what you are feeding them and how much/how often, what vegetable varieties you have and how they perform, should also be captured in production records.
Keeping and analysing accurate production records are important and essential aspects of farm management.
Both production and financial records are critical to the efficient management of a farm business. When such information is accurately maintained and categorised, it can be used to produce useful decisions.
These records come handy in getting a full picture of how your farm is functioning or performing. Most of the time, farmers may get the impression that they are generating positive income on their farms, but they are actually struggling with an aspect of crop protection that requires adjustment.
Generally, farm record system should be affordable to the farmer, provide accurate and necessary information, readily available for fast and efficient decision-making.
The farmer or the person responsible for keeping the records should develop a habit of regularly and accurately posting transactions.
The simplest systems of record-keeping involve recording by hand all the sales and purchase activities as they occur. The records should show:
The dates and short descriptions of the transactions are listed first, followed by the monetary value of each transaction either as income or expenditure.
Decision-making can be enhanced significantly by examining both production and financial records and their impact on profitability.
The income and expense records can quickly show how the farm business stands on a cash basis, in a week, month or during any period desired.
The difference in the income and expense totals will reflect the farm cash balance at that particular point. Good records can lead to better decisions and hopefully higher returns.
Keeping and analysing farm financial records are essential to the efficient management of a farm business. The selected record-keeping system notwithstanding, effort should be made to make the entries regularly.
Ochola is based at Department of Crops, Horticulture, and Soils, Egerton University.
