Farming is both a way of life and making a living. Non-profitable farming activity is not only unsustainable but also an investment in frustration. For a better outcome and breathtaking profit in your farm pursuit this year 2024, there are certain factors you have to put into consideration.
Generally, you have to control the production process to minimize cost and maximize profit, enhance your ability to recognize market opportunities and have your finger on the pulse of emerging innovations and technologies in the industry.
Specifically, there are 7 critical factors you have to put in your toolbox to achieve dramatic results.
Table of Contents
These factors areÂ
High financial leverage:
Financial leverage can be said to be the ability to ensure that the debt level in your farming business is low compared to your equity (total amount owned after debts are paid off). When your debt level is low, it increases your borrowing capacities, enabling you to control more resources.
The economic downturns resulting from events worldwide are causing high inflation affecting the prices of goods, including farm inputs. The cost of fertilizer has been on the rise.
Many farmers are unable to achieve significant results because they fail to plan their cash flow in such a way to give them financial leverage.
Finance is essential to the entire farm management practice. While it is good to have access to loans to meet up with the financial outlay of the farming business, the debt level mustn’t eat up your equity. You must also ensure you are operating your farm at its optimal size and capacity to fully utilize the available funds and resources.
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The optimal size of the farming business
The optimal size of your farming business is the size at which you can utilize labor and machinery extra capacities, thereby reducing the running cost and ensuring more efficiencies. Operating below optimal level may make you spend more on machinery and labor per crop.
You must identify the size at which your farm operates in the most cost-efficient way to increase your net income. When operating at your optimal level, you spread the costs of using new technologies to more output units and apply them to other resource base.
Nevertheless, when thinking of increasing the size of your farm, you have to check your management ability, attitude towards risk and resource availability. These involve a lot of research and while you are at it, be on the lookout for market trends.
Improved market knowledge
Up-to-date knowledge of the market and trends is another critical factor for a wonderful farming result. It will guide you on what types of crops to grow based on market needs and demands. Imagine putting all your resources into growing produce only to realize there is no market for it. Terrible, you’d say? You can avoid that if you keep your eyes on the details of market information and analysis. The insights from timely market information will give you the privilege of making informed decisions about the sale and delivery of your products in a profitable way. After studying the market trends and knowing the market needs and demands, you need to look at what you can grow or produce well to give high yields.
Improved yields:
If you are into crop production, you should adopt improved seeds and high-yield genetically modified crops that are resistant to weather shock while considering your unique soil type.
A proper plan around factors such as time of operation, the use of seeds, and the use of pesticides will help in increasing the crop yield.
This same logic can be applied to other agricultural value chains. The key thing here is to know what you can produce well, be it a particular specie of livestock or fish, to give high yields based on the market information and analysis.
Integration into Agricultural Value Chain:Â
A value chain is a wide range of activities involved in creating a product or service. The Agricultural value chain involves actors and actions that add value to agricultural produce while linking the producers to markets.
With the growth in international supermarket chains, two major chains have emerged in the agricultural sector: the traditional or informal and the formal. The common players in the informal chain are the local middlemen and the local stores.
The markets are characterized by low-quality products and low returns for farmers. You have to integrate into the modern and formal value chain through quality products and network with commercial wholesalers and exporters to make a breathtaking profit.
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Integrated Farming System:
One other factor that can shore up your profit margin and give you wonderful results is to reduce your production costs and farm input requirements through an integrated farming system (IFS).
IFS integrates crops and livestock production or fish and livestock production principles to create a sustainable farming system and preserve environmental quality.
Costs are reduced in an integrated farming system while improving production and income by utilizing the waste in one component as input for another part of the farming system.
IFS enables you to preserve natural resources, including soil, air, and water, while fulfilling your financial needs. An integrated farming system can generate income for you around the year if properly planned.
Get Smart with the use of ICT and Modern Technologies:
Information communication technology has been an enabler across different industries. It is currently combined with other modern technologies to create smart agriculture, opening a new vista of opportunities in farming and agribusiness.
It is a leveler with which you can bring the other critical factors mentioned so far together for dramatic results in your farm pursuit.
You can use ICT to access weather information and enhance water and land management. The choice of fertilizer and pesticide is also an important area of ICT, and modern technologies can be very helpful.
The use of ICT is critical to increasing productivity and income. ICT can also bridge the gap in accessing credit facilities and increasing your bargaining power by providing information on prices in different markets.
If you desire to transform your agricultural enterprise into a high profit-making venture this year, these critical factors will give you an ace up your sleeves. Implementing them will get you ahead of the curve with above-average innovative performance in your farm pursuits.