Access to markets and information, fair participation, retaining and repositioning into sustainable markets are some of the critical concerns that this division aims to address. The focus is skewed towards the identification of market opportunities and risks through research, packaging and dissemination of such information through appropriate channels. While the research conducted focuses on traditional markets, there is also research conducted for niche and differentiated products and industries that need to be developed and exploited. Facilitation of market access to ensure uptake of identified opportunities at both local and international markets is also one of the services provided. This component also aims to improve the bargaining power of farmers, sharing of expertise and collective pulling of resources through facilitation of co-operative development. The division also promotes agribusiness support through value-adding, provision of advisory services to unlock opportunities provided by AgriBEE Charter, facilitation of partnerships and acquisition of funding for increased investment in the sector.
With the change of the nature of competitiveness from land labour and capital to information and knowledge, the root of global agricultural competitiveness is embodied in farming systems and farm management practices. This division researches and analyses the relative competitiveness of local farming systems and management practices in relation to international best practice. Due emphasis is also placed on resource issues with prominence given to alternative and sustainable uses of scarce natural resources. The results of these actions are wrapped in advice packages and disseminated to the whole spectrum of clients.
Managing your farming enterprise
Farming is a business. Like any business, every farming enterprise must be managed.
Farming management can be subdivided into:
- Production management
- Financial management
- Marketing management
- Credit management
Production management means producing the correct amount of the correct product correctly at the lowest possible cost.
Why would you say that some farmers in your area are more successful than you are?
Why do some farmers survive difficulties like crop failures, while the same difficulties force others to give up?
The reason is simple. Some farmers manage their farms better than others do.
Some of the decisions the farmer has to take are:
- How much must I plant?
- What kind of stock must I keep and how many animals?
- What methods must I follow to farm correctly?
- Where and when must I buy seed, fertilizer, etc?
- Where and when must I sell my products?
The financial management of a farming enterprise is just as important as the production management. You cannot farm profitably unless you keep record of your expenditure and your income.
Without records a farming enterprise is like a car without a steering wheel.
Are you making a profit or are you farming at a loss?
If you are making a profit you must decide what to do with the money.
- Should you save it all?
- Should you save some and plough the remainder back into your farming enterprise, thus expanding it?
- Should you save some, plough some back and retain enough money to buy fertilizer for your next crop or for better breeding animals?
- How much should you pay yourself?
If you are farming at a loss, you have to know:
- Why are you farming at a loss?
- What can you do to prevent it?
Answers to all these questions cannot be obtained without record keeping - that is to say financial management.
How do you keep records?
You have to record your income and expenditure every month. If the expenditure exceeds the income, you are farming at a loss. If your expenditure is less than your income, you are making a profit.
It is only at the end of the production season that a true picture can be obtained of whether the enterprise was run at a profit or a loss. You may, for example, have had great expenses in April, while the crop was not harvested until July to give you an income. You cannot see whether you have farmed at a profit or a loss until you have compared all your expenses and income over a whole production season.
Before you can know whether your enterprise has been conducted at a profit or a loss, you must first market your products.
The following questions are important:
- When must you market your products?
- Where must you market them?
- How much should you charge for them?
It is sometimes difficult for a farmer to make these decisions. He must keep record of all the expenditure, that is, for example, what it cost him to plant potatoes or care for stock up to the date of sale. The income from his potatoes or stock must exceed his expenditure, otherwise he has been farming at a loss. This emphasizes the importance of keeping record of all your income and expenditure. The extension officer in your area will be glad to help you.
The most economical way for a farmer to buy seed, fertilizer and sprays, or animals, is to pay cash for them.
If you do not have enough cash available, you can apply to government agents for a short-term production loan. This loan must be repaid at the end of the production season. In addition, interest must be paid at 14 % (that is R14 for every R100 that has been borrowed).
When your harvest has been sold, you must:
- FIRSTLY, repay your loan.
- SECONDLY, take your wages for the work you have done so that you will have enough to live on.
- THIRDLY, you must save the rest so that you will again be able to buy seed, fertilizer and sprays for the next crop to be planted, or to improve the quality of your animals.
You must always try to borrow as little money as possible, because the interest is a costly outlay.
If, for example, you want to buy a tractor, you can apply to the Land Bank for a medium-term loan that must be repaid in annual installments.
With credit management it is essential that the farmer should obtain the right kind of financing for the intended purpose.
JL Stander & EB de Villiers
ELSENBURG / Agricultural economics
Agri-processing is emerging as an important sub-sector with the potential to spur economic growth and create jobs. The Agro-Processing Support sub-program enables agricultural producers to enter into the value-adding activities related to the processing and marketing of new products. The aims of this sub-programme are to facilitate the production of new products, create and expand marketing opportunities and thereby increase producers’ incomes. The role of the sub-programme is to create an enabling environment for the development of the agri-processing capacity in the Western Cape in order to create a vibrant rural economy. The Sub-programme, through the Agrihub located at Elsenburg, provides support on a broad range of services, including but not limited to, the following:
- Encouraging downstream beneficiation of agricultural products through new product development and existing product improvement;
- Compliance support with regards to food safety and quality;
- Product analysis and testing;
- Technical advice on procurement of agro-processing equipment;
- Facilitate agro-processing funding related applications
- Capacity building on various agro-processing initiatives
In order to monitor trends and to make good decisions at all levels of responsibility (both within and out of the Department) good and reliable “data” or statistics is necessary. It is unfortunate that for various reasons the consistency of the agricultural economics database currently needs to be addressed as spurious claims are often made regarding various important agricultural issues. It follows that it is necessary to develop a comprehensive agricultural economics database in order to monitor certain actual trends in the agricultural sector.
Trends and data are not enough to ensure sound decisions, but it is needed to distill the truly crucial variables and to evaluate the impact of these on the agricultural economy of the Western Cape. As mathematical and/or computerised models are a representation of reality, reality can be “changed” under controlled conditions in order to evaluate the impact of a specific variable. However, models are only a representation and simplification of reality. It follows that various angles on the same problem need to be developed. The purpose of this division is to develop the necessary mathematical frameworks and to evaluate the impact of various local and international environmental and policy measures on the economy of the Province.