Bennie van Zyl, general manager of TLU SA
Of course, it is great when the grain falls into the harvester machine’s bin and you reach new record levels of tons. However, the question is, what did it cost to get to this point?
Agricultural success is measured in economic results. It is the last line of the balance sheet that determines whether you will get another chance next season. For sustainable farming, you need to make a profit.
It is however important to realise that a process must be followed to get to that last line, and that several expert choices can have an influence on your success. We always speak of the qualities a farmer needs to be successful. Of these qualities, the most important one is their mindset: Do they have the necessary drive for urgency; do they accept responsibility for everything that happens on the farm; do they have a hunger for knowledge to ensure that they have the best and latest information for their specific purposes; and do they work hard?
In addition to the farmer’s mindset, it is important being a specialist in the commodity they farm with, and that they have knowledge of mechanics, all things electric, plumbing, fitting and turning, welding, fencing, labour issues, and so on.
Then there are several external factors that can continually have an influence on the farm, some of which are not in the farmer’s control. Security in our country and especially on farms is critically important, and it needs continuous input and planning from the farmer to meet the challenge. It is not only about attacks on farms, but also theft of products, infrastructure and implements. Agricultural financing was set back severely because of the way in which the Land Bank was managed, which was the result of government policy where people were appointed to important posts on grounds of race instead of expertise. The prospect of expropriation without compensation certainly does not stimulate investment. Add to that extremely unfavourable labour conditions that are being forced on farmers by law, and the package gets too much for any farmer. And lastly, extreme climate circumstances have a negative influence on farming. Despite all these issues, the farmers are still there, performing extraordinarily in our country where, compared to other countries, we are seen as a marginal country where agriculture is concerned.
This brings us back to the question, are we farming for profit or yield? A yield is obviously essential, but the question that goes with it, is: at what cost? For example, tonnage can be pursued with the cultivation of maize, and fertilization can help. But somewhere there is a point where you must break even where the cost of fertilization does not measure up with the difference between the cost of production and yield. Simply put, profit is the difference between production costs and the yield that is turned into money. Without profit, any business is doomed. This is of course something that farmers should consider when they farm with more than one commodity. It can easily happen that one commodity carries a possibly non-profitable commodity in the bigger totality by means of cross-subsidisation. Each commodity should be calculated on its own.
It is essential to continually evaluate the profitability of each farm – when you clear a profit, you will get another chance next year. It is important to plan in good years for less profitable years and to budget for difficult circumstances. Planning for sustainability starts with profitability.
