Robert Likhang FCIS, ACMA, CGMA, CA(L) – Principal at RL Consulting – Chartered Accountants, a boutique Business & Finance firm helping indigenous commercial farmers to succeed.
PASSION NOT ENOUGH
Agriculture has been a source of food and exchange of services over the year. We used cattle for buying and selling goods and services, including use for bridal price, as well as for purpose of meeting many of our cultural obligations. Agriculture was a means and not an end in itself. The attitudinal framework that existed then made many ‘would be’ farmers merely remain at subsistence stage, because profit had never been the motive.
Many of the people involved in farming today, still take farming as a hobby and passion, and we still have very few farmers out there to draw millions out of and improve our economy. By the look of it, farming has a potential to boost our economy to greater heights, and offer jobs for many of our citizens stranded with below poverty levels (Bohoefe). Our land is sufficient to provide us organic outputs which would provide us with food and health, thus curb the increasing cancer pandemic and poverty. We can start producing enough to export and receive the much needed foreign exchange. Only when we change our attitude from just doing farming for Passion to doing it for Profit.
I blame governments for allocating so much public funds each year towards agriculture and we still are not able to get any meaningful results. In some cases budgetary allocations for agriculture are used for political rather than economic gain. Government should not keep pumping money into crops or agricultural produce with a low economic yield. Some crops without mentioning types only have yield when poisoned with dangerous chemicals that are not good for the environment and our health.
The Ministry of agriculture should begin to allocate funds based on economic yield, that is economic value per acre, and that is despite whether a product is a staple food or not. If need be the policy should influence change in staple food. We cannot leave it to the farmer to use our funds (national budget) the way he wants even if that is not an efficient use of our highly limited and depleting financial resources.
Policy change is needed in our legislation, as there are some proclamations that make export and imports of animals very difficult. We need to restrict certain products in our country for as long as they are not health hazards free. The use of land especially huge sites (residential or commercial) that are owned by households, churches, chiefs and never cultivated is a waste, and a contributor to the poverty we face each day. We perhaps need to introduce unused land tax. An average Mosotho does not need 30 x 40 residential land, and any excess should attract land tax, and this will force owners of such land to cultivate the land so that they have produce to sell and pay taxes. We cannot shout Poverty! Poverty! with so much land unused. I think the Ministry should enhance gardening programmes so that households can start producing the organic food they need and sell the excess.
I need to thank Government for the marketing centres although they are not enough. The Northern region is growing very fast and is becoming an economic unit on its own, which will need a Market Centre too, to avoid the cost of moving to Maseru, which can be prohibitive on its own. The Maseruistic attitude will increase costs to other farmers in otherwise very rich farming places like the North. I think we need a Market Centre in Maputsoe to cater for rich farmlands of Leribe (Likhakeng, Hleoheng, Peka, Matsekheng areas).
Funding is still a challenge. I think we need to bring back an agriculturally focused development finance institution. For as long as we use commercial banks for agriculture, and for as long as we expect commercial insurance companies to assist in agriculture, we will get what we have always been getting, Nothing!. If Agriculture is indeed as high as politicians would want us to believe, then structures must be in place quickly.
PROFIT MIND CHANGE
Farmers should begin to take their farming as a business. Let me start first with ownership. Businesses are moving away from just sole traders to companies. There are not only benefits of taxation, but the good governance is able to be implemented. The boards can be formed which will bring in different skills sets, and the profit orientation. We need to stop with days where one person cultivates many fields and runs the business like running a household. We can be able to bring in new powerful collaborations where some come with land and obtains shares for the land, others with equipment, others with farming skills, business skills, finance skills etc and others with financial capital.
It is good corporate governance that businesses should have strategic direction and control. The direction is normally reflected in the strategic plan. It is therefore mandatory that a business including farming business should develop strategic plan and live by it. We need business advisors to assist us to develop such tools. For strategic control, businesses need policies, risk frameworks, effective internal control systems etc. Businesses that do not possess and use this tools will never grow to be meaningful businesses.
Getting back to the issue of Passion discussed in the introductory paragraph above, we cannot plant a product merely because we have a passion for it. If maize will not give us the economic yield but rather apples, grapes can, the if profit is the matter let us go for the latter. If sheep are better than cattle, then why keep a cow. When a business chooses to produce one product, it automatically chooses not to produce another, that is called Strategy. We cannot produce everything, but we can produce what we can make the most money out of, so that we can buy other products where other farmers or countries can produce better and more effectively.
I want to end this article with the truth of every business which is people are the most important resources. Farmers need to develop a win-win attitude when it comes to farm workers. They are a nuisance to your business but rather they are a capital to enrich your business (human capital). Farmers need to spend time and money investing on farm workers in terms of training and relationship building. The other group of people that are important are the consumers. If you kill consumers buy putting in health and environmentally disastrous chemicals, will your business see another decade? The short-term view of ‘all profits today’ is not sustainable and dangerous. We need to take care of the people we feed and the people who feed us.