Home » Business » Risk Management At Farm Level [opinion]

There are a lot of things that go wrong in our day to day running of agricultural enterprises and farming is synonymous with a lot of mishaps. This phenomenon is described by a very short and precise word – risk. Risk is the probability of an unlikely event or condition, which if it occurs has a positive or negative effect on an objective. For example crop losses due to hail storm, fire gutting tobacco barns and the possibility of a farm truck laden with produce being involved in an accident.

Risk brings a lot of uncertainties to Farmers and hence, farmers need to pay attention to detail and adhere to management practices that reduces such.

Risk management requires a farmer to know their operation and what it requires to be a success.

In the process, the farmer should eliminate possibilities of losses due to unforeseen circumstances and hiccups that can, otherwise, be controlled and or avoided by good planning, management and control.

From time to time a farmer should sit and list all possible problems that might occur, evaluate them, and counter them by putting in place, a safety net (contingency plan) for all the items on the list. It needs careful planning and informed decision making on a step by step guide basis.

A good farmer needs a true understanding of management to be successful. It does not just take a technocrat to be an achiever, but the farmer also needs to be a master of their trade.

It is one of the least attributes considered as long as there is someone who knows how to do what needs to be done on a farm to get yields.

There is a high misconception of farming and managing a farm and farmers do not realise the risk they are taking when venturing into farming.

Having explored the risk management factor in most farming operations extensively, there is need to highlight the essence of risk management, especially at farm level.

It is not a function for top management and big consultants only – it is a basic requirement for all farmers from all walks of life.

Aantages of risk management

It represents an opportunity to substitute a known cost (annual premiums) for unpredictable and irregular yield losses. You can transfer a portion of your yield risk. It represents an opportunity to substitute a known cost (annual premiums) for unpredictable and irregular yield losses. You can transfer a portion of your yield risk.

It may provide the financial liquidity needed to remain in farming for another year in the event of significant crop yield loss.

Insurance provides peace of mind. It presents risk transfer mechanisms where possible losses are controlled or avoided.

It improves the general planning of all current and future activities on the farm.

It enhances production and hence the maximisation of profitability on your farm.

Transport and communication nightmares are kept in the loop of the scope of the farm as a business.

It keeps you as a farmer ahead of the prevailing and available markets and prices for your products.

Products available and relevant for farm insurance

Motor Insurance – covering private and commercial vehicles, motorcycles, tractors, combine harvesters and any other motorized equipment on the farm

Farmers combined policy – covering all farm buildings, farming machinery, irrigation equipment, crops, poultry, cattle and other livestock.

Just to produce a good harvest with correct shape, type, colour, texture, structure and quality, it takes a good production plan. It is a heavy risk as it stands if not done well.

Are your inputs in place and on time (seeds, chemicals, and fertilizers – etc?

In every crop or stock, you must check if you have alternative products in case you run short of something along the season.

What is the value of your crop, herd or enterprise in cash terms- you may want to think of insurance for high crops like tobacco and flowers, your high value pedigree bulls and your equipment and machinery where necessary.

Your manager should be able to monitor all the day to day farming operations and make sure they are done well to avoid unnecessary losses.

That makes production a major risk in farming set up. It is surely by finding solutions to these possible problems that reduces your fear factor in the production game and this reduces our risk at the farm.

Goods in transit

Transportation of inputs, labour and produce to markets needs attention because timing is the key word.

You have to be on time every time. The business community has become a global village where information moves at great speed and that speed keeps business going.

You cannot afford to be in a slow lane. Transporting of produce, especially fresh produce is very demanding due to the need to keep your produce refrigerated. You also need personal accident cover for directors and employees.

General and product liabilities

Communication is a very vital commodity in any farming enterprise across the farming world. It keeps you informed and in the picture of things on the fields and markets.

It has to be defined from the farmer, the managers, supervisors and foremen that there has to be a channel of communication for your farm and one that works with other farmsfarmers and your marketsservice providers.

Its efficiency is evident by results that come out of your initiatives. When you farm in areas where communication with the outside world is difficult, you are always left behind instead of moving with the times.

You need the internet, cellular network, radio and Television for weather reports, updates and market trends. This gap must be closed as much as possible on your farm

Risk management at farm level will never be history or something from the past, but rather as farmers, we can reduce the effects by moderating and controlling all our main threats. We can survive this by creating a safety net around all our projects to avoid losses. Management is an art, a science, a skill and a mastery of good planning, running, administrating and supervising.

You need to be a good manager to create and implement a risk management plan on your farm. I hope this is happening to you and your farm because if it is not- you are the biggest risk in your project

Till Next week

Evans Zininga is the managing director of the Zanu PF Youth League and Lasch Enterprises PL Joint Venture.

Source : The Herald

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