Online Reporter
Obert Chifamba
Agric-Insight
THE 2025 tobacco marketing season is now in its fourth month and farmers are reportedly taking home good earnings.
The highest price recorded at the contract floors is US$6,30 per kilogramme while the auction floors have not breached their traditional ceiling – US$4, 99.
Why the price does not go beyond this figure for the auction floors every season remains a story for another day.
Today I will be looking into a topic most fly-by-night farmers are not comfortable with. Budgeting.
This is a topic the less serious group of farmers does not want to talk about because it exposes their lack of direction and incapacity to run a properly planned farming venture. Soon, the cotton marketing season will be underway amid indications that stakeholders are making frantic efforts to have everything in place.
The last time I checked the Agricultural Marketing Authority (AMA) had established 697 common buying points in cotton producing areas to enable farmers to deliver their produce without the hassle of travelling long distances to selling points.
They had also started deploying clerks to those buying points to oversee the selling processes and were seized with registering buyers, who incidentally have to be from those that have no outstanding payments for farmers.
Soon, cotton producers will be enjoying the fruits of their toil together with tobacco producers. I have deliberately chosen cotton and tobacco for the budgeting story because they are some of the crops that allow farmers to handle large sums of money at one go. In most cases, it is these large sums of money that send the less organised farmers on spending sprees and the next moment they will be struggling to put together enough capital to fund their next cropping activities.
In the not-too-distant past, we have heard stories of cotton producers from districts such as Sanyati in Mashonaland West province disappearing for a month or so after getting paid for their cotton deliveries and only re-surfacing after exhausting the entire earnings or even come home with a second or third wife. This is clearly a demonstration of the absence of budget planning and spending is always impulsive and driven by personal whims rather than real need.
It is against such a background that farmers need to be constantly reminded that drawing up budget plans after selling crop produce offers them several advantages.
Budgeting gives them financial clarity, which gives them a clear picture of the incomes they would have made as well as the expenses. This naturally helps them understand their financial status and avoid building their plans around things they cannot achieve using the cash at their disposal.
A clear understanding of what is at their disposal allows them to do proper resource allocation and make informed decisions on how to allocate funds for inputs such as seeds, fertilisers, equipment, and labour for the next planting season. This means that farmers can effectively plan around the confines of the available budget guided by what it can allow them to do.
The other beautiful thing about budgeting is that it helps the farmer to manage risks by capacitating them to anticipate potential threats and plan for contingencies, such as market fluctuations or crop failures. It is always safe for farmers to set aside a bit of their earnings for emergencies that may require them to adopt a plan B if their original intentions fail to materialise. This, may be difficult for most farmers to do given that patient capital is not readily available for the bulk of the farmers but such an arrangement is quite ideal for those with the means.
On the one hand, drawing up a budget empowers the farmer to do investment planning. It enables her to identify opportunities for investment in technology or infrastructure that can enhance productivity. Usually some investments do not seem relevant because there will be no cash to support them and can easily become apparent when there is some resource allocation towards their fulfilment.
Budgeting also empowers the farmer to manage debt. This is so because the farmer can easily plan repayments for loans taken for operational costs thereby ensuring financial stability. The farmer who does her job without fears of properties or proceeds getting attached by those she owes normally performs well and always enjoys a degree of financial stability that nurtures the will to invest and grow.
Additionally, budgeting allows the farmer to keep track of her production trends, which lays the foundation for improved profitability because it exposes areas that would have been found wanting paving the way for improvement. Budgeting facilitates tracking of profitability by comparing costs against income, allowing the farmer to adjust strategies for better margins.
The other critical observation is that it is easier for a farmer who follows a strict budgeting policy to produce more sustainably than her counterpart who randomly deploys financial resources towards situational issues that need to be addressed. Budgeting naturally encourages sustainable practices by allowing farmers to budget even for eco-friendly inputs and practices, which raises the levels of demand for their products on many different markets.
Usually, the farmer whose operations are guided by a budget does well and is able to meet targets. The mere fact that the farmer is using a budget is a sure recipe for success, especially for those who set themselves goals with every season that comes. Budgets help in setting realistic financial and production goals based on past performance and future expectations. They enable a farmer to do a personal audit of their performances exposing those areas in which they would not be doing very well.
Budgets generally allow the farmer to keep records of their incomes and expenses throughout the year. They school the farmer to live within her means and stop producing a crop for the sake of producing, but do so with a particular market in mind. This is what the new farmer who sees farming as a business is expected to do. It is no longer business as usual for now and every farmer must appreciate the fact that all activities on the farm should be done for the sole purpose of generating an income.
To cap all these positive functions, budgets can also be a very effective marketing tool. They help farmers in developing strategies for future sales and marketing based on past sales data and market trends. In these circumstances, the farmer needs to revisit her recent budgets and note what various crops would have earned and at which markets. This will help her make an informed decision on the quantities to produce and where to sell them.
It is, therefore, a fact that once the farmer creates a budget plan after selling crop produce, she can enhance her financial management and improve her overall operational efficiency. The budget is a big indicator on how a farmer is performing and where she needs to improve or increase investment.
