Everything you wanted to know about:
Farm record keeping by Louis de Jager, Kameelboom Akademie, Comprehensive practical farmer training
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ecord keeping must be regarded as a means to reach a certain goal, or else it will be a waste of valuable time. Records can be defined as systematic collection and registering of all relevant information concerning the farming enterprise and the household, the analysis of the results, the diagnoses of weaknesses and the planning to rectify the detected weaknesses. Essentiality of record keeping: Knowledge of the enterprise • Due to the progress in production techniques and the economics of farming, the management function of the entrepreneur became so complicated that he can only be successful if he remains well informed about all aspects directly or indirectly concerning the production and marketing of his products. • A complete knowledge of all income and expenditures is a necessity to calculate the net profit or loss. A complete evaluation of all assets and investments is necessary to calculate the interest earned on capital invested. These measurements, along with others, will show the farmer his degree of success and whether it will be advantageous to continue in the same way. • Keeping track of the profitability of every department is necessary to eliminate weak points in the production process. • The farmer must be able to calculate the efficiency of the different production factors. • Legislation determines that every
farmer must submit statements for income tax, VAT, and agricultural census. This information plays a major role in the determination of agricultural policy in which the farmer is closely involved. Limits to the human memory If the diversity and volume of all the information is considered, it will put enormous pressure on the memory, especially if no records are kept. The total investment on a farm can run into millions and no businessman can dream about running his business without the use of records. The influence of time Without keeping records, a farmer might perhaps be able to able to handle one year’s information, but it will be
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almost impossible to recall the details after a few years. It is often exactly this information on a number of years that puts the farmer in a position to come to accurate conclusions about the results of a specific year or enterprise. Advantages of record keeping: Advantages of a financial nature: • The farmer can determine his financial position at any time. By analysing the records of a series of years, the farmer can also determine whether his financial position improved or deteriorated. The difference between assets and liabilities represents the farmer’s own capital. • Any farm record system requires the recording of all transactions made in order to reveal a list of all income and expenditure that can be referred to in future. A comprehensive record system will even reveal the smallest items of income and expenditure which the farmer normally forgets, but which can make a positive contribution to the structure of his income and expenditure. • A farmer can even adapt his personal and household expenditure according to the financial income as reflected in his farm records. • In negotiations with financial institutions, the farmer who can produce a complete set of farm records will have an advantage over his counterpart with no records. By studying the records, the bank manager will have facts to support his decision when granting or refusing a loan. • The calculation of taxable income will be simplified if reliable records are available. An accountant will charge much less if supplied with full particulars. When keeping
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