Agriculture presents us with mammoth opportunities for entrepreneurship, job creation, skills acquisition, wealth creation, social and national development. Currently, the sector has attracted and is attracting more entrepreneurs, investors, and researchers, etc, like never before. Entrepreneurs/investors come with goods, services, and innovations in the quest to provide food, medicine, fiber, recreation, etc, for domestic, commercial, and industrial consumption, local and international. But even with passion, hard work, and enthusiasm, farm businesses fail!
This information is very important for existing, as well as, upcoming farmers because farming is at the production level of the value chain and farms have failed and will continue to fail until we stop making the same mistakes made by those who have failed. I’m sharing the reasons below from personal experience, from our farms, and from farms I’ve had the opportunity to work with. These experiences have helped me to handle my business better now and to provide useful advice for my clients, mentees, and colleagues.
1. Costly Assumption
It’s amazing how a lot of people out there still regard farming as a ‘low hanging fruit’. They assume that what is required is to clear the land, plant seed, or bring in livestock and wait for the harvest to rake in millions of money. Hilarious! Assumptions lead to the lack of/poor knowledge of the business/industry; lack of/poor preparedness for business management; lack of/poor skills, exposure, and commitment; and lack of personal/business development. Such that even after deploying resources, the business still fails. Assumptions can be costly!!!
2. Poor Articulation of Farm Business Idea
As a business consultant and agropreneur, I get to review draft business ideas from people regularly. Some of them are so poorly articulated that you wonder if the writer is describing a ‘wish’ or a business at all. When the business idea is poorly expressed, implementation becomes difficult and ineffective to the success of the business. It’s a major reason why many start-up farm businesses fail. Entrepreneurs must ensure that their business ideas are viable to start with.
3. Poor Staffing
When farmworkers are incompetent, fraudulent, and uncommitted, they have the singular capacity to bring about the failure of the farm business. Some farm business owners hire on sentiment and poor merit considerations. It always backfires!
The other day, a video went viral on Social Media showing workers from a poultry farm using very ‘interesting’ methods to dispose of stolen eggs. In addition to the outrage over the farmer’s loss was the question of the quality of staff hire + welfare provided. Poor hire = Farm Failure! Similarly, is the penchant of some farm owners to treat their staff appallingly – poor/unstable salary, poor work tools, poor training, and supervision, etc. While workers with a poor attitude to work are bad for business, farm owners need a check too.
4. Costly Operations
Some farmers are not diligent in keeping farm records. They have little or no idea about their expenses and their revenue. So, there’s no periodic analysis of their accounts to show if the business is doing well or not. No audit checks too! When expenses go unchecked, that can pull the business down – cash flow will be affected; financial obligations will not be met; farm operations will grind to a halt; leading to the shutdown of the business. Financial discipline and business best practices are key!
5. Poor Attention to Budding Problems
Some farm owners hardly devote time/resources to nip in the bud, a threatening problem. ‘A stitch in time saves nine’ is not their motto. Then what started as a small ‘leak’, with neglect, becomes an uncontrollable flood. The farm can’t operate without tools and workers cannot perform well without training. These are just a few of the small problems that dig a hole in the bottom line and bring about business failure. Farm owners must pay attention to the health of their business.
6. Poor Quality Input
Whether crop or livestock, goods or services, the farmer may be at the risk of poor quality inputs from producers and suppliers. With ‘garbage in’, there will be ‘garbage out’ and a business can’t last long with such ‘testimony’. How do you guard against poor input? Relate with others in the business/industry for help. Work with reputable suppliers. Join a cooperative/trade group and take advantage of bulk buying. Supplier integrity + price could be good for you. Know how to do a quality check so you’re not ripped off with poor materials
7. Resistance to Change
Farm business owners with good experience in farming are sometimes, resistant to change and innovation. But Heraclitus, the Greek philosopher, did say that “Change is the only constant in life.” Resistance to change can kill the business. There’ve been changes in farming since the beginning of time and there will continue to be changes. Farm businesses that refuse to adapt to the changes or adopt efficient/effective methods/technology will fail… That’s not a prayer but an obvious FACT!
So far, I have listed some situations, activities, and circumstances within our control that, if not attended to, can bring about the failure of the farm business. Now, let’s consider those external factors that have the power to wreck our efforts in our business.
8. Unstable Government Policies
They’re like the ‘Now-you-see-me; Now-you-don’t kind of scene. Ban on imported poultry today… then you wonder how imported turkey got into the country… Your entire sweat can be buried by government policy if you’re not careful. This is where membership of strong business/trade associations works well for the farm business owner. You get information, knowledge, and the benefit of advocacy. There’s engagement with the government and defense of your business. Join one today! My Advice: Be Active!!!
9. Inadequate Support System
Some farm businesses really struggle to access inputs, resources, markets, support, regulations, etc. Lack of storage facilities means that perishable farm produce will perish and becomes a loss to the farmer and can sink the business. Lack of extension services means that farmers will not get the professional support they require for the success of their business. Untimely funding means the farmer will fall behind in expected outcomes. These and more can collapse the farm business.
10. Climate Change
Climate change is here. The weather and seasons have been changing patterns for years now and getting increasingly, worse. Some farm businesses have failed after an encounter or repeated encounter with ‘angry elements’ – flood, drought, hail, earthquake, tsunami, hurricane, etc. Instead of throwing up arms in defeat, some farm owners have chosen to work towards the survival of their business. This includes moving towards climate-smart agriculture and getting knowledge/information/training, just for a fighting chance for their business.
More farmers are embracing insurance as one of the most sustainable strategies for managing business risk. Sadly, a lot of farmers have no insurance for their business. This gap needs to be closed so farmers can have some succor in the event of an occurrence.