25/02/2020
Reasons why people are not making money from farming – Exposed!
Many people are not making money from farming because they are not farming – they are gardening. So there was a call received today and the caller said, “I have a small broiler farm…I want to start producing eggs. Now tell me, is there money to be made from eggs.”
“Attend the workshop” that’s what I said. Now why are people not making money from farming.
1. Starting small
Many people start small and wonder why they are not making money. I call this gardening. You decide whether you want to have a garden or a farm. A garden is for making food for your family, a farm is about making food for your community, a commercial farm is about making food for your province, country or more than one country.
2. Confusing revenue with profit
If you bought apples for R10 and sold each for R11. The money you make is R1. The money you have in your account is R11. If you buy an apple for R10 and sell for R11 and it cost you R2. The money you make is R11 – R2 – R10 = -R1. This means you are losing money. Now let’s take this to chickens. If you have 100 chickens laying eggs, you will make about 3000 eggs, making on average a revenue of R3480. The profit of about R1 740.00 before other deductions.
3. Overlooking small costs
It is costly to be small. The cost of labour for 100 chickens is the same cost for 1000 chickens. If you pay yourself or someone to take care of the chickens at R1500 a month. Note that for a person with 100 chickens labour takes 86.20 percent of the profit before other deduction like transportation and maintenance. On the other hand, at 1000 chickens we have R17 400.00 profit before other deductions. Labour for 1000 then takes 8.6% of the profit before deductions. Starting small can kill your dreams. Gardening can be costly. To make money from farming you can’t be small. When you are small the costs eat you up…when you get bigger certain input costs like labour can be kept constant
4. You can’t compete in the market while small
If you are small the big guys will push you around. When we get a good weather feed become cheap and due to a large number of chickens the big guys can produce cheaply. As a small guy there is really no room for lowering costs. You are easily pushed around by external factors like prices set by feed producers.
5. Poor record keeping
We always say in our workshops. If you don’t know how many eggs were made yesterday, you are not serious. If you don’t know how many chickens died yesterday, last week, last month, you are not serious. Record keeping and analysis help farm managers (you) to monitor the production parameters of the farm. If production drops, what happened? If mortality rises, what happened? You use all these to help diagnose the problem.
As we say in our workshop. As long as you don’t have 2000 chickens. You are gardening!
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