Look back ... then plan the way forward

January 2022

JENNY MATHEWS, MANAGEMENT AND DEVELOPMENT SPECIALIST AND EDUCATOR

Many farmers claim they love the outdoors and hate being stuck in an office. For these individuals, record keeping is time consuming, boring, restricting and a punishment to be avoided at all costs – but this is a very outdated manner of thinking. In modern farming businesses, the keeping of records plays a significant role in contributing to efficiency and improved performance.

It’s that time again – prepping for a new summer grain growing season. The farm shed area is humming with activity as the implements and planters are serviced in readiness. My office has been a buzzing hub for many planning meetings. All the while the farmers are looking through their historic records sifting through information that enables them to make the best decisions for the new season.

The farmer who keeps track of farm activities and farm expenses is empowering his planning and forecasting process. Tracking costs and measuring yields per field, leads to informed decision making. Even my old dad who farmed in the days before computers and cell phones, kept a big ledger book on his desk. It was his routine to end each day sitting at his desk and entering every activity that had taken place on the farm that day. I still recall the many occasions I’d see him scanning the pages to remember exactly when he had replaced a tractor filter or what date the first calving of a season had begun. You can’t manage what you can’t measure! 

WHAT RECORDS SHOULD BE KEPT?

I, like my dad, believe that a journal should be kept of daily activities. Record keeping can be divided into categories. The two main distinctions are 1) financial and 2) the production aspects that is physical data.

Let’s look at some specifics about record keeping:

Financial records
Banks, agribusiness and financiers require evidence of good farm record keeping before loans or grants are made available. In the old days many farmers used a ‘shoebox’ method of bookkeeping which was all on paper between a notebook, a ledger and the loose papers that were stored in a box and later handed to the bookkeeper. This costs the farmer much more money because he is effectively leaving all his filing to the bookkeeper.

Nowadays there are many computer programmes that are a great tool in the farm office. Your records are your proof of income, expenses and inventory as reported on in tax returns. Whichever method is chosen, certain information needs to be gathered, organised, filed and analysed. The point of record keeping is to provide the farmer key information on a timely basis. All income and expenditure on the farm should be recorded.

It is useful to allocate an expense against a certain implement or operation. For example when repairs are done to a particular tractor, make note of what that tractor is costing you. Over the period of a year, it should be possible to look at each of your tractors and implements and know what each item has had spent on it.

Equally important is keeping records for each separate activity on the farm like maize cropping, vegetable production, beef animals, sheep and poultry. Each line item has to tell its own story so the farmer can see whether that activity is profitable and worthwhile or does he have to reconsider an activity to find something more profitable to do in its place.

In order to stay on the right side of the law, every farmer should be submitting VAT records and TAX returns to SARS. With the help of a reputable accounting firm this is done in conjunction with tracking cash flow and informs the farmer when he draws up his budget for the new season.

Farmers normally need to at least keep the following documents for the bookkeepers:

• Bank statements.
• Cash analysis book – including records of payments and money received.
• List of monthly wages paid.
• All tax invoices, proof of payment, sales slips, statements.

Asset inventory lists
List all the physical assets on the farm then get a reasonable value in rands. For example list the farm land, the farm buildings, all vehicles and machinery on the farm, any crops still on the farm or in silos, estimate the value of crops growing on the field and record all livestock owned by the farming enterprise.

Your bookkeepers will review this list on an annual basis as some assets will increase in value whilst others may depreciate. Depreciation refers to any reduction in value of an asset like vehicles, implements, equipment and tools. This occurs due to age, wear and tear or even when an item become obsolete or useless.

Vehicles and implements: Licences and financing
A farm usually has a number of vehicles and implements doing the farm business.

• Keep records for each vehicle – date of purchase, services etc.
• Know when the licenses are due for renewal to avoid the unnecessary cost of a fine.
• List which vehicles are paid off and which are still financed.
• Make sure that you source a tax certificate for each item still being paid off for your accountant at the end of every financial year and in the final instalment month.

Human relations: Employment records
We are dependent on our farmworkers and are responsible for accurate record keeping in our human relationship division.

• Keep a history for each worker that records start date.
• Have a copy of an identity document for each worker on your records.
• Record annual leave, sick leave and compassionate leave allocated. 
• Report salaries for UIF records on a monthly basis.
• Seasonal workers – keep records of when and why they were employed.

Production records
This is important and enables farmers to track income per crop against cost of production.

• Fields, cultivars, yields
• Plantings done – where, what, when. Keep detailed records of each process followed on each field including dates of each activity.

Spray programmes used. Spray history is relevant from one season to the next in case there is a residual influence which may harm the next crop.

• Pesticides that were used and why.
• Dates on which they were sprayed. 
• Which fields were sprayed.
• The safety intervals for each chemical.

Livestock

• Livestock farmers should record animal numbers, purchases and sales.
• Keep data on the feed supplied and the cost of the feeding – know how much you are feeding per animal per day.
• Have you had to manage pests or disease, what did you do to manage the problem?

RECORD KEEPING VS RECORD ANALYSIS
These are two completely different activities. The act of record keeping is the administrative process of paying bills, filing, sorting, and completing the VAT etc. On the other hand, record analysis is the process of evaluating the information recorded and using it for decision making.

• Organised records cut time spent in the office from days to hours.
• Data collection drives growth – as long as you understand what your data is telling you.

Publication: January 2022

Section: Pula/Imvula