Perceiving the farm as an enterprise

Most small-holder farmers in Africa do not treat their farms as businesses. In other words, they grow crops or animals the way their parents did or the community has been doing for generations. Proper reflection and setting of farm goals for farm development to meet present and future income needs is very rare.

Treating a farm as an enterprise involves careful analysis of the farm resources and potential in order to understand the full potential of the farm. This is then compared with the way the farmer is currently utilising those resources to identify any gaps or necessary improvements. This will be followed by the careful selection of crop and animal enterprises and practices, needed to improve short- and long-term productivity of the farm.

Mapping of farm resources

Resource mapping is the process of identifying of all the physical, land and water resources available on their farms. This is done by drawing a clear map of the farm including all its crop fields indicating the type of crops grown and the area covered, soil types, bushes/forests, water sources, hills, valleys, and all features like roads and buildings. Additionally the amount of labour available, total size of land, access to water, tools, number and types of animals are identified and listed.

The exercise of resource mapping helps farmers to:

Identify the kind of resources available on their farms.
Realise how much of the resources are currently being utilised.
Understand quantities of resources entering (inputs) and leaving (outputs) the farm every season.
Plan how to benefit more from utilised and unutilised resources in order to improve the farm, for example allocating labour more efficiently to various farm enterprises.

Evaluation of the present farm and defining goals

After identifying all resources available on the farm, its present status can be evaluated in relation to the ideals that organic agriculture proposes and what farmers may want to achieve.

By comparing the characteristics of an ideal organic farm and the current situation of the farm, farmers are able to set both short- and long-term goals for their farms. The long-term goals can refer to the any of the following general criteria:

Diversifying sources of income
Minimising dependency on external inputs
Improving level and safety of yields
Efficient use of resources such as labour and area
Value addition on the farm
Improving profitability of the farm

Examples of specific short-term goals include:

Introducing other crops on the farm to meet crop rotation and intercropping requirements.
Expanding on the area under production of crops and to utilise labour more efficiently through better planning.
Introducing animals to the farm in order to have an on-farm source of manure, and increasing income sources on the farm.
Establishing enough on-farm sources of food, feeds, seeds, manure, pesticides or firewood/energy sources so as to minimise off-farm purchases.
Constructing a farm store in order to add value to farm products so as to increase income and profitability.
Initiating on-farm or off-farm non-agricultural activities that will increase income.

Evaluating the current profitability of the farm

The evaluation of the current profitability of the farm is necessary, when one of the goals of the farm is to improve profitability. This involves comparing the amount of money spent on various production activities on the farm (expenses) and the money received from the outputs from the farm (incomes). The difference between the expenses and income will indicate how much money the farm is currently making (profits).

The total profit of the farm is determined by summing up all the incomes that are generated from the different on-farm and off-farm activities minus the expenses needed to perform these activities. In this sense, the profit of the farm represents the amount of money that the farmer is left with, from the total amount he/she receives from various sources and what was paid out for all the work, materials and services used on the farm. From this profit, the farmer is able to pay for household expenses, make investments, and save part of it.

In addition to financial profitability, farming (and especially organic farming) may offer to the farmer and his family many other benefits such as satisfaction, a healthy living and others. These benefits are, however, difficult to calculate in terms of money. Although they are not included in the calculation of the current profits from the farm activities, they will greatly contribute to the future profitability of the farm.

Main sources of income (money) for the farm include:

Selling farm products like crops, animals, animal products (e.g. milk, eggs), seeds, other planting materials, manure, mulching materials or other farm products (e.g. timber, firewood, charcoal, bricks).
Hiring out of labour, tools, machinery or renting of land.
Charges and donations collected from visitors to the farm.
Off-farm activities or services like brick making, charcoal making, harvesting of wild products, etc.

Main uses of income (money) on the farm include:

Household needs - These are costs associated with the well-being of the farmer and his family, e.g. food, water, health, education, accommodation, clothing, entertainment, etc.
Farm variable costs - These are costs that the farmer pays for whenever he needs to perform an activity or to increase production. Variable costs include cost of seeds or planting materials or animals to keep, manure, mulching materials, labour (including family labour), fuel, packing materials, annual or seasonal land renting, hiring of equipment, etc.
Farm fixed costs - These are costs that the farmer pays for an item once, but which he continues to use for a longer period of time. Farm fixed costs include rent (if land is hired) or purchase of land, farm buildings, machinery, tools, etc.

Discussion/Group work: comparing the current farm with development goals

Take an example of a farm map and the corresponding list of resources, and discuss with the farmers, what needs to be done in order to improve the farm towards an ideal organic farm. Record all the recommendations and help them to set short- and long-term goals for improving the farm.

Then let the participants discuss in groups of 2 to 3 persons, what needs to be done to improve their individual farms. What could be short- and long-term goals for improving their farms?

Individual exercise: Evaluation of sources of income

Let each participant identify the different sources of income on their farm and the uses of the income of a season. Each participant should note his/her results on a piece of paper including the amount of money for each source.

Collect the notes and pin them on the wall. Select a few papers and use them to determine the amount of profits that the farms are making.

Discussion: How can organic farming improve the productivity of the farm?

Using the same examples of farms used in section 2.2, ask the participants to identify how organic farming can help to improve such farms. List all contributions and guide the selection of specific contributions from organic farming before introducing the general discussions below.