Financial literacy is no longer a luxury for South African farmers – it’s a necessity. A recent study found finances to be a major hurdle for smallholder farmers across Sub-Saharan Africa, limiting their ability to increase yields and income.
Gert Bezuidenhout, regional executive at Sanlam, emphasises that financial literacy and planning are the seeds farmers need to sow for long-term prosperity in the unpredictable world of agriculture.
“Financial knowledge empowers farmers to manage resources effectively,” Bezuidenhout explains. “From budgeting to navigating market fluctuations, financial literacy is crucial for sustainable success.”
Unpredictable income, unwavering planning
Farmers face unique challenges, including natural disasters and fluctuating income due to seasonal harvests and market forces. Bezuidenhout highlights the need for astute financial planning to bridge the gap between irregular income and regular expenses like salaries and utilities.
“Cash flow management is key,” he says. “Farmers need to plan for production costs even when income isn’t flowing. This requires strategic planning and financial literacy to ensure long-term sustainability.”
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Financial planning goes beyond basic budgeting for established farmers, according to Bezuidenhout. It delves into areas like business structuring, asset protection, and succession planning.
“Savvy farmers understand the importance of financial planning,” he says. “It helps protect assets, plan for retirement, and ensure a smooth transition to the next generation.”
While specific needs vary, some core components of financial literacy are essential for all farmers:
- Budgeting and cash flow management: Navigate the seasonal rollercoaster of income.
- Risk management and insurance: Mitigate threats like weather and market volatility.
- Investment decisions: Make informed choices on equipment, technology, and expansion.
- Succession planning: Ensure a smooth handover to the next generation.
Bridging the gap: Empowering farmers
Despite the benefits, many farmers lack access to financial literacy education. Bezuidenhout acknowledges a gap in formal education and highlights Sanlam’s grassroots initiatives that bridge this gap.
“We work with farmer unions to provide on-the-ground training and resources,” he explains. “This empowers farmers to make informed decisions and build a thriving future.”
Bezuidenhout shares a story of a cattle farmer who used financial literacy to transform his business. By investing in better genetics for his herd, he improved the weight gain and market value of his calves. This strategic decision, driven by financial knowledge, boosted his income and opened new market opportunities.
“Financial literacy empowers farmers to thrive,” Bezuidenhout concludes. “By equipping them with the tools they need, we can cultivate a resilient agricultural sector that drives economic growth and social upliftment.”
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