Home Food for Thought Between the Headlines Mzansi farmers need to diversify to prosper, says economist

Mzansi farmers need to diversify to prosper, says economist

Climate and economic conditions can make it fatal for agribusinesses to have all eggs in one basket

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Globally, farmers face many challenges and decreasing farm income has been a major driver encouraging farming families to investigate diversification. Looking at grain farmers, for instance, if you are only engaged in one enterprise (like growing maize) and have a crop failure, it will be more devastating than if you grew more crops.

Most of us have heard the saying “don’t put all of your eggs in one basket.” One meaning suggests that the basket will be too heavy to carry, while another is that if you slip or fall, you may break more eggs if they are all in one basket. For the purpose of agriculture and business, I would say the second meaning is more suitable.

Diversification on a farm is when a farm branches out from traditional farming by adding new moneymaking activities.

This can be in place of or in addition to its traditional farming activities. Farm diversification involves anything, from adding free range poultry and livestock production to starting a bed and breakfast in the out buildings or setting up a local tourist attraction. This all depends on the size of your farm.

Generally, diversification simply refers to an increase in the number of enterprises operated on the farm. In practical terms, this can be done in many different ways and not necessarily limited to the list below:

  • Grow more than one field crop to spread the work over a longer planting and harvesting season. (Produce two crops on the same land within a twelve-month period.)
  • Spread the risk over more than one enterprise (such as livestock to provide income for months in which no grain is sold, thus producing better cash flow for the business),
  • Add value to a crop you currently produce, i.e. Nixtamalization (a process for the preparation of maize, or other grain, in which the corn is soaked and cooked in an alkaline solution)
  • Engage in the same farm enterprise in different physical locations.
  • Generate income from off-farm activities, like renting out your bakkie.

Benefits of diversifying

Diversifying can have many benefits for farmers of all scales.

  • Increased income: extra money made from new activities could afford farmers an increased farm income and a better quality of life.
  • Adaptability: branching out inspires farmers to look for new opportunities and to adapt quicker to challenges.
  • Securityand spreading risk: new activities can provide greater stability and increased income sources ensures that farmers are less vulnerable to any one-income source letting them down.
  • Develop new skills: running a new venture will provide the opportunity to increase skills and for farmers to learn where their personal strengths lie.
  • Crop rotation: this would replenish soil nutrients especially if farmers add a legume crop into the rotation, which will help raise nitrogen levels in the soil and increase the organic matter within the soil structure.
  • Tradition: diversifying can provide farmers and their families with a means of carrying on their farming tradition.

It is never a good idea to start something new if you currently struggle with your cash flow demands. Many new enterprises may not be profitable the first year and learning new crops and production methods may stretch your management abilities. Farmers will need to learn all of the new practices and methods while trying to be profitable. Start small, maybe on one hectare or less the first year, and grow the enterprise as you develop the new skills. Remember to develop a marketing plan while starting the small enterprise.

Globally, developed countries view farm diversification as a valuable strategy to deal with some of the current problems facing agriculture.

Together with the desire to keep their land and to maintain a steady income, these form part of the reasons they diversify from their traditional activities.

Diversification can be seen to have both financial and environmental benefits for the farmer. Looking at the current climatic and economic conditions that farmers in developing countries like South Africa are faced with, my take is that farm diversification is not just an optional extra any more. Rather, it is an essential part of a farmer’s future all over the world.

Ikageng Maluleke
Ikageng Maluleke
Ikageng Maluleke is an agricultural economist at Grain SA, a farmer organization representing major grains in South Africa. She was born and bred in Pretoria, where she completed her undergrad and post graduate studies. Ikageng holds a BSc degree in agricultural economics as well as an MSc degree in Agricultural Economics, majoring in Agribusiness, both from the University of Pretoria. Her passion lies in international trade and development and her dream is to see a food secure South Africa, with a thriving rural economy in her lifetime.
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