By Albert Makendenge
Agriculture comes with a lot of risk and uncertainty. The risk and uncertain nature of the industry thus calls for management measures to be put in place in order to reduce or minimize the negative impacts. Below are the main 5 production risks that farmers face and the ways of managing them.
First up are production risks. These relate to the possibility that the yield or output levels may be lower than expected or projected as a result of, for instance, adverse weather conditions. Following recommended production practices, crop and animal diversification as well as expanding production are some of the measures to guard against production failures.
Farmers also need to guard against marketing risks that come from price fluctuations or supply and demand changes. Thorough marketing research, coming up with realistic marketing plans and marketing through multiple channels can be used to reduce marketing risks. Utilizing platforms like vaMudhumeni marketplace on Facebook and WhatsApp for example allows you to get your produce in front of a diverse audience and potential customers.
Financial risks also come into play and these relate to the ability to have enough cash or profits to meet expected financial obligations. These may be caused by increased input costs, excessive borrowing or unfavorable economic situation and has to be addressed by controlling or deferring unnecessary family and business expenditures and developing a sound strategic business plan.
The legal and environmental aspects that relate to agriculture also bring risk with them. Failure to adhere to state laws and regulations, either through mere ignorance or deliberate foul play may come with a very high cost. Knowing and following state laws and regulations through good agricultural practices is therefore very important.
The art of dealing with people (human resource management) is also an area where risk may come from mainly as a result of poor communication and lack of people management skills. Learning people skills, good communication and rewarding good performance also goes a long way in maintaining good and productive relationships in the work spaces.
Risk and uncertainty is inevitable in agriculture and farmers need to stay ready for any and every event to avoid being run into the ground. Above all, insurance is the best policy especially for those kind risks that just come out of the blue.