Simple Economics and Record Keeping On the Farm   

Mon, 30 Nov -0001 00:00:00 +0000

Each person especially women when they want to buy something they have to look at what they have that is money – wise. The economics of spending the available money so that she is able to at least reach another pay day to supplement family needs.

The farmer to produce satisfactorily he requires all sorts of equipment and machinery varying from a hoe to tractor, land and people to do the work or produce what is required for him to be in business. Therefore, with the help of his land, buildings and machinery would be able to produce needed food crops. All these things are a necessity or needed to help the farmer to produce and aid him do things which the people want is what can be termed capital.

The farmer to produce must have people or labor to carry and work at the farm, hence labor and capital become factors of production on the farm. Then the produce so produced becomes the income of the community, and if a great deal of the farm produce is produced the community can enjoy a high standard of living, but if it is low production we can expect the community to be poor.

To explain the above, each person exchanges his or her contribution to production for some units of money which he or she then uses to buy the many goods and services which he or she wants for his or her wellbeing. The expenditure or money used to buy whatever produce, becomes in turn, the income of the farmer in that community and other people who have produced the things he or she has bought. Money is in constant circulation, and at one stage of its flow we can think of it as the income of the community, at another stage as the expenditure of the community and at another as a measure of the value of what is being produced by our farmer.

For our farmer to make a fortune from the available land he must understand the meaning of agricultural production. Whatever would be produced on the farm should be the produce that would be acceptable and satisfactory to the people who would be consumers of these products. And if the farmer cannot produce what is satisfactory then the people would not like that kind of product.

The farmer may put up with a life of poverty. Every person is specialized in some work or another, and we are all rewarded materially according to our contribution to the satisfaction of people’s wants and the farmer is no exception. And so when money is spent our money income we influence the rewards obtained by other consumers. Farm production of either crops, livestock or any other is an activity that is and must be directed to the satisfaction of other peoples wants though exchange that is money produced to buy the product presented.

Therefore, our farmer must direct his farming activities to production of farm crops or livestock to the satisfaction of consumers wants. After what has been mentioned above in regards to farm activities in order to have a steady income and avoid falling into poverty the so many activities that are being done on the farm must be recorded. It is important to keep records of every activity and how to sustain them. Firstly, records and pieces of information recorded in an orderly manner are an asset. They show the performance of all the farming activities.

The farmer needs this information to make decisions, plan and control farming activities. Good record keeping would show seriousness of the farming business. This in the long run help the farmer to win the confidence of bankers in case the farmer needs to get a loan and would be of great help in assisting or a having access to such bank services. If records are not kept, it is not easy to know whether the farming activities are bringing in money or not. Therefore without records it will be impossible to know whether the farmer is making or losing money.

On the farm there are so many kinds of records that can be kept all for the sake of accounting for whatever activity is taking place. There can be financial records, production records, and maintenance and repair records. In livestock production there would be health records milk production records, livestock records (births, deaths and sales) etc.

Some records e.g. cashier’s record. This will record daily activities which include revenue, expenditures, and raw materials bought and selling of farm products. However some activities may not take place every day, these can only be recorded when they are to take place. And also there would be no need to indicate selling activity when it has not taken place. It would be a good business practice to write and give receipts to customers who come to buy farm produce. This will also help in capturing information for records and helps to account for money. Petty cash vouchers, this is information about small cash payments that the farming activity makes such as for repairing or welding works on the farm. Sometimes on labor. This also must be captured by recording in petty cash vouchers.

The original vouchers of such payments and invoices are then or can be kept as part of financial records. All the receipts for payments that represent the buying of raw materials or inputs in the faming activity must be kept together as part of financial records. Receipts can be for fuel, oil, spare parts for machinery or some equipment, payment of bills etc. All this information so compiled can be used in making the summery records to make a monthly summery record giving a complete record for the year and how the farm is performing. Expenses.

The receipt which are given when you buy something and the petty cash vouchers made during each day will show some of the expenses. From these and any other recorded expenses, the farmer will write a summery record of expenses. The records so kept would very much help the farmer to know how much money is going out of the farming business or coming it. The records would help to know the amounts of stock of raw materials, produce that should be kept during and at any given period of time. The records can also help to find out which farming activities or items are costing the farming business more money and try to control these costs.

Therefore, records are an aid in making management decisions on the farm. This is how essential these records are to any farmer who means business from the available resources. It does not matter on how small the enterprise so engaged in every thing must show by means of keeping records that are easy to follow and must be remembered that accountability is very important. No resource should go to waste.