Present day farming operations are becoming more business-oriented. The key to becoming a successful farmer today is to be a good producer, as well as, a good financial manager.
The first step involves establishing a sound record keeping system. A record is information systematically and carefully collected and stored for intended use. Too often, there is a misconception that one needs to keep records for tax purposes only.
However, record keeping plays a more vital role in business. Farming is a business, therefore, records can be helpful, especially in planning. Records are more reliable and dependable than a good memory because, although your memory may be good, it tends to remember only the good facts about your business, forgetting the negative aspects, or weaknesses. To successfully run a farm enterprise, carefully thought out, properly collected and kept records are a must. Farm record keeping means keeping, filing, categorising, and maintaining the financial and production information of the farm. Farm records are categorised into two, namely; financial records and production records.
By evaluating farm records through a process called record analysis, the farmer is able to make informed decisions based on actual or projected farm performance.
Therefore, establishing an effective farm record-keeping system aids in planning, making informed decision and analysis of both production and financial records.
Record keeping is important for several reasons including:
Improved decision-making skills
Ability to evaluate the farm’s financial performance
Ability to identify production and marketing problems
Ability to decrease the debt to asset ratio
Improvement in farm management practices
Records are also a requirement in case one is to access credit services. Record keeping methods range from basic-hand record keeping to the elaborate computerised systems depending on the expected use of the records.
There is no perfect system for all situations, but at the minimum, a farm record system should provide accurate and necessary information, to fit into the organisation or framework.
The farmer should habitually post accurate transactions in these records. When choosing the right record-keeping system, remember that decisions made cannot be better than the information used to make them. A good record keeping system is one that will provide the necessary information when needed.
Examples of financial records:
-Product sales
-Operating expenses
-Equipment purchases
-Accounts payable
-Price information
-Accounts receivable
– Inventories
-Depreciation records
-Loan balances
Examples of production records:
-Physical or identification records e.g. ear tags, notches, names of animals, tattoos, etc
-Breeding records e.g. pedigree/parentage, growth records, and fertility
-Performance records e.g. daily milk yield, milk content, etc.
-Feeding records e.g, available fodder on the farm
-Health records e.g, number of sick animals, treatment given, and by whom, vaccinations, dipping for cattle.
