Farming your way around inflation
Ugandans are generally concerned about the high rate at which the prices of essential commodities like food and fuel are rising.
With over 70% of Uganda’s population earning a living through agriculture, the sector is undoubtedly one of the most affected by the rising commodity prices.
However, before we play the blame game, we need to first understand what inflation is, what causes it and how farmers can survive it and even take advantage of the high commodity prices.
Economists tell us inflation is a sustained increase in the prices of goods and services in an economy over a period of time resulting in each unit of currency buying fewer goods and services.
In simple language, inflation is a situation where too much money is chasing after too few goods. Inflation rate is the annual percentage change in the general prices of goods and services over time.
Negative effects of inflation include;
- Decreases the value of your money l Discourages saving as your savings will be losing value
- Discourages investment as people are not sure about the financial future
- Leads to shortage of goods as traders hoard what they have hoping for even higher prices in future. The agriculture sector is not sheltered from these effects. As a matter of fact, since Uganda’s economy is agro-based, many of these effects are mainly felt in the agriculture sector.
How can a farmer hope to make profit, or even just stay in business in such a situation?
Below are a number of solutions that I would recommend to farmers and those planning to invest in farming.
During such tough financial times, farmers need to take a number of measures to cut costs in order to maintain their profit levels, or even stay in business.
- Milling and mixing your own feeds from the farm instead of purchasing already made commercial feeds that are very expensive. Remember, the feed millers have to include a profit margin in the price. Besides, some of the ingredients they use might be available to you at a cheaper price. Lastly, some of them have management problems or inefficiencies. You end up paying for that too!
- Use locally available cheap feeds such as banana peelings and potato vines.
- Opt for cheaper and often nature-based technologies such as organic farming instead of buying artificial fertilisers, whose price has shot up.
- Rely more on family labour. It is cheaper and affordable than hired labour who will charge you higher for their services due to the increased cost of living. On the other hand, you can motivate your family members using non-monetary means.
- Diversify into several enterprises on your farm to reduce the level of financial risk associated with relying on a single product. Since they have less money at their disposal, people tend to be picky. Suppose they decide to stop consuming the only product you have? So it is safer to produce milk and bananas instead of relying on just milk.
- Make use of your credibility to purchase some of the more expensive inputs on credit. You can, for instance, buy on credit feeds in bulk from a reliable supplier and agree to pay later on specific terms.
- Constantly search the market for suppliers with the lowest price range for your farm inputs.
- Form farmers’ groups to collectively market your products. When you do this, you are in position to set and regulate the price of your product, which may not be possible when you selling as an individual. It is called collective bargaining.