1Contents in this guide
- Business Planning
- Equipment and livestock
- Market Positioning
- Types of Farming
- Planning Stages
It would be wise to create a business plan for any new venture. There are a few points to keep in mind when planning the business.
Resource: Free Business Plan Template Download
The location of your farm will have to suit the type of product you wish to produce. The choice is usually determined by space limitations, and the type of farming you wish to undertake. For example, if you are going to sell Free Range poultry you would have to have enough space for the chickens to roam freely.
On the other hand chickens that are kept indoors are typically housed in rows of cages, called batteries, and this system requires a great deal of equipment and capital outlay.
If you are planning to produce maize you will have to consider the requirements for that product such as location and climate.
Equipment and live stock
Capital is required to buy livestock, equipment and land. Funds have to be budgeted for to cover buying or leasing of land on which to house the farm in a suitable area. The Department of Agriculture’s Mafisa scheme has been launched to fund smaller emerging farmers.
Sustainable Rural Livelihoods (Livestock) Programme is a research, training and small business programme that addresses the basic issues underlying emerging farming systems and SMME Development in product processing and marketing.
They provide guidance in areas such as milk products for small-scale farmers, fruit and vegetable industry by-products as feed; goat leather production; feasibility studies and business plans for rural entrepreneurs.
Market positioning is very important and you must consider carefully if:
- The idea practical, and will it fill a need?
- What is the competition?
- What is your business’s advantage over existing poultry farmers?
- Will you deliver a better quality service?
- Can you create a demand for your product?
You need to have financial strength to support your routine production cycle. There are different ways to go about it. The Land Bank supports resource-poor farmers to become active participants in mainstream commercial agriculture through Agricultural entrepreneurship.
The Bank offers unsecured loans of up to R25 000. These are usually offered to small-scale farmers.
However, it is imperative for the loans must be used for agricultural purposes only.
The Land Bank offers short, medium and long term loans as well as Instalment Sale Finance which is a type of medium-term loan where the goods that you buy act as the main security for the loan: the goods belong to the Bank until the loan is paid in full. It enables all farmers, especially those with limited assets to grow their businesses.
- Farming equipment
This finance package is available for periods between 3 and 10 years, depending on the expected length of life of the asset. Payments can be made on a monthly, quarterly, six-monthly or annual basis. An individual farmer or a group or any legal entity may access this type of loan.
Related: How to Write a Funding Proposal
Funding for farms outside South Africa’s borders
Approach Alliance for a Green Revolution for Africa (AGRA). If they cannot help, they may well be able to guide you to an organisation that can.
AGRA’s programs and partnerships work to make changes across various agricultural systems. Integrated programs in seeds, soils, market access, policy and partnerships, and innovative finance help to transform various subsistence agri-businesses into sustainable, viable commercial activities.
One example is found in the Southern Highlands of Tanzania, where 700 000 smallholder farmers produced a record maize harvest in 2009, helping to feed drought-stricken regions of the country.
Types of Farms
Small Scale Farming
What kinds of farming are suitable for a 21-hectare plot? Should I farm with cows or grow crops? Small-scale farming can provide a good living
Smaller farms are easier to manage. You need a genuine interest in farming if you want to be successful. A farmer is a businessman first and a farmer second. You should have an entrepreneurial flair, be quality-conscious and self-motivated.
A. Dairy farming
To be a successful dairy farmer one has to have a love of cattle and experience in this field. A person who wants to become a dairy farmer should spend time working on a dairy farm before striking out on their own. It is important to have an understanding of animal anatomy, cattle health, and milk production.
If you have no experience, take classes in livestock production and business management to help develop the skills needed to run a successful dairy farm. These include:
- Animal handling
- Practical skills such as the ability to do fencing and use mechanical tools
- Mathematical and business skills
- Communication and organisational skills
Dairy farming is a lifestyle
You have to work long hours every day of the year, and rise early to milk and feed the cows. You have to be detail orientated. Farmers must keep careful records on each cow so they can measure the cost of keeping it against the income produced.
To run a small community farm with 10 head of dairy cows where crops are also grown and sold, you need skills in both disciplines. These include being able to work independently, understand soils, crops and dairy production as well as the ability to observe herd health and behaviour
These are a few of the responsibilities you have to think about:
- Manage pasture, stock and stock breeding programmes
- Hire, organise and supervise farm staff
- Buy feed, machinery and other farm materials
- Attend stock sales to buy and sell stock
- Dip cattle to ensure good health and remove parasites
- Wean calves
- Manage and prepare stock for slaughter
- Control pests and weeds
- Maintain farm buildings, yards and fences
You can make money by selling products produced at the farm to big dairy companies, or sell your own products if you can afford the processing equipment.
In South Africa, only about 12% of the country can be used for crop production. High-potential arable land comprises only 22% of total arable land. Therefore you need to find out what crops would be suitable for the farm you have. This depends on soil type, water supply and a host of other considerations. Contact the Department of Agriculture, Forestry and Fisheries for more information.
Before you go ahead and start farming check details of any legislation and regulations governing the industry, product and production processes. Consult with the local municipal authorities to ensure that the land is zoned for farming and that there are no by laws that could affect the farm negatively.
Register the business with SARS so that you are compliant with tax and labour legislation.
To start any business, whether it is a farm or a factory, you must prepare a business plan. Information in each section of the business plan should be concise and include an evaluation of the strengths, weaknesses, opportunities and threats that may apply.
Every farm is unique, in terms of location, soil quality, labour requirements and so on. The business plan must therefore include a “production plan”. This encompasses all the details explaining how your farm operates and what products it will produce for market.
The production plan includes such things as land, buildings, equipment, supplies and processes, as well as laws and regulations that influence the business. Production is the core income-producer for a farm, so this section must be very detailed. You will need to do extensive research into the capabilities of your land, the type of farming you choose, market requirements and the buyers in your area.
Within the business plan, you must include the cost of equipment and storage facilities. These are needed for storing feed and the plants that are produced. For example, cow manure is a good fertiliser for crops but needs to be stored.
If you run a dairy farm, you can milk the cows by hand. However, having automated milking equipment can cut the time required to produce milk.
Commercial banks offer a wide range of finance, investment and risk management solutions across a diverse range of agribusiness products and services for the agricultural value chain.
The Land Bank of South Africa is an agricultural development finance institution that supports economic growth through the provision of retail, wholesale, project and micro-financial services to agriculture and related rural services.
It offers long, medium and short-term loans. Alternatively, click here to find out more about the various financing options available to you.
For training in agriculture ARC (Agricultural Research Council) offers a number of courses which include: Pig production, beef cattle management, small stock management, poultry production and meat processing.
Other courses offered by other institutions of ARC are:
- Grain Crops Institute – Maize and dry beans
- Plant Protection Institute – Bee keeping.
- Vegetable and Ornamental Plants -Vegetable hydroponics.
- Fruit, Vine and Wine Institute – Preserving of fruit
Other sources to contact:
- Postal: Private Bag x250, Pretoria, 0001
- Tel: +27 12 319 6000
- PO Box 1202, Honeydew 2040.
- Tel: +27 11 795 9920
- E-mail: email@example.com
Poultry Reference Laboratory
- University of Pretoria, Private Bag X04, Onderstepoort 0110
- Tel: +27 12 529 8224
- E-mail: firstname.lastname@example.org
- Tel: +27 33 346 0049
- E-mail: email@example.com
Irene Animal Improvement Institute, Advisory Services
- PO Box X2, Irene 0062
- Tel: +27 12 672 9239
- E-mail: firstname.lastname@example.org
These websites can help regarding agriculture:
- Agriculture SA
- Equipment: www.agriworldsa.com
- Live Stock: www.agriworldsa.com
- Agricultural Research Council
- Agri Eastern Cape
- Agri South Africa
- Arid Areas Programme
- Citrus Growers Association
- Deciduous Fruit Producers Trust
- Eastern Cape Department of Agriculture and Rural Development
- Mohair South Africa
- National Department of Agriculture, Forestry and Fisheries
- Organic Agricultural Association of South Africa
- Perishable Products Export Control Board