Principles of Farm Economics
Senior 1 · Agriculture
Principles of Farm Economics
Lesson 4 of 5
20 min
Let's begin
Two poultry farmers in Bugesera each sell about the same number of eggs. One can tell you exactly what she spent on feed last month, which hens have stopped laying, and how much profit she made; she used those figures to get a loan from her SACCO to double her flock. The other thinks he is making money but is not sure, and cannot say why his cash keeps running out.
The difference is farm records: written (or digital) accounts of everything that happens on the farm. A farm without records is run on memory and guesswork; a farm with records is run as a business.
| Type | What it records | Example |
|---|---|---|
| Inventory record | Everything the farm owns (land, buildings, tools, animals, stored produce) with its value on a given date | Stock-taking on 1 January |
| Financial records | Money coming in and going out | Cash book (receipts and payments), sales record, purchases record, debtors and creditors |
| Crop production records | For each plot: crop, variety, planting date, inputs used, operations, pests, harvest date, yield | Beans on terrace 3, season A |
| Livestock production records | Output of the animals | Daily milk yield per cow; eggs collected per day |
| Breeding records | Mating or insemination dates, expected and actual birth dates, number born and weaned | Doe card in a rabbit unit |
| Feeding records | Type and amount of feed given and its cost | Bags of layers' mash used per week |
| Health records | Vaccinations, treatments, disease cases, deaths | Newcastle disease vaccination dates |
| Labour records | Workers, days worked, tasks done and wages paid | Casual labour for weeding |
| Farm diary | Daily notes of events and activities | "Heavy rain; terrace 2 bank collapsed" |
Good records are accurate, written at the time (not from memory weeks later), complete, simple enough for the farmer to use, dated, and kept safely (dry, and backed up if kept on a phone).
A cash book lists money received on one side and money paid out on the other. Here is one month for a small layer unit (illustrative figures).
| Date | Receipts (money in) | Frw | Date | Payments (money out) | Frw |
|---|---|---|---|---|---|
| 1 Mar | Balance brought forward | 50,000 | 2 Mar | 4 bags layers' mash at 30,000 | 120,000 |
| 5 Mar | 20 trays of eggs at 4,000 | 80,000 | 12 Mar | Vaccine | 8,000 |
| 19 Mar | 20 trays of eggs at 4,000 | 80,000 | 20 Mar | Wages | 30,000 |
| 26 Mar | 10 spent hens at 3,500 | 35,000 | 28 Mar | Egg trays | 12,000 |
| Total | 245,000 | Total | 170,000 |
Tools lose value as they wear out. This loss is called depreciation. A simple method spreads the cost evenly over the tool's useful life.
A knapsack sprayer costs 60,000 Frw and is expected to last 5 years.
Tip
Memory hook, the qualities of a good record: "ACCESS": Accurate, Complete, Current (written at the time), Easy (simple), Safe, Signed and dated.
Exam technique: when a question gives a list of transactions, first sort each one into "in" or "out", then total each side separately. Balance = total in − total out.
Give four reasons why a farmer should keep records.
Solution: Any four of: to know profit or loss; to plan and budget; to detect problems early; to obtain credit; to support insurance and tax; to settle disputes; to guide breeding and culling; to share cooperative earnings fairly.
Name the type of record in which a farmer writes: (a) the dates on which each doe was mated and kindled; (b) all the farm's tools and animals with their values on 1 January; (c) the vaccinations given to a flock.
Solution: (a) breeding record; (b) inventory record; (c) health record.
A farmer starts the month with 20,000 Frw, receives 150,000 Frw from milk sales and pays out 95,000 Frw for feed and 25,000 Frw for labour. What is the closing balance?
Solution: In: 20,000 + 150,000 = 170,000. Out: 95,000 + 25,000 = 120,000. Balance = 170,000 − 120,000 = 50,000 Frw.
A water tank costs 240,000 Frw and lasts 8 years. Using the straight-line method, find its depreciation per year and its value after 3 years.
Solution: 240,000 ÷ 8 = 30,000 Frw per year. After 3 years: 240,000 − 3 × 30,000 = 150,000 Frw.
Why should records be written on the day an event happens, not at the end of the month?
Solution: Memory is unreliable. Figures written weeks later are often wrong or missing, which makes the records useless for judging profit or spotting problems.
Summary
Sources and credits
Written by Ganzaa.
