Farm Investments 02/19/2015

 Farm Investments

Farmers are often tempted to make investments that are expensive but do not improve significantly the financial viability of their farm. This needs to be avoided. Decisions should have as priorities investments that can: assure an income, through reducing risk; increase incomes by improving prices; improve incomes by increasing yields; reduce production costs; or generate additional income.

Investments that can improve yield stability and hence reduce risks include:

• those that protect against pests and diseases, such as sprays and a sprayer;

• irrigation and other technology that reduces the adverse effects of the weather.

Such investments are particularly important in horticulture because when yields are low as a result of poor weather or pests, prices rise significantly. The grower whose yields are least affected makes the most profit.

Investments that improve prices include:

• technology for 'off-season' production, such as polythene tunnels and improved transplant technology;

• investments made directly in improving marketing, such as grading facilities, on-farm storage, pick-up trucks to transport produce and telephones to improve market communication;

• investments that improve the quality of produce, (e.g. irrigation, crop protection or high-quality planting material).

 Investments that increase yields are:

• irrigation equipment;

• scientific fertilizer usage (e.g. correct quantities, optimum timing of application, right amounts of different nutrients);

• high quality planting material.

Investments that save on production costs include:

• herbicides and mechanical hoes, which can cut down on labour for weeding.

Investments that can create additional income are:

• processing equipment to add value to products;

• transport, to take products to new markets