Farming is not just farming but a business as well. We have realized that increasing profit margin from farming uses similar strategies as other industries across the country. Farmers look to maximize labor, reduce spending and maximize revenue so the business can retain as much profit as possible. Short of simply raising prices, there are a number of strategies farmers can employ to increase profit margin without sacrificing the quality of products brought to the market.
Selling to Local Businesses
Selling to local community markets and grocery stores can help a farmer decrease transportation costs for products and increase profit margin. A farmer selling farm produce to local grocery stores and markets doesn’t have to hire transportation to reach delivery destinations that are far, which cuts down on fuel costs and strain on delivery equipment. A farmer also reduces payroll by having shorter delivery routes for drivers. Local grocery stores prize produce from local growers because of the increasing number of consumers looking to reduce carbon footprint through the purchase of locally grown products.
Investing in Alternative Energy
Investing in alternative energy solutions, including solar power, can allow a farmer to reduce energy costs and increase profit. Solar power can provide a cheaper form of energy to power farm equipment than conventionally generated electricity.
Crop Rotation Habits
Proper crop rotation strategies can help reduce a farmer’s fertilizer costs, enrich the soil, and increase take-home earnings. For example, planting beans when maize isn’t in season increases nitrogen content in the soil. These strategies can also help kill off harmful insects and retard the growth of harmful bacteria. Integrated Pest Management, can help a farmer operating on a small or large scale to bring a greater percentage of produce and other food products to market. The increased yield, combined with healthier soil, allows a farmer to retain a greater percentage of his revenue as profit.
Improving Farm Equipment
Purchasing more efficient farm equipment, including tractors, harvesters and grain separators, can help reduce a farmer’s equipment costs in the long run and lead to increased profits. A farmer incurs increased costs up front to purchase more energy-efficient equipment, but the savings the farmer receives in reduced fuel and maintenance costs over time can outpace those up-front expenditures. Purchasing new capital assets expected to earn income for the farm also allows a farmer to recoup these expenditures over a number of years through depreciation. This ensures the farmer has eligible tax deductions over the useful lives of these items.
Farmers Should Boost irrigation
With the growing effects of climate change on weather patterns, more irrigation will be needed. Average yields in irrigated farms are 90% higher than those of nearby rain-fed farms.
Increase the use of fertilizers
As soil fertility deteriorates, fertilizer use must increase. Kenyan National in collaboration with local governments need to ensure the right type of fertilizers are available at the right price, and at the right times. Fertilizer education lessens the environmental impact and an analysis of such training programs in Kenya found they boosted average incomes by 61%.
Improve market access, regulations, and governance
Improving rural infrastructure such as roads is crucial to raising productivity through reductions in shipping costs and the loss of perishable produce. Meanwhile, providing better incentives to farmers, including reductions in food subsidies, could raise agricultural output by nearly 5%.
Make better use of information technology
Information technology can support better crop, fertilizer and pesticide selection. It also improves land and water management, provides access to weather information, and connects farmers to sources of credit. Simply giving farmers information about crop prices in different markets has increased their bargaining power.
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