Training farmers on budgeting key—Ifpri
The International Food Policy Research Institute (Ifpri) says training smallholder farmers in budgeting and sales planning is key to ending a vicious cycle of inefficient purchasing systems and poor decision-making.
The report titled ‘Expecting too much, foreseeing too little?’ indicates that smallholder farmers’ tendency to sell their produce for low prices immediately after the harvest only to repurchase them later in the season at mark-up undermines their capacity to maximise profits and generate revenue.
Reads the report in part: “In particular, farmers are constrained in their cognitive capacity, leading them to underestimate future needs.
“Such budget neglect leads farmers to sell earlier on and save too little for later in the year.”
In a bid to address this, the researchers tested two interventions, namely budgeting and sales planning. Budgeting showed some promise in improving stock management, its impact on sales timing was mixed.
However, a sales planning intervention, where farmers committed to selling specific quantities at minimum prices later in the season, proved more effective, according to the study.
Commenting on the study, agriculture development policy expert Tamani Nkhono-Mvula said in an interview on Monday that sales plans are easier to implement and could be a valuable tool for policymakers and agricultural agencies.
He supported the recommendations, but stressed that they would have to be supplemented by interventions that address the underlying issues that force farmers to sell their produce early.
Said Nkhono-Mvula: “The farmers resort to selling their produce because they do not have alternative off-farm incomes.
“When pressured, they will sell their produce because that is the only asset that they can easily liquidate.”
Mwapata Institute research director Levison Chiwayula said in an interview on Monday that government can also boost farmers’ income by intervening in the market to stabilise price fluctuations, a factor that worsens farmers’ losses to income.
He said: “Current legislation grants the Minister of Agriculture powers to intervene in the market at any time.
“This leaves the actors in the maize value chain guessing,”
Chiwayula said government should develop clear and transparent rules for setting minimum prices and instituting export bans.
Agriculture is the country’s mainstay and contributes about 25 percent to the gross domestic product and about 75 percent to foreign exchange earnings, according to the National Statistical Office.
