Start farming is not so easy before proper farm planning. Running a farm and doing farming are two different perspectives to understand. Agriculture is almost the backbone of the world economy. Farming business is growing as the world population is increasing to compete for the demand of users. Technology usage increased production in farming, which attracts new businessmen to start farming.
Before you get started, you have to select any product on which you will begin to farming. The product can be any vegetable, fruit, or animal. Selection matter most in the whole farming business because it will define the below points, which are mostly related or expenditures. If you select a budgeted product, it will be easy for you to complete the cycle to end. If you choose any expensive product, it may become a cause of the dead-end of your investment.
Time frame: Product should be inside your desired timeframe, some products take a long time to get output, and some take less. Such as if we talk about dairy or egg farming, we get production daily. But if we talk about rice we have to wait at least eight months and for potato two months.
ROI: Return over investment, either by money or production. If you invest 20$ in one hen and sell her eggs in $1.52, you need to wait 12 days to meet sales. Now production is one unit a day, and investment is around half on the output as running cost. Businessman prefers high ROI products to farm, from which they get more profit in less capital & running cost.
Once you selected your product, the next phase is to do in-depth research on the product. Never take your decision too early after product selection. When you do, different research outcomes can either encourage and discourage to pursue the product. Mostly availability of resources in the mean of the workforce and capital effects during research. In farming, you will found, some products required initial significant capital and low running cost, where some products are inverse, which means less money and high running cost. Depend on geographical area, its rare to found a balanced product study in which you will get the budgeted capital and running cost.
In product study, below are the main points which we have to focus on before making a decision.
- Capital cost
- Running cost
- Harvest time
- Harvest Cost
The above points are not limited; there are many other points which you can consider before taking your decision to start farming. It’s based on geographical location, but you will found these common points in each business study.
The initial amount which you will invest in starting your farm consider as a capital cost; this is a common phenomenon. The actual point is that capital cost is dependent on the selection of product, if you already selected your product and started study around that, now you know what the capital cost you need to invest is. Capital cost is calculated based on the essentials you need to start.
Such as you have selected potato as your product. The essentials you need for potato farming is listed below.
- Planting (Machine or manually)
These are significant factors on which you can calculate your capital cost easily. For example, one-acre land cost $500 for the year on rent, Planting on acres manually cost $200, seed cost $150 & fertilizer cost $80-$100 for an acre.
Now your total cost becomes 500+200+150+100 = $950
Note: This is the only assumption, not actual use-case.
Next, you have to calculate the daily expenses, like watering of field, fertilizing of area, etc. Each product selection has a different running cost, which you have to bear. So always take a significant portion of your entire investment as running cost & future investments. If you pursue potato farming assumption, one-month watering cost & fertility cost $50 per acre, and potato has 17 week period for max production cost you $200.
This period is calculated when your selected product is ready for collection. Such as in the case of potato, you have to wait max 17 weeks to harvest potato from under the ground. If your product is milk either from cow, buffalo or goat, your harvest time is daily or twice a day. If you selected a product which is odd harvesting time and geographical issues, then maybe you have to face some financial losses.
Some people plant rice crops in winter or near, so to harvest them in summer, on harvesting time, if the raining season started, then rice crops get wasted. Farmers are well aware of geographical issues such as floods on special occasions, under the groundwater level, the PH level of soil, unconditional temperature issues, lack of resource availability, etc.
FYI (For Your Info):
- Potato: 17 weeks
- Onion: 17 weeks
- Wheat: 17 – 20 weeks
- Rice: 18 – 22 weeks
This cost is directly proportional to this land, which you require for the planting of your product, which you have to harvest. Your harvesting cost may be higher in the case of sugar cane compared to rice and other crops. Some crops need more cost to harvest because they need machinery or more manpower, which you have to consume based upon the physical land.
In some products, you need multiple types of machinery to process for harvesting. Such as rice and wheat need multiple processors to produce a final outcome. In the case of rice first, you have to harvest from the land and then process in sheller to get the final product; in case of wheat, you have to harvest from the land, then process in sheller and then processes in the wheat machine.
The marketplace is the area where you can sell your product in one go. Meaning if you have 1 ton of potato, you can’t sell that in the open market; you have to deal that in the marketplace from where investors or mid man purchased products for the business. If we assume 1 kg potato @ $0.30 then 1 ton becomes $300 and not one invest their money for potato which they don’t need.
Akbari Mandi is the Punjab, Pakistan marketplace which is formed under the Mughal Empire for agricultural barter. It’s is still running for the same purpose in Lahore. Where farmers can sell their products in one, go to different business people quickly, so in farming selling products is also very critical; if you failed to sell your work on time, then you will be screwed and out from farming business in days. Before starting, make sure you have useful links in the marketplace of your state or city to get started with production.