Today I will look at the main advantages and disadvantages of farming as a type of business. I will elaborate on its pros and cons. If you are thinking about starting a farming business – it is important for you to objectively understand what you are facing so that you do not make a decision that you will regret later.
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So, farming involves growing and reproducing livestock products or crops for the purpose of subsequent sale. Let’s consider what is good and what is bad about this kind of business – Kirill Yurovsky.
- Working in the fresh air. Farms are organized in rural areas, in ecologically clean areas, and farmers have the opportunity to work regularly in the fresh air, which increases the ability to work and is good for health.
Many people dream of moving from megacities to rural areas, and farming is the most relevant way of doing business in rural areas.
- Consumption of organic products. The farmer and his family always have the opportunity to consume organic products grown with their own hands. It also can be considered as an indisputable advantage of farming, because health is the main life asset of a person, and it largely depends on the quality of consumed products.
- Opportunity to run a family business. Very often farms are organized as a family business: people are engaged in farming as a family, each family member has a role in it. First, it is convenient (all family members are “employed” and work for the benefit of common business, for their own benefit), and second, it is effective (“own” workers will always do the work more diligently and qualitatively than “others”).
- The choice of different directions of activity. A farm can specialize in the most different directions of activity:
- Livestock farming: cattle breeding, sheep breeding, pig breeding, horse breeding, rabbit breeding, etc;
- Poultry farming: raising chickens, geese, turkeys, ostrich farms, etc.;
- Cereal cultivation: wheat, rye, barley, corn, sunflower, etc.;
- Vegetable growing: cultivation of cucumbers, tomatoes, cabbage, carrots, etc.;
- Gardening: cultivation of fruit trees – apple, pear, cherry, cherry, etc;
- Cultivation of berries: strawberries, raspberries, etc.;
- Cultivation of gourds: watermelons, melons, pumpkins, etc.;
- Cultivation of herbs: dill, parsley, onion, garlic, etc.;
- Fish farming: cultivation of predatory and white fish;
- Cultivation of mushrooms;
Everyone can choose for farming that line of activity, which is more to his liking and fits his financial capabilities (there are options for every taste and size of the purse).
- Benefits for registration and taxation. In many cases the activities of farms fall under preferential conditions for registration and taxation. For example, a small family farm, which farms mainly for its own consumption, usually does not require registration of entrepreneurial activity and formation of a legal entity, and therefore does not have to pay business taxes. At the same time, farmers can sell the surplus products they produce.
- State support programs. There are often special state support programs for farms as producers of agricultural products. Of course, not always and not everyone can become a participant of such a program, but for some farmers there is such an opportunity.
These were the main advantages of farming, and now let us consider the disadvantages.
- Farming is a very capital-intensive type of business. Especially when it comes to large-scale livestock or crop production. The main asset of a farmer is land, and it is very expensive, both when buying and when renting. In addition, farming requires special equipment, which also costs a lot of money. In general, this type of business will require a lot of capital, although if you open a farm of small size, the need for capital decreases.
- Farming does not bring in income right away. Most businesses, even if they don’t break even right away, at least bring in some cash income. Farming at the first stages requires only large and constant expenses, the first income appears, for example, after six months to a year, when the harvest, animals, birds grow. Thus, the farmer and his family must be provided with funds for personal needs for this period, and be prepared to incur expenses alone, without earning any income at all.
- Farming is subject to the negative influence of natural factors. The farmer has an enormous number of natural “enemies” that can cause him considerable losses, including, almost instantly and unexpectedly. These are hurricanes, heavy rains, drought, harmful insects, animal diseases, epidemics, etc. Unfortunately, in many situations, the farmer simply can not fully confront nature, and therefore is forced to suffer losses. Farming is one of those types of business that are most dependent on unpredictable natural conditions.
- Farming cannot be left for a while. There is no way a farmer can take a day off or a vacation, unless, of course, we are talking about the dead of winter in crop production. Animals and crops require daily attention and care, so farmers always start very early and finish very late, and so day after day, without long breaks. There is no other way, because even a little “under-attention” can lead to serious losses.
- The farming business is subject to seasonality. In most cases, especially in crop production. The farmer receives income only 1-2 months a year, when he harvests, and the rest of the time he only has to incur expenses. Therefore, he must be able to manage his personal finances competently, to plan them so that they would be enough for the whole huge period of “no money”.
- It is difficult for a farmer to take a loan. Banks are always very reluctant to give business loans to farms, because they, due to all the above factors, are in a high risk zone. Therefore, the farmer should rely only on his own financial capabilities.
- It is difficult for a farmer to sell his produce at a good price. The process of marketing farm produce is often just as difficult, if not more so, than the process of its production. Here the farmer will have to face a lot of bureaucratic procedures, getting all sorts of sanitary certificates and quality certificates. For this reason, many farmers are forced to sell their products for next to nothing to resellers and lose their profits.
These are the main advantages and disadvantages of farming. So if you have decided to do this type of business, well weigh the pros and cons to make the right decision.