Lemang’s Praveen Dwarika on diversifying a farming business

The seasonality of farming production means seasonal income and inevitable cashflow constraints. However, diversification offers income year-round. But how do you go about diversifying a business that already exists?

Dwarika says diversification is important if you want to farm successfully.

“Investment advisors always talk about a diverse investment portfolio. What that essentially means in a farming operation is making sure you have income streams coming from different types of productions.

“You may have crop production and within that perennial crops and short-term crops. You could also have livestock consisting of for example, small stock units or large stock units. All of this will provide an income at different times of the year.”

When a farmer develops his diversification plan, there is a criteria he should look at.

Dwarika emphasises that a farmer should constantly be planning.

“It’s always good to be thinking about a diversification strategy. Naturally you must wait for the right time to execute it.”

It should also be proactive. “Look out for the warning signs and understand what is happening in the market, and with environmental factors. Use that to determine when you want to execute your new strategy. Your finger needs to be on the pulse at all times.”

Farming well is all about timing.

“Your plan can be implemented at any time during the season, depending on exactly what it is that you want to do. However, the important bit is planning so that you have recourses available and are able to manage the plan accordingly.”

This is especially important if you want to implement a plan that is heavily reliant on financing.

“You don’t want to end up in a situation where you tie up the farm’s finances by suddenly switching to a diversification strategy.”