Farming can be as much a precarious job as much as it is rewarding. Factors like unexpected rain or overtime drought can throw a farmer’s plans into disarray. This will eventually lead to a decrease in income from farming. Without proper planning in finances, a farmer could find himself in a financial crunch. How to avoid this and create a better future? Read on.
- Take loan only after careful consideration – One of the common mistakes most farmers make is taking a loan without assessing how much cash inflow they will be obtaining. Estimate the average output yield that you will be getting at the end of the season, evaluate risks that could befall your crops and always plan for a worst-case scenario. Only after such careful consideration and with full confidence that you can repay the loan back, must you take a loan.
- Ensure you use the government schemes properly – India government offers many schemes which are aimed at improving farmer’s life. Ensure you use them to boost your crop yields rather than utilising it on your household expenses. Otherwise, you will not have proper income flow and you will not have the capacity to generate income to sustain the family in the long run.
- Insurance for your tractors – One of the important points that many farmers overlook is the need to get an insurance policy for their tractors. Buying a tractor insurance would be a good investment in the long run. Tractor being an important asset in your farming will be subjected to lots of wears and tears. If any damage happens to your tractors you will have to spend money on repairing and your farming might also get halted. To prevent these unnecessary expenditures, it is best to get a tractor insurance.
- Take an insurance cover for livestock and crops – Government provides low premium loans to cover livestock and crops. Make sure you properly utilise these loans so that you have proper protection over your livestock and crops.
- Have a good understanding of the machinery used – Farmers must have a good understanding and the break-even point of the machinery used in farming. Every machine would be having the optimum point for which it must be used. No proper maintenance and overusing machinery can lead to their depreciation. This would lead to shelling out more money over the money already invested. Thus farmers must have a proper grasp over how to use the machines optimally.
- Emergency fund – Most farmers fail to keep aside an emergency fund. This would be an ideal step that farmers can take to make sure that they have a safety net to fall onto in case of a worst-case scenario like your crops failing or unprecedented weather issues.
- Invest money– Whatever profit that farmers get, invest a portion of it in fixed deposits or recurring deposits. This can maximise the returns.
- Get financial advice from experts – Before you start each crop season, seek the help of financial and agricultural advisors. They can help you plan your season effectively and can direct you how to invest your money to maximise the revenue. They can also educate you on the latest trends that you can incorporate to boost your income.
- Learn extra skillsets – Having a back-up skillset that you can fall back into when farming fails is a great way to ensure that your cash inflow will be sustained. If something drastic happens in the middle of the season and if you don’t have enough money to start over, you can rely on these additional skillsets to fund your income.
- Enroll in life insurance coverage and health insurance schemes – Apart from taking insurance for crops and livestock, it is also equally important to get insurance for farmers themselves. If the farmer’s health is jeopardised the entire farming operation could come to a standstill and cash income could dwindle. Without an insurance cover, you will have to spend a lot of money on treatments too.
If you don’t know where to obtain insurance at affordable prices head over to Digit Insurance. They provide affordable General Insurance policies, so you can choose the best policy as per your requirements.
Written by Arya T.N