Farm accounting - The only guide you'll ever need!

Agriculture is unique. Unique. No other kinds of enterprises, whether it's crops or animals, depend on living produce. In terms of assets, liabilities, costs, and revenues, farm accounts are thus more complex than other enterprises.
Farming can be a regulated and subsidized industry, depending on which country you are in. Then of course the weather can affect profit and loss dramatically.

All these factors are not easy to take into account. But it is possible to start a routine of financial management for every aspect of the farm's activity with a few thoughts and plans. Here are the key points to remember when it comes to farm accounting.

1. Your land is a valuable asset.

Agricultural land that is well-managed should not depreciate – in fact, it may increase in value. However, unmanaged land can take many years to recover its productivity, especially if it has become very acidic or depleted of minerals due to past over-farming. The expense of maintaining your land should be factored in at all times.


If you want to keep your fields productive, this is an unavoidable cost.


Nothing grows without water, and in dry places, irrigation is a significant expense.


Crops may rot and livestock will be harmed if the soil does not drain well. It is an expensive process to improve drainage.

pH control in the soil

pH values are varied for different plants. Although some crops may demand more acidic soils, acidity frequently means more weeds. To provide the right nutrients and keep the soil pH at the right level, a thorough examination is required.

Weed control

Weed removal is a continual cost, whether it's hand extraction or spraying.

Controlling pests

You'll have to deal with bugs if you're raising crops. As bugs acquire resistance, this is a never-ending battle with natural selection.
Good grade land should be productive year after year if properly cared for. As a result, whatever it costs to keep your land in good shape is generally money well spent. Make sure you account for all these expenses.

2. Keep up with government subsidy programs.

Agriculture is a vital sector. If a country lacks the resources to feed its own people, it will have to rely on imports to survive. As a result, most governments pay subsidies to farmers to help them through the lean years, to encourage specific types of farming, and to ensure that the country never runs out of food.

Each country's subsidies are unique, and they frequently change. One year, a large subsidy may be given to livestock wheat production, while another year, beef may be subsidized. Governments frequently get it, resulting in surpluses that force prices too low. Subsidies are now more efficiently managed, but it also means they change more frequently. So, especially if the subsidies are delivered as direct payments, make sure you keep track of them and account for them. The more you understand about subsidies, the better you'll be able to organize your farming strategy to take advantage of them.

3. Changes in land usage should be documented.

The type of farming that is carried out on the land changes as economies change. Consider the following scenario:

Crop productivity 

As the world becomes more vegan, pasture may be converted to grain, fruit, or vegetable farming.

If your land-use changes, even if it's only a few fields, make a note of it in your books. Make any necessary adjustments to the land valuation (asset) and account for the sale of any stock that was previously on the land. Alternatively, if you're switching to livestock farming, keep track of the cost of purchasing livestock.

It will be much easier to maintain your business records up to date if you note these changes as they occur.

4. Know what you have on hand.

Farmers will know how many animals they have, what sort, breed, and age they have.

However, because animals reproduce and die, the population will not remain constant. And, especially during winters and calving season, the old adage "where there is livestock, there is also deadstock" still holds true.

As a result, your stock figures will fluctuate over time, and it's critical to keep track of them in your accounting software. Every head has a value, which should be documented.


To read Part 2 of the article click the link below

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