Farmers urged to guard financial assets

Economic cycles consist of good, average and weak times and it is important that every Namibian farmer should know how the chackles of this economic chain fits together and how to prepare and react to each situation.

Stressing the importance of good relations between farm owners and farm workers in this entire chain, managing director of IJG Wealth Management's Rene Olivier noted the current weak financial situation where there is just not enough money floating around to stimulate the economy and many farmers are struggling with increasing debts. He was one of many guest speakers at last week's 31st Agricultural Employers Association's annual congress held in Windhoek.

He warned that debt cannot be erased by more debt and therefore credit rating agencies look closely at this when banks are of the opinion that loans cannot be paid back.

When the economic going is good, people tend to be over optimistic and when the going gets tough, we tend to panic, he noted.

He emphasised that it will probaply take up to two years before the Namibian economy will be able to see growth again. If we are lucky, our growth might be three percent by 2020, he observed.

He noted with thanks the African Development Bank and Chinese Bank's contributions to boost economic growth but also stressed that inflation will increase by between 4 and 5 percent in the coming years and suggested a long hard look at inflation and interest rates. It is unlikely that interest rates will rise in 2018 and 2019.

He emphasised that farms are businesses and as such they have to possess sustainable and competitive value.

Where there is profits made, there is competition and where there is competition and profits, investors will invest. Farmers dont have control over the climate, droughts and meat prices, but they do have control over the management of their farms and will have to farm as effectively as possible in the years to come, he noted.

Farmers will have to manage their farms in cycles and make sure they sell at the best possible times when a drought strike.

Farmers must pay great attention to their balance sheets and I advise them to start small and slowly and keep an eye on the money market. Make sure of the value of the property and if the farm is to stay in the family, they must make sure that the next generation will be able to farm sustainably and productively.

It is also important that the entire family is involved and that wills are specific and clear as to investments and who is to inherit what in the case of more than one child.

The elderly must also make sure they get a pension when they hand over farm property to children.

And last but not least, if the elderly generation just moan about farming, the younger generation will not be eager to farm themselves.

Source: New Era Newspaper Namibia