Farm records are not widely used in West Africa. This state of affairs is due to one or both of the following many tarmers are relatively uneducated and therefore cannot keep records, in addition the need for proper record keeping is not widely appreciated within the farming community.
Uses Of Farm Records
Records assist a farmer to improve his business, because such records will enable him to establish whether or not the business is being run profitably and whether or not his resources are being put to the best use.
Records also help the farmer when he is preparing his budgets, which are estimates of his annual expenditure and income. From the past data available to him, he is in a position to predict probable income for the present and for future years with some accuracy. Records, therefore, can be used for diag- nostic purposes and as sources of data for use in budgeting.
Cash Records
Under this heading the farmer may keep the following records.
A Cash Account
Here the farmer records the expenditure and revenue of the farm as well as the amount he has in his bank. At the end of each month or year the account is balanced.
what is commonly referred to as a Balance Sheet For the accurate preparation of such an account the tarmer has to know a number ot things.
1. He should know how to take an inventory of his assets. This is simply a list of possessions such as tools, equipment, buildings and stock, showing their estimated values.
2. The farmer should form the habit of recording accurately all the receipts and payments he makes throughout the year.
3. He should keep a record of produce consumed in the home and he should be able to calculate their monetary (naira) equivalents.
4 The farmer should know how to make a closing valuation.
5 Based on all the above data he should be able to draw his final profit and loss account.
Manure Record
It is advisable for a farmer to keep a record of manure used on the farm. Such information as the type of manure applied, rate of application per hectare and the method of application, are required when the balance sheet is prepared at the end of the year.
Record Of Home Consumed Produce
A farmer is expected to keep a record of the produce consumed in his home. He should also learn to cost these food items in monetary terms. This is necessary in calculating the true net output of the farm. A farmer who did not produce these items of food would
Depreciation
The farm inventory, which has already been referred to earlier in this chapter, consists of a list of assets showing their estimated values. Machinery of many types and fixed assets such as farm buildings are placed under depreciation schedules.
Depreciation is a way by which we distribute the cost of a depreciable item over the number of years which we estimate that the item will last. The number of years so estimated is known as the useful life of the item. When the useful life of the depreciable item lapses, the equipment/item can be sold at a give-away price. This price then becomes the salvage value.
Also Read:
The salvage value may then be defined as the price one hopes to realise from a depreciable item when it is finally withdrawn from the farm. When taking an ventory, therefore, a farmer should calculate the depreciation in order to establish the true worth of any equipment or building. There are three main methods of calculating depreciation. Assume that a machine will depreciate at 10, per annum.
a) The straight-line method:
Consider a machine costing N4000 with an estimated 10-year life and a salvage value of N400. The depreciation would be written off at N360 a year.
This method of calculation 1s very simple and is highly recommended for use by farm operators.
b) Annual reducing value
Another method is to base the calculation on the annual reducing value of the machine. A N4 000 tractor, for example, depreciated at 10 per annum would attract a depreciation sum of N400 in the first year. At the beginning of the following year, this machine is valued in the inventory at N3 600, and as such the value of the second year's depreciation would be N360 and so on.
c) Sum of the years digits
The third method is commonly called the sum of the years digits. Here it is assumed that the useful life of the depreciable item will be ten years. The sum of the years in series will be: 1+2+3+4+5+6 7+8+9+10 which equals 55. This sum, 55 then Decomes the denominator. The depreciation for the first year will then be:
Summary
Whatever may be the aims behind record keeping records when properly kept are indicators of good managerial ability and are helpful in determining whether a business is doing well or not. With reterence to poultry: the main areas of interest are the number of eggs laid per bird, and the amount of feed consumed per laying bird in relation to the eggs produced. This information is required so that the stage at which the input exceeds the output is known, thereby necessitating some culling. With respect to pigs, one should know the number of farrowings per sow, the average weight per litter, the average number of pigs born per sow and the average numbers of pigs reared per sow. A dairy farmer is interested in knowing the milk output per cow and the efficiency of food use.
A Farmer who produces crops is interested in finding out whether his marginal cost exceeds his marginal revenue. All these records are aimed at one thing that 1s, that profit maximisation should be the key note in agricultural endeavours and any activiuc which are not channelled towards this aim should be undertaken.
