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Brazilian Farmers Are Too Nervous to Track Their Costs
Editor's Note: The author of this article, Ed Siatti, is vice president of sales at Aegro, a Brazilian farm management software start-up helping farmers to plan their crops, log their activities, and manage their budgets. He joined Aegro in March. Before then, he worked with Strider, a decision support software start-up. Here he writes about his meetings with farmers across Brazil and includes some of his surprising findings.
Since I became the VP of sales at Aegro, I’ve been traveling a lot from farm to farm assessing with the real pain points farmers are facing in their daily lives.
It’s a blessing having this great opportunity to be in the fields interacting with farmers all across the country. One particularly big issue has caught my attention, and it’s deeply concerning: Many farmers are struggling to stay in business because their working capital is disappearing.
How is this happening? During my visits, I noticed that more than 95% of farmers in Brazil are not monitoring their production costs. It blew my mind!
At a big event for coffee growers in São Paulo a few weeks ago, I asked the audience how many of them closely follow their costs of production.
One of the farmers stood up and said: “Ed, I have to admit that I do not do the math because if I did, I’d need to stop my farming operation – I do not want to know how deep I am in the red.” Stunned, I replied to the farmer: “Señor, I have bad news for you. If you do not follow your costs of production today, it’s just a matter of time before you’ll be out of business.”
Can you imagine being afraid of accessing your bank account to know your balance? That’s the feeling and reality many farmers are facing all over the country. And unfortunately, many of them are falling apart when it comes to cost-benefit analyses.
My grandfather was a coffee grower in southern Brazil and he used to tell me: “Son, farmers can’t control weather, currency fluctuations, and input costs, but there are two things they can do very well. One of them is to produce more with quality and the second one is to control production costs closely.”
That’s what I believe strongly. If you don’t know exactly how much you are spending to produce 1 acre of crop yield, you don’t know how much money you’re getting out of it. As we all know, the bottom line is getting red more frequently in agriculture all over the world, so we badly need to help farmers change that scenario.
Today, the farmers that do track their costs are using spreadsheets or notebooks, which makes it hard to find the right information when they need it. I believe that information has to be at their fingertips, on a tablet or smartphone. There are farm management technologies helping farmers to get it done and, most importantly, build agronomic, financial, and commercial records, field-by-field, season-after-season.
Farmers are aware that they need to control their costs, particularly as input costs rise worldwide. According to Farmers Business Network’s Voice of the Farmer survey, those in the Midwest U.S. plan to reduce the following in 2017: equipment 29%; fertilizer 24%; seed 16%; chemical 10%; land 8%, 4% none; all 3%; labor 3%; other 3%.
There are so many amazing precision agriculture tools that can help farmers reduce these inputs and make better choices, but there are still challenges in getting to that point and truly understanding your cost of production.
Technology like Aegro could help, but it has to be affordable and it needs to be simple to understand if farmers are going to use it. My feeling is that farmers desperately want to be part of this tech revolution that we are living in, but we need to make it easy for them, and they need to trust you.
From my standpoint, knowing that the vast majority of farmers are not close to their cost numbers drives me to fight to reverse this damaging scenario and make sure that agriculture everywhere becomes more efficient, profitable, and sustainable. We know there is a long road ahead of us, but we, like many other agtech entrepreneurs, are passionate and mission-oriented about helping farmers succeed. We hope a breakthrough is at hand, and that farmers will feel educated enough to adopt new technology. The personality behind your technology and the story that your customers adopt are what will drive the growth.
To achieve mass adoption, we need more than customers: We need evangelists.
This article originally appeared in AgFunderNews.
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