Nkosana Mtambo’s father Jabu, a successful entrepreneur in the Vaal triangle, and his late grandfather Samuel, who farmed with livestock in Frankfort, exposed him to the world of business and farming. Today, under his company Mtambo’s Boerdery, he plants maize and beans on his 710-hectare farm near Vrede in the Free State, and leases two other farms, totalling just more than 2 000 hectares.
He grows maize and soya beans, manages a herd of about 200 Bonsmara cattle, and maintains a large flock of Dohne Merinos, producing both meat and wool. Nkosana also has a fleet of tractors and other farm machinery and implements that he rents out, and he trades in livestock.
Nkosana’s father and grandfather gave him 710 hectares of farmland as a gift for his 21st birthday.
We asked Nkosana to tell us more about the business side of his farming operation:
How do you track your farm’s income and expenses?
I use a financial expert to keep track of the earnings and expenses of the four enterprises I manage on the farm.
What kind of budgeting method do you use for your farming operations?
My banker and I do the financial planning together. We look at the number of hectares to be planted and build a budget based on what we will need for the upcoming production season – things like diesel, fertiliser, chemicals and seed.
How do you manage cash flow during off-season periods?
Most of my income comes from grain, equipment rental and livestock trading. The accountant oversees all of these with the help of our administrative assistant and bank statements.
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How do you manage debt and loans for your farm?
We use only short-term production loans for the grain season. So when I get my payment after the harvest, I pay off the loan and then wait until the next season. I limit my borrowing to production loans, and try to avoid debt for farm-related expenses as far as possible.
How do you determine prices for your crops and livestock?
I hedge my grains with my buyer. At the moment, we have completed the harvest, I’ve supplied my customer with his maize, and we’ve secured prices for the upcoming season. SAFEX mostly determines the price of maize, and we estimate what we believe the maize price will be this time next year. Wool, meat and livestock prices are also determined by the market, as are prices in the livestock-trading sector.
Do you use any financial software or financial tools specifically designed for farming?
My accountant uses the applications, not me!
How do you assess the financial viability of a new crop or farming technique before implementing it?
I have a close working relationship with my suppliers, and I actively do trials on about 10 hectares that I set aside annually to test new technology.
How do you manage the financial risks associated with farming?
I am a firm believer in sticking to guidelines and not cutting corners. I work closely with my suppliers, and I make sure to use their products correctly. I also have insurance. While I cannot cover all my production, I do manage to cover about 50%.
How do you plan for long-term investments in infrastructure?
I assess annually what needs to be improved on the farm. Out of all these options, I select two items and make sure they’re given top priority once we have harvested. This forces me to make a commitment and to finish two tasks from my list every year.
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Do government subsidies or grants play a role in your planning?
I received only one government grant, which did provide a significant boost for my business. I am convinced such financing is crucial for farmers trying to become commercial. Grants should be spread over three to five years, instead of being a single lump sum. This would maintain steady and reliable progress. It is a great advantage for a farmer not to have to pay for everything, and government after all also had a hand in shaping the commercial farmers we have today.
How is your farming funded?
I expanded my farming enterprise with personal funds from a previous business, before I looked for help from the Department of Agriculture. The grant I mentioned earlier was a one-off thing. I now finance production with business loans from the bank.
Who assisted you with the process to secure financing?
My extension officer helped me with all the paperwork.
How do you manage insurance and your tax affairs?
My accountant deals with those. There is a full-time staff member responsible for all the record-keeping, and she deals with the accountant.
What challenges have you faced in terms of securing financing, and how did you overcome them?
I still need to grow as a farming entrepreneur, so securing the money I need can be quite challenging. Bad weather conditions also consistently impact our production, which makes securing financial support difficult at times.
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Do you do succession planning for the next generation?
I aim to build generational wealth for my children.
Do you have a financial mentor?
Absolutely! My partner is my banker, who has more than 37 years’ experience in the industry. I’ve learnt a lot from him about money and ways to improve one’s financial position.
What is the biggest financial lesson you have learnt?
In the past I would use cash for big farm expenses, but my banker advised me against doing that. He taught me how to leverage credit to your business’s advantage, and the importance of maintaining a good credit record. Your credit score is very important in the business world.
