Limbe Leaf tobacco has trained farmers in financial literacy and it is bearing fruit, our contributor MCDONALD CHAPALAPATA writes.
Misheck Mwale, 47, has been growing tobacco for more than 15 years.
For the past six years, he has been producing the leaf under a contract with Limbe Leaf Tobacco Company Limited, alternatively known as Limbe Leaf.
When he started farming, he was just convinced that tobacco would bring him and his family enough money to overcome poverty.
“There was no business planning, no business forecast, no contingency plan, nothing. It was business as usual,” he says.
This was nothing unusual. Like many farmers in the country, Mwale had never heard that farming was a ‘business’ and that it needed planning, budgeting and record-keeping.
For the early years, he was growing maize, groundnuts and tobacco for sale to support his wife and their two children.
At that time, he could spend a lot of money on in-puts and other expenses without keeping a record of his expenditure.
After selling his produce, he would spend his earnings without sitting back to calculate if he had made a profit or loss.
“I was always contented with how much I realised from the sale of my produce. I never took into account how much I invested to earn the money. To me there was no profit or loss, as a long as I was seeing money in my hands,” recalls Mwale.
Mwale embraced farming as a business when he and other farmers attended a four-day financial literacy and business planning training conducted by Limbe Leaf.
“The training was an eye opener,” he says. “We learnt that farming is a business and in every business, one needs to document every transaction, have a work plan and know whether you are making a profit or loss.”
Sitting in front of his house roofed with corrugated iron sheets, which has become a model of Kasela Village in Zimu farming zone, Mwale says the new skills constitute a rare opportunity to expand his farming business and make more money.
“In addition to tobacco farming, I started growing vegetables as a business. I hired a tractor to prepare half a hectare of land along Luza River where I grew maize, beans, tomatoes and different types of leaf vegetables,” he explains.
The vegetables did well. He sold green and fresh beans at K4 000 per bucket, making K156 000 in profits.
He also got a profit of K360 000 from green maize sales after getting gross sales amounting to K600 000. From tomatoes, Mwale got a profit of K82 000.
“I thank Limbe Leaf for the free training. Now I can plan before starting any business, just like I did when I did the vegetable farming.”
And Mwale has a word for farmers still doing business as usual: “One needs to have a business plan, taking into consideration capital, whether one should get a loan and what the conditions for the loans are.
“One must also think of the size of the intended business. At the end, there is also need to evaluate whether one is making profits or losses. For this, you need to have book-keeping skills.”
Now, Mwale sees business planning as key to his success.
“With the training, all I need to do is plan properly and I know from my planning and budgeting, I will know which activities will bring me money,” he quips.
Limbe Leaf corporate affairs director Febbie Chikungwa says the company decided to train farmers on basic principles of financial planning and business management to encourage them to manage farming as a business unit.
She says: “We would like to promote various income streams for farmers. Consistent cash flow throughout the season will not only enable farmers to better plan their income from tobacco, but also provide them with resources to pay wages throughout the season and send children to school.
“The training in financial literacy complements the training the farmers receive on Agricultural Labour Practices programme. Under the programme, farmers are among other requirements, trained to pay at least minimum wage, not to engage child or forced labour and generally to provide a decent work environment.
“With the financial literacy training, farmers are able to calculate minimum wage and budget for regular wages for the season. We are happy that once these lessons are engrained, the knowledge is used in tobacco production as well as other businesses that the farmers engage in.”
Almost 1 770 farmers were trained between October and December 2019. The training was not restricted to contracted farmers for Limbe Leaf.
Limbe Leaf also trained its technicians as trainers to ensure continuity of the programme and ease of monitoring in the areas where they work.
The topics covered during the financial literacy training include setting financial goals, increasing income from farming business, understanding cash-flow, record keeping, planning and budgeting, building a saving culture and debt management.
For Mwale, one lesson that he keeps so dearly from the training is a simple one: “Keep records, they will help you make right decisions.”