As farming gets more commercialised, farmers should endeavour to be certain about the performance of their farms at any given time.
They should be in a position, for example, to easily tell how much is spent on farm inputs, how much is paid to farm employees, how much is lost, and how much is earned as profit, if any.
This is difficult to achieve if a farmer does not keep a record of financial transactions and other activities that take place on the farm.
Some of the records should be about the weather patterns – the dates it rained and the dates when calamities such as hailstorms and dry spells took place.
Accumulated data of this kind can aid the farmer to make a better guess of when the rains are likely to begin or stop and what weather calamities are likely to take place in a given period.
There should be a record of all financial transactions whether it is money spent on inputs, veterinary medical bills, or sale of farm products.
Such records help the farmer to make performance comparisons between different years or between his farm and other farms in the neighbourhood.
The farmer is in a better position to estimate his actual earnings and losses. Records inform the farmer whether he is in a position to take a loan and to pay back the borrowed money.
Many financial credit institutions want to have a look at farm records before granting loans.
As we embrace agricultural insurance, farm records are bound to gain more prominence since they give insurance companies a clearer picture of the covered farming enterprises and how much to indemnify the farmer in case of a calamity.
Farm records also guide the farmer to plan for the future. If records indicate that the farm does not make sufficient profits the farmer will be more careful in deciding whether to invest more into it, or think of better management methods to increase the farm’s output and profits.
Farm records help the farmer to remember which of his customers did not pay cash and how much they owe him.