Why Farm Records Are Maintained

Where this differs from the previous chapter

The objectives were what the records are designed to achieve. The reasons are the pressures that make a farmer keep them, and most of those pressures come from outside the farm gate.

The internal reasons

1. Because the farmer cannot remember. A farm has hundreds of small transactions a season, spread over months, and every one of them affects a cost.

2. Because he cannot be everywhere. Seven fields, a store, a cattle shed and a market cannot be watched by one man. The record is how he knows what happened while he was elsewhere.

3. Because he must know which crop pays. Without records by crop, a loss-making crop is carried by the profitable ones and nobody sees it.

4. Because inputs leak. Seed, fertiliser, pesticide, diesel and feed disappear from a store with no issue register, and the loss is charged to the crop, which then appears expensive.

5. Because he has to plan the next season while this one is still running. Sowing decisions are made months before the accounts are closed.

The external reasons

6. Credit. A bank or a cooperative society lending for a crop, a tractor, a well or a shed asks for income, expenditure and repayment capacity. No records, no institutional credit.

7. Insurance. Crop insurance, cattle insurance and machinery insurance all require proof at the time of the claim of what was sown, what was spent and what was lost.

8. Subsidy and relief. Area, inputs and yield have to be documented for a subsidy scheme and for calamity relief.

9. Taxation. Agricultural income is exempt under the income-tax law, but a farm with non-agricultural income beside it, from a poultry unit, from letting machinery or from trading in produce it did not grow, has to separate the two, and only records can do that. A registered farming company is assessed like any company.

10. Statutory and regulatory requirements. A farm that employs labour has obligations under the labour laws, and a farm that is a company has to keep books under section 128 of the Companies Act 2013.

11. Buyers and contracts. A processor contracting for the crop wants traceability of inputs and of dates.

12. Succession and partition. A farm passing to the next generation, or divided between brothers, needs evidence of who put in what and of what the farm is worth.

13. Disputes. With labour over wages, with a supplier over a delivery, with a tenant over a share, with a neighbour over a boundary. All are settled on evidence.

The reasons nobody thinks of

14. Research and price policy. Cost-of-cultivation studies are built farm by farm from recorded data, and minimum support prices are recommended from them. A farm that records nothing contributes nothing to the figure at which its own crop is bought.