Is It Possible To Start Small Scale Farming (Without Loan) Capital In Gauteng, South Africa?

The short answer is: Yes – small scale farming in Gauteng can indeed be a profitable venture!

Want to hear the best part?

You don’t even need a loan or government subsidy…

Don’t believe us?

Take a look for yourself…

Meet Clement Tshuma!…Vegetable Producer in Kempton Park in Gauteng

Clement Tshuma Vegetable Farmer In Gauteng South Africa

“When I started, I felt I needed to have a project that could benefit those who have land, but cannot afford equipment. I think if someone farms on a small scale, he can gradually expand.

The idea is to show people that it is possible to be profitable without needing a tractor and large equipment,” Clement explains.

“…the first layer is sustainability, then cash crops to create revenue, and then adding value, like selling chilli powder, to enter more profitable markets.”

Further reading: Small land, big dreams for urban veggie farmer – Farmer’s Weekly ZA

This insightful article is a must read for any budding small scale agri-entrepreneur anywhere – but particularly if you live in Gauteng, South Africa.

What can we learn from Clement’s successful small scale farming journey in Kempton Park, Gauteng (South Africa)?

Many important lessons can be learned from this article if you are considering starting up small scale farming on a budget.

Clement’s ‘organic’ approach to business growth gives hope for you if you want to begin growing cash crops without capital investment.

His no debt model of small farming, lowers the bar to entry for many.

As quoted from the same interview, Clement advises:

“…the inability to secure loans is a major obstacle for those starting out, he says.”

The article narrative continues:

‘From the outset, Clement’s idea was to start out producing for own consumption, and then slowly build a business from there, without owing anyone any money.’

I’m sure you’ll find these very encouraging words, if you also have ambitions of becoming a profitable local grower of produce…

But just can’t see past needing a loan.

The financial investment approach to start-up, however, has three crippling drawbacks to most ‘would-be’ entrepreneurs:

  1. Inexperience & little knowledge regarding agricultural loan or subsidy application
  2. Lack of credit worthiness
  3. Insufficient business planning documentation

Many newbies with an idea to begin small scale agri-business projects, freeze at the first apparent hurdle of obtaining ‘seemingly vital’ financial support.

But zero-debt start-up entrepreneurship stories like Clement’s, show a far more sustainable and profitable approach to getting into small scale production.

Here is our own digest of key success factors, according to Clement’s article:

30 Key Success Factors To Starting A Small Scale Farm Production Business In Gauteng – Without A Loan!

One quick thing to point out:

Whilst Clement’s small scale farm produces vegetables…

The take home points below (if we read between the lines a little) are entirely transferable to any agri-project, whatever your niche

Crop or livestock…

Fruit or vegetable…

The principals can all be applied.

Practical Tips To Better Small Scale Farming In South Africa, Gauteng

Step #1 – Choose a modest sized plot

In our experience of writing farming project reports – we see the number one most influential factor affecting the benefit vs. cost trade-off is…

Access to land.

Buyers of land take on large capital expenditure, usually in the form of debt.

This size of outlay greatly skews the investor attraction in the venture.

Where the benefits of the project i.e. potential profits and earnings are overshadowed by the heavy weighting of land purchase…

Alternative routes of investment, like stocks or government bonds offer better returns.

Although this approach of Clement’s does not depend on debt…

It is still worth taking note of the rationale behind the aversion of investors in agri-business projects which require proportionally large land investment.

Land purchases dig a deep debt ditch which future profits may not lift you out of.

Said in simple terms:

Why overstretch yourself & damage your profits tomorrow with the overburdening cost of buying land on credit today?

Start small – and priorotise quality over quantity.

A consistent approach, with consistent results is worth more in the long run than over-subscribing and under-delivering.

You can always expand once you’ve got a quality operation up and running.

But it’s not so easy always to improve quality once the wheels are already in motion.

Step #2  – Choose a hardy + high growth potential crop

Profitability as a grower/small scale farming is dependent upon production yield.

The outdoor environment is anything but controllable.

There is nothing you can do about your farm being affected by the natural surroundings.

Adverse conditions, such as a particularly harsh winter, can significantly hamper your harvest yield.

Production loss = lost sales revenue = lost profit = lost earnings.

That said,

The converse is also true.

Greater productivity = increased sales revenue = increased profit = increased earnings.

Agricultural stock which has a relatively higher growth rate, also offers higher profit potential.

What are your most profitable agricultural profit opportunities?

Hit the search engines and do some desk research…

Also, speak with some produce distributors re:yield and investigate market prices.

Step #3 – You don’t have to own the land

Tenant farmers can make a profit.

Such arrangements should really work for both parties – the land owner and the producer.

Where the use of land offers great potential for productivity in the right hands…

It still requires the right hands.

You can’t have one without the other.

This co-dependence theoretically makes for a a balanced bargaining power between parties.

Land, like any asset, requires hard work to make it reliably generate income.

Getting qualified and willing hands to convert that potential into landlord’s profits is not so easy to find.

Many ‘would-be’ small scale farmers have the intention or the idea, but not the credentials.

Want to improve your prospects of securing long term affordable land rental?

Draft a winning project proposal.

Step #4 – Minimal paid labour

Keep paid labour to a minimum – if any at all.

Consistency of care for vegetables, fruits, livestock etc. is one of the critical success factors for obtaining optimal yield.

The more hands involved, the less the consistency.

More variables, lead to greater variability of results.

Seeing as your operation is so small – you should be without excuse for keeping it as a one man band…

Ok…

Maybe with the odd helper at times of particularly rigourous labour where only two will do.

Step #5 – DIY (Do It Yourself)

Small scale growers who learn to DIY get great results like Clement.

Quality control is one of the most determining factors of small scale farming success.

Learning to handle the operation single-handedly prepares you for a far more confident engagement with buyers and other commercial supporters.

DIY production also negates the cost of staff hire.

Step #6 – Work with nature

Learn to adapt and to make the most of your environmental conditions – whatever the weather.

In Clement’s case, he made the most of the wet conditions in winter for working over the soil with ease…

Step #7 – Propagate to lower direct input costs

As with any business, direct costs reduce profit margin.

The higher the direct costs of sale (or cost of goods sold – COGS), the lower the margin of profit gained on each sale.

What are the typical direct costs for a vegetable farm like Clement’s?

If he buys seedlings to produce his harvest, the cost of seedlings therefore is his #1 COGS.

In other words:

Every harvest of his incurs the automatic cost of having to buy baby plants.

Is it possible to sidestep this cost?

Propagate your own seeds and close the production cycle.

Again, DIY wins.

In doing this, you take on additional operational complexity, on one hand…

But the another hand…

You save the direct cost of seedlings, massively increasing your profit margin per sale.

Well worth the initial hassle.

It will pay you back…

As long as your propagated seeds yield the same harvest end product.

Step #8 – New bed preparation to advance capacity

Always work towards the long term goals.

Whilst immediacy of sales and operational rigour can take centre stage…

Don’t lose focus with advancing forward on your long term plan for growing your capacity and increasing earning potential.

In other words…

Make sure your efforts aren’t just set to maintain current earnings, but…

With every once of grunt work you are also increasing your earning potential.

Step #9 – Diversify your supply

Acquire a good spread of stock suppliers.

Each supplier will offer unique benefits of engagement.

Perhaps better terms for delivery…

Maybe more flexible pricing…

Or, more convenient presentation of stock for ready use.

Search far and wide for the best deal that works for you and your farm.

Step #10 – Always choose quality stock

Quality of stock should never be undercut.

Undercutting quality, undercuts yield which undercuts your profit and damages earnings.

This is never advisable.

Step #11 – Local manure cuts cost

Manure from local sources can grant great savings advantage in another necessary cost category of your small scale farming business…

Fertiliser.

Do your best to tap into the local manure supply by liaising with a livestock farmer…

And save yourself huge recurring cost of fertilising soil for crop growth with a local livestock output.

Step #12 – Save water usage by mulching

Water conservation is a key aspect of any agricultural process.

Availability of clean, cool water is a premium in most environs.

Gauteng, South Africa is not different.

Where you can save on the usage of water (without damaging yield) – it is an advantage for your farm.

Both in labour and resource consumption.

Techniques such as mulching offer water saving benefits which produce pockets of incremental gain within your farm’s operational model.

Step #13 – Vary the watering methods for optimal delivery

Adopting a variety of watering methods grants high specificity on delivery of moisture to the crops.

Producing the optimal balance of availability and uptake of the precious life stimulating water is key to receiving the maximum yield.

A variety of watering methods will ensure you cover all bases in getting water to the place of need most efficiently and effectively.

Step #14 – Keep reinvesting for business growth

Don’t starve your business of much needed reinvestment for upkeep and improvement.

Keeping up with general maintenance and running costs is one thing…

But adding value back into the system for growth needs a deliberate program of reinvestment.

If you draw down all available net profit as earnings…

You deny your business the time for bedding in and becoming established.

Step #15 – Don’t despise being small, use it to your advantage

Being a small scale producer or business owner in many cases has advantages.

With your more compact scale of enterprise, the more personable approach to business should be something that you excel in.

Giving customers or clients the benefit of dealing face to face with the business owner directly is an instant value adder.

Don’t pass up on making the most of this proximity.

Step #16 – Stay nimble, don’t get cumbered with bulky equipment

One common misconception received by many a small scale farmer or entrepreneur is:

The perceived need for big equipment.

Big equipment is touted by industry to offer the profitable advantages of saving time and increasing output – but then again, they would say that!

Before taking the plunge to invest in new kit…

As yourself…

Do I really need it?

How can I make do without it?

How much of my profits will be taken up with capital purchases and maintenance costs?

A cost benefit analysis will soon enable you to appreciate the pros and cons involved.

In this interview, Clement, confidently attests to his commitment to avoid capital investment in large scale equipment.

Aside from his irrigation tools for drip water delivery and tunnels to protect against frost – he has a comparatively lean operational approach.

Step #17 – Preempt the frost

The frost kills growth.

To maintain a consistent production schedule year round, Clement uses the advantage of poly tunnels to guard against the harsh cold.

Staying ahead of schedule and being proactive keeps his crops on target for profitable yield, no matter the season.

Year round earnings are untouched by the winter.

Step #18 – Better soil care prevents pest invasion

Pests devour growth in the field.

It’s their environment too and they typically don’t need any invitation to take a bite.

Whilst there are many costly (not to mention dangerous) chemical interventions:

Clement has found that better soil management and tilling naturally drives away his unwanted garden guests.

Step #19 – Hand to hand combat with worms is the best tactic

Clement’s most trusty tool in his battle with the notorious Cutworm are surprisingly…

His hands.

It costs his time and availability to be on-site everyday, but as committed as he is – the Cutworms stay far away.

Again, he saves on:

  • loss
  • chemicals

…by every farmers strongest advantage:

time in the field.

Step #20 – Secret to success = time on site

Tending to his plot is great enjoyment to Clement.

He enjoys time with his crop.

Being there all the time, keeps all things that don’t belong:

  • pests
  • weeds
  • adverse conditions

…completely overwhelmed by his busy-ness.

With every minute on-site he directly preserves his bottom line profits and earnings.

Step #21 – Occupy the plot in stages

He didn’t attempt to bite off more than he could chew at the start.

Again, quality over quantity in agriculture and generally business keeps output maximised…

Thus, getting out of the soil the highest proportional gain for corresponding input.

Cultivating the total plot in phases, means that advances into new territory is with a view to remain.

Take on too much…

And you run the risk of being overstretched and the result…

You are pushed back, retreating to handover your newly ventured portion back into the hands of ‘the conditions of the wild’.

This yo-yo of:

Ground gained…

Then…

Ground lost…etc.

Is one sure way of both depleting your resources on failed campaigns…

As well as becoming thoroughly disheartened in the battle to occupy your whole plot, profitably.

Step #22 – Have an expansion plan

Know how you are going to grow…

In advance.

Think forward.

Your current customers may have something in common with others out there and demand may increase accordingly.

You want to be able to give your business the ability to serve and show readiness to your growing audience.

Step #23 – Attract new niche buyers by diversifying product gradually

Getting mainstream attention is the most obvious desire of most small scale farming entrepreneurs.

Major multiples and their oversized crowds are the often the preferred target for getting new products to market.

But what about the niche buyers?

They may not be many in number…

But as Clement found out, listening to the specialist niche buyers gave him profitable angles of augmenting his product offering.

Step #24 – Value added products add premium

Taking his raw product and adding value by producing a derivative or value added product…

Is a common method for small scale producers to tap into greater profit potential.

By part processing the base product – culinary preparations like condiments and seasonings can be profitably offered to new customers.

Sure it takes an initial set-up cost of equipping your business with the processing ability…

But once set-up, it simply a case of keeping the conveyor belt moving to continue producing the units to meet the demand.

Keeping a balance of enough ‘raw product’ vs. ‘value-added product’ to suffice the composite needs of the market is key.

This takes greater management attention.

Step #25 – Restaurant buyers favour local suppliers

Clement found favour with restaurant buyers sourcing produce merely for the fact that he is a local grower.

Research shows that restaurants chefs typically consider buying from local producers have the following benefits:

  • Contact with producers
  • Profitable
  • Customer expectations
  • Taste
  • Speciality

…amongst other reasons.

If you’re unsure about the buying interest of chefs ordering produce from your small farm…

Chefs surely aren’t!

Step #26 – Client consistency is better than clientbase growth

Because Clement serves a small clientele on a consistent basis, he doesn’t have to stretch his business development efforts to go looking for new accounts continuously.

Serving a small audience with quality – consistently – keeps him in business.

He can therefore afford to offer relatively stable prices…

With no surprises.

This makes for a predictable and reliable relationship with his buyer counterparts.

Step #27 – Cash crop sales is best grown out of sustainability

His first step in this venture to grow and sell cash crops was to aim for the nearside target of becoming self-sustaining.

He figured:

Before he attempts to grow consistently for others, he ought to be able to do it for himself first.

Wise move!

Not only does he learn to make his mistakes without the pressure of and audience’s demand…

But also he gets to trial his products first and get it standard before his worst critic:

Himself.

Step #28 – Community Supported Agriculture (CSA) grants off-take sales foresight

In a comment within the conversational thread following the article in Farmer’s Weekly (South Africa)…

Clement addresses one of the commentators with the following retort:

“…thank you, we would love the local hotels to uptake our produce without the middle man Community Supported Agriculture,any pointers,paperwork?”

Clement was responding to a comment encouraging him to consider organic produce delivery.

His choice of words give insight to where his priorities lay for growth.

Local hotels provide another niche customer segment which Clement could serve in the growth of his business.

Often the decision makers buy from agents/distributors who curate a tailored product range to suit the buyers’ needs.

Such middlemen approach local producers offering to promote their goods and in return offer access to commercial customers.

The agent’s gain is commission on the sale.

This eats into the potential profit margin of the producer.

Producers like Clement would prefer to sell directly to hotels and maintain their margin.

Also, Clement mentions Community Supported Agriculture as a means of increasing his share of profits.

By such a system, producers like Clement sell shares in future harvest yield in advance to consumers in the community.

The system is not ideal by any means and relies heavily on market liquidity – i.e. being able to sell enough shares to cover the entire harvest before the supply is produced (…the supply, of course, being perishable if not claimed).

In other words, farmers can find their efforts to produce a bumper harvest be give in vain as their ability to match produce with buyers falls short.

Where this happens, they’re left with stock that each day dips in shelf life as they rapidly seek to sell the off-take.

Step #29 – Direct selling maintains margins

Direct selling is the most advantageous trade tool for the small scale farmer.

If you can go to market successfully by yourself, under your ‘own steam’, so to speak…

And reach consumers cost effectively and consistently – then you’ve got a whole host of economies of scale…innovation…& efficiency at your finger tips:

  • word of mouth
  • repeat custom
  • public relations
  • brand equity
  • brand loyalty

…and much, much more!

For every small scale farmer this is the ultimate commercial goal.

To conquer direct selling.

In many cases this is more critical a success factor than even growing the produce.

Getting direct access to your consumer market is arguably the most difficult and resource intensive goal…

Yet undoubtedly the most potentially profitable.

And yet most surprisingly it can be done with very little expense…

Other than your time to research and to practice – learning by mistake.

Here’s a quick guide to help you on your way…

The SEO Marketing Hub – Backlinko

Step #30 – Other commercial buyers like hotels should be considered

Diligently segmenting your customer audience based on what they want enables you to identify new opportunities of profitability.

Undoubtedly, there are merits in consolidating your focus on a single customer type…

But…

Extending your reach with new customer targets keeps your income and profits stretching…

Plus, your learning ability continues to be stretch with every new audience engagement.

The stuff of innovation and extending commercial growth.

It’s a balance.

Finally…

An article like the one above by Gerhard Uys is highly valuable to ‘would-be’ small scale farmers, especially of course, if based in Gauteng, South Africa.

It blows away the misconceptions and myths and gives credence to the virtues of hard work, faithfulness and staying within your means.

We would welcome knowing more from Clement and other such producers who are bucking the trend of investment…

In favour of an organic approach to start-up business growth.


Are you thinking of starting up as a small scale agricultural producer in Gauteng or other locality & need some start-up advice?

Ask away

Are you an experienced small scale producer with some value to add to your peers?

Leave and comment/answer to this question below.

Are you a supplier of stock or equipment and would like to offer advice to producers?

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