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Wednesday, May 10, 2017

Agricultural Accounting and the Costless “X factor” in Agriculture




Introduction

Accounting is defined as a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. It reveals profit or loss for a given period, and the value and nature of a firm's assets, liabilities and owners' equity. Accounting provides information on the resources available to a firm, the means employed to finance those resources, and the results achieved through their use.


Accounting therefore is a management tool which when applied to agriculture would, among others, effectively keep track of financial information about agricultural activity involving the biological transformation of biological assets (plants or animals) for sale, into agricultural produce or into additional biological assets. Biological transformation comprises the processes of growth, degeneration, production and procreation that cause qualitative or quantitative changes in a biological asset. Hence, the estimated value of the biologically transformed assets during a particular accounting period minus the overall cost incurred in the process represents the profit. This is assuming that the liability (or cost of production) is less than the assets (or products).


This article is not meant to educate the readers about the intricacies of accounting procedures. This is intended to give readers something to think about, the life source of plants and animals which this representation consider as priceless yet conventional accounting system consider it costless.



The ‘Elements of Life’ are considered cost-less in agricultural accounting


Elements make up everything around us including plants, animals, and even humans. Every living thing is made up of small compartments called cells. Very small life forms, such as bacteria, have only one cell, while large animals have millions. The cells of every creature are made of atoms of different elements such as: Hydrogen (H) 59%; Oxygen (O) 24%; Carbon; (C) 11% Nitrogen; and 👎 4%. Others such as phosphorus (P) and Sulphur (S) 2% combined. But these are not the only elements that have important roles for living things.

Plants and animals need a variety of other elements in the atmosphere and earth’s crust (including of course the sun’s energy) to survive and grow. However, despite the abundance of the natural elements including solar energy that supports life to grow and multiply, such a stark reality is not being considered a factor in agricultural accounting in terms of cost. Why? Because those elements of life are so precious that the real value of them cannot just be quantified.  The elements of life therefore as a whole is the “x factor” that is actually priceless but being treated costless in accounting point of view.  Hence, without considering the cost of the “x factor” or the elements of life (as production cost), the profit is readily determined after subtracting only the expenses incurred from revenues generated over a designated period of time.


The agricultural accounting that disregards the cost of the “x factor” in agriculture serves the interest of agricultural entrepreneurship. Without taking it into accounting consideration, the investment cost or cost of capital is being lessened resulting to the company’s reduced opening balance.  Hence, the profitability of agribusiness is apparently enhanced and then the conventional accounting balance sheet can easily be reconciled.


When “giving back” or sharing is actually an equity gain


The “x factor” which is the totality of the elements in nature that gives life is considerably an immeasurable incentive to agribusiness entrepreneurs which they must forever be thankful for. It is the Mother Nature’s investment meant to give life and to support the cycle of life yet the same is not considered as debit for it cannot be balanced by credit. Considering that the “x factor” in agriculture has been there since the beginning and is free for the taking, would it then be too much for those who profit from agribusiness to give back and share the blessings and how can they do it just in case?


As earlier stated, the “x factor” in agriculture is priceless; hence, replacing its life giving properties simply with certain amount of money for instance is not a possibility. Instead, by way of giving back to Mother Nature, agribusiness entrepreneurs can contribute efforts and resources to protect, preserve and enrich our natural resources. Those environmental friendly measures must strictly adhere to and be in line with the very purpose or reason for which the elements of life were created in the first place and that was simply: to see to it that others may live!


Relatedly, agribusiness entrepreneurs must share generosity with the less fortunate sectors of society and must likewise initiate strategic socioeconomic programs in every barangay community to propagate profitable agriculture related livelihood opportunities. In this way, the populace can be motivated to work together in replenishing the land with farm animals and plants that would support man’s need for food security and consequently, his financial needs to better raise his family.


Such “life enhancing” acts of caring and sharing may not be considered gain in equity and not indicated in the balance sheet of agricultural accounting of man. Nonetheless, the consequent multilevel benefits of such shared blessings are actually gains in equity highlighted in the perfectly formulated balance sheet of the Divine. Thanks be to God and to Him is all the glory!

Wednesday, February 8, 2017



The Making of "The People’s Farm”
By Dexter Villamin

I used to be working in pastry department of a 5-star hotel in Manila and my speedy promotion as Pastry Chef inspired me even more to take advantage of the opportunity to work abroad as an Executive Pastry Chef in Bangkok, Thailand.

I considered myself as someone who was at the right place at the right time as I eventually became a sales manager in a company whose business was about the importation of pastry related food products primarily agricultural products like meat and dairy. Such a varied experience probed to be the turning point in my career as I ventured into establishing my own food related business in Bangkok. As a natural consequence of my newfound profitable business endeavor, I had to visit countries in Europe where I attended various food exhibits and seminars on agricultural food products and the accurate sourcing of the same.

Indeed, it was a very fantastic career development in terms of profitability, broadened horizon and learning experience and in the midst of my early successes; it dawned upon me the realization of greater opportunity in agri-business since agriculture is the source of food production and is the key to food security. I realized the potential of agri-business in a country like the Philippines (where I came from) with vast natural resources and vegetation to sustain large scale and widespread livestock raising project for instance. I realized also the irony behind the fact that many Filipinos were trying hard to be able to work abroad when in reality, greater opportunities thrived in their naturally very rich native land.

Finally, I realized then that it was the right time to be at the right place once again and when that inherent sense of social responsibility and nationalistic fervor got the best of me, I decided to come home for good. I then began the propagation of agriculture based socio-economic endeavor initially by way of goat breeding and raising notwithstanding my meager financial resources for that purpose. With the common good foremost in my mind, I prepared myself for the expected greater challenge ahead as I strengthened my faith in the perfect guidance by the Divine Providence to get me through.


In the beginning, it was hybrid goat raising

It was actually during the last two (2) years of my stint as OFW (following my multinational exposure to seminars on livestock based food production and processing) when I began to seriously entertain the idea of livestock farming. Within that period, I underwent months of serious study and research about raising different kinds of farm animals.

Upon learning the intricacies of livestock raising, I began to plan a revolutionary approach in livestock farming which would include the widespread sharing of superior livestock genetics. This was in connection with my vision: an integrated effort in livestock raising among  stakeholders whose solidarity of purpose shall ensure sustainable and progressive mass reproduction of hybrid offspring. My objective was to upgrade the quality of our country’s native livestock and in the process, institute an innovative and profitable livestock farming never before experienced under the country’s agricultural setting. I then decided to begin with hybrid goat raising which I considered as easier to manage and more economical in terms of handling cost, feed cost and energy cost compared to swine raising.

But then, large scale goat raising would not be possible without the required many hectares of farmland for that purpose and incidentally, I did not have even a small farm of my own to begin with. It was just fortunate that I met and got acquainted with an owner of a 12-hectare unproductive farmland in Lian, Batangas. The farm owner, upon learning about my goat raising livelihood project and related socio-economic advocacy was so sympathetic that he agreed to have his farm be used according to my purpose under a long term lease agreement at a meager yearly cost.

Towards the end of 2014, I, together with a handful of helpers, began the preliminary preparation of the said farm in an effort to make it suitable for goat raising. I then bought two (2) native pregnant does from one of my neighbors in the farm and then imported three (3) Boer goats for cross breeding purposes. While such initiative maybe looked upon as a very humble beginning, it was on the other hand a symbolic foundation of an agriculture based socio-economic endeavor and I felt proud of it. I then registered this social entrepreneurship program of mine with the Department of Trade and Industry (DTI) as DV Boer Farm.

There were many skeptics along the way and only few trusting relatives and connections participated in my early goat raising livelihood program. But instead of being discouraged during those trying times, I was forced to increase the level of my determination to accomplish my mission. Consequently, I saw myself through during those eight (8) months or so of painful “gestation” and then afterwards, the “birth” of the SEC registered DV Boer Farm Corporation which inspired me even more.
 

DV Boer Farm, The People’s Farm

The DV Boer Profitable Goat Raising Livelihood Program which was earlier launched and promoted in my official facebook accounts
https://www.facebook.com/profile.php?id=100000181949536
and
https://www.facebook.com/profile.php?id=100009479965681 shortly went viral catching the attention of Filipino livestock farming and agri-business enthusiasts both here and abroad. My social media promotion of goat raising and later the cattle raising projects paved the way for more people to develop that spirit of agriculture based entrepreneurship. Those people learned the simplified yet profitable way of livestock raising even if they didn’t have their own farms. They only have to avail the services provided by the DV Boer’s own farm complete with its facilities, manpower and technical expertise to ensure successful livestock raising and breeding processes or the “Pa-iwi System”. This simplified way of large scale livestock raising coupled with its inherent socio-economic relevance served as motivating factors for many of those people to come forward and join the system.

The number of people’s participation to our “Pa-Iwi System” kept on increasing (following the series of seminars abroad aside from the occasionally scheduled on-line seminars or webinar). Hence, to accommodate the influx, DV Boer Farm had expanded by way of establishing satellite farms or sub-farms (we have two in Pangasinan, one in Sorsogon and more to be established nationwide in the very near future).

Undeniably in two years’ time, this "Pa-Iwi System", an innovative large scale livestock raising project had so far successfully motivated the participation of OFWs and people who considered themselves as agri-business stakeholders and therefore, its looming replications nationwide had become predictable. Hence, the vision of success kept lingering on me in more ways than one as I also saw: a vision of OFWs homecoming for good; a vision of Filipino workers not wanting to work abroad; a vision of massive employment for jobless people; a vision of agricultural and socio-economic growth; a vision of improved quality of livestock; and finally, a vision of people moved into action by their solidarity of purpose and happily enjoying the raising of livestock at the People’s Farm…then I thanked God!