Letting Go to Grow: Why Some Farmers Hold Onto Unprofitable Projects and How to Make Smarter Business Decisions

By Rawlings Kofi - Farming is more than just a business; for many, it is a way of life, a passion, and a legacy passed down through generations. However, some farmers continue investing time and resources into projects that are no longer profitable, holding onto them despite mounting losses. Why does this happen, and how can farmers break free from unprofitable ventures while ensuring long-term success?

Why Farmers Cling to Failing Projects

1. Past Success and Emotional Attachment
   Many farmers continue with unprofitable projects because they once experienced high returns from the same venture. They remember the good years and believe that with just a bit of luck, things will turn around again. This emotional attachment can cloud judgment, making it difficult to assess the current realities objectively.
   
   
2. The Sunk Cost Fallacy
   The sunk cost fallacy occurs when people continue investing in a failing project simply because they have already put in significant time, effort, or money. Farmers may say, "I’ve already spent so much on this, I can’t quit now!"—even when the best decision is to cut their losses and move on.
   
   
3. Fear of Change and Uncertainty
   Shifting to a new project, crop, or livestock enterprise requires learning, investment, and risk-taking. Many farmers prefer to stick with what they know, even if it is no longer viable. The fear of trying something new—especially when their livelihood is at stake—can lead to stagnation.
   
   
4. External Pressure and Community Expectations
   Farming is often deeply tied to identity and social standing. A farmer who has been known for growing a particular crop or raising a specific type of livestock may feel pressure to continue, even when it is no longer profitable. The fear of what family, friends, or the community will say can keep them trapped in an unsustainable cycle.
   
   

Recognizing When to Pivot or Exit

1. Conduct a Financial Health Check
   Farmers should regularly analyze their profit and loss statements. If a project consistently incurs losses without a clear plan for improvement, it might be time to reconsider its viability. Tools like gross margin analysis and return on investment (ROI) calculations can provide clarity.
   
   
2. Monitor Market Trends and Demand
   The agricultural landscape is constantly shifting due to changes in consumer preferences, input costs, and climate conditions. If market trends indicate declining demand or rising production costs that make profitability unlikely, it’s time to explore alternatives.
   
   
3. Be Open to Diversification and Innovation
   Instead of clinging to an unprofitable venture, farmers can explore other options such as value addition, contract farming, or integrating new technology. For example, a struggling maize farmer might switch to higher-value crops like herbs or enter agribusiness by processing maize into mealie-meal.
   
   
4. Seek Expert Advice
   Engaging with agricultural extension officers, financial advisors, or successful farmers in new fields can help provide a fresh perspective. Sometimes, an outsider’s objective analysis can reveal blind spots that an emotionally invested farmer may overlook.
   
   

Closing a Business is Part of Business

Every successful entrepreneur understands that not all ventures will succeed. Knowing when to stop, pivot, or re-strategize is a key skill in business—and farming is no exception. Letting go of an unprofitable project does not mean failure; it means making room for better opportunities.

A real-world example is that of dairy farmers who struggled with low milk prices and high feed costs. Some transitioned to goat farming, where input costs were lower, and the market demand was growing. Others invested in value addition by producing cheese and yogurt, increasing their profitability.

Final Thoughts

Agriculture is a business, and like any business, it requires adaptability, data-driven decision-making, and the courage to let go of what no longer works. Farmers must shift their mindset from emotional attachment to strategic thinking, ensuring they are always working towards sustainable profitability.

If a project is not paying, it’s okay to move on—because sometimes, letting go is the best way to grow.