Stock Distribution and Enterprise Recording

Any business needs to know how much and what type of stock they have on hand. Stock refers to all the goods a farmer has in storage. It includes all the agricultural inputs required for the production of the crop. Stock control aims to balance the number of inputs the farmer has in the store against the amount of the inputs used during the production cycle. The production cycle is different for different crops, and therefore the type and amount of stock as well as the period of storage will differ between crop types.

A manager will try to maximise the stock turnover while carrying the least amount of stock possible. Stock turnover usually refers to a retailer that sells the stock to an end user. However, stock turnover is an important concept in the farm situation as well. This is because most agricultural inputs have a limited shelf-life. Pesticides for example have a 2-year shelf life, after which they should not be used unless an analysis has been performed to certify that the pesticide is still usable. The disposal of obsolete pesticides is extremely expensive, and therefore the stock of pesticides should not be allowed to build up. The compounds should be used on the First in First out (FIFO) principle. This means that the first batch of a particular batch of pesticide that comes into the store must be used first. This principle applies not only to pesticides but also to fertilisers, seeds and any other input that may be required. Efficient stock control, including stock rotation systems, means that old stock does not accumulate.

Stock requires control, because a shortage of stock may lead to a lack of pest control or fertilisation at critical periods. Overstocking of inputs may lead to stocks becoming obsolete, which may have serious implications for the running costs of the operation. Effective stock control will minimise shrinkage by reducing errors, waste, and theft. Efficient stock control reduces the risk of accidents and injury through good housekeeping, as well as reducing the costs of insurance, workers’ compensation payments and the time lost through injury. Farm stores will each have their stock control systems and procedures that must be followed. All personnel that work on the farm must know and understand these procedures.

Key Terms

Damaged stock: This reveres to stock that has been damaged, broken, or soiled during delivery or while in the store.
Dispatching inputs: Implies the distribution of inputs to the relevant individuals for use at a specific time and on specific fields or orchards.
Electronic Data Interchange (EDI): Electronic stock recording system where a computer is linked to dispatch and receiving areas, which will automatically record and update stock levels.
First in First Out (FIFO): A stock rotation system, which requires the inputs that are bought first must be used first.
Incoming inputs: Those inputs, which have been ordered and are delivered to the store.
Lead time: The time between when goods are ordered and when they are delivered to the store.
Minimum stock levels: A predetermined minimum number of stock items which, when reached, will trigger the ordering of new stocks.
Obsolete stocks: Old stock which is out of date (has expired).
Replenishment: The replacement of stock in the store that has been issued and used during the season.
Seasonality: A concept relating to the demand for inputs which is governed by the seasons. E.g., some growth regulators are applied very early in the season and are only required at this specific time. Post-harvest chemicals again are only required at harvest and may not require storage during the rest of the season.
Shelf life: The time a product will remain intact under normal storage conditions.
Shrinkage: The difference between the present value of the stock and the value that the stock should have.
Stock: All the inputs a farmer retailer holds in store.
Stock rotation: A stock control system that implies the selling of old stock before the fresh stock is sold.
Stocktaking: There are several types of stocktaking:
Full stocktaking: where every item in a store is counted.
Cyclical stocktaking: where only part of the stock is counted at any one time, but on a regularly scheduled basis Spot-checks imply the counting of a specific group of stock where differences occur.

Receiving Agricultural Inputs in an Agricultural Storage Facility

A. Ordering agricultural inputs and requirements:

Most agricultural inputs can be viewed as consumables. Consumables are the inputs required during the season to ensure crop growth. Consumables include pesticides, fertilisers, and seeds. It also includes packaging materials where crops are processed or packed on the farm. Remember, components such as packing material will not be stored together with pesticides. The resources that are used in farm products include chemicals; equipment (tools and implements), feed and seeds are collectively called agricultural inputs. Most farm inputs are purchased from cooperative or specialised dealers. The volumes of inputs purchased are normally high and they must be stored on the farm before being used. Equipment is normally expensive and requires storage when not in use to ensure they last for prolonged periods.

It is important that when inputs are received, they are correctly identified on the order and the invoice. The storeman must be able to identify what is being received so that the products are sorted in the correct storage areas. In some cases, the various inputs may be stored in separate stores, and here the segregation process must be followed correctly. The site-specific segregation procedures for the farm must be followed to ensure that the inputs are placed in the relevant areas. In the case of most stocks kept in a farm’s store, the quality criteria are very important, especially for agricultural inputs. The quality of packaging materials is also important but will generally not lead to harvest reduction. In the case of inputs such as pesticides, fertilisers and seeds, quality criteria must be set and adhered to. The criteria may differ between different crop types in the specific agri-business. There are however several generic principles that must be adhered to. The criteria below are not discussed in-depth, but site-specific criteria for receiving inputs must be followed regarding the product’s specifications.

B. Shelf life:

All pesticides and fertilisers and seeds have a distinct expiry dates. If the expiry date on pesticides is exceeded, the pesticide may not contain the correct amount of active ingredients. A lack of active ingredients will lead to a loss in pesticide efficacy. The solvents in the compound may also have evaporated during storage causing the formulation to be over-concentrated. This will lead to too much active ingredients being applied in a mixture which can harm animals or a crop.

C. Open containers:

No agricultural inputs should be used from containers that have been opened or partially used unless the usage is recorded. The reason is that the contents of these containers are unknown. If for example a granular herbicide has for some reason, been stored in a fertiliser bag, crops may be damaged or killed if such a product is used.

D. Unlabelled containers:

The principles concerning open containers also apply to unlabelled containers. A container without a label is of unknown origin and the contents of an unknown product. Both unlabelled and opened containers must be disposed of correctly.

E. Product safety:

All inputs will be labelled with information on the safety of the product. These guidelines must be followed. If the label does not state the product’s safety and safe handling guidelines, a product safety data sheet must be obtained. Chemicals lacking safety information should not be placed in storage.

F. Product specifications:

Agricultural inputs will be ordered according to specific specifications. It is therefore critical that the information on labels specifies the brand’s name, its active ingredient, concentrations, and so forth. The delivery should not be signed off if the order and delivery do not coincide regarding type, quality, and quantity. If you need information or assistance regarding agricultural inputs, use the following channels or contact the following institutions.

Department of Agriculture.
SA Institute for Agricultural Extension.
Agricultural Research Council (ARC).
Your local Co-operative or Agri mark.
Agri SA.
The South African Pest Control Association (SAPCA).
Suppliers of Agricultural Chemicals such as Aventis, Bayer, Agri col, UAP, Terrasson and many more.
Sectors and National Trade Magazines – such as Farmer’s Weekly and Landbouweekblad.
Annual trade shows.

These institutions can help us with information regarding the differentiation between items as well as the quantification of items. Only registered persons may recommend and supply certain inputs. Therefore, ensure that inputs are only purchased from registered and/or accredited distributors where required.

Substituting Pesticides

There are several generic products of many inputs available in the market. The herbicide Roundup contains the active ingredient glyphosate. This active ingredient is also available in approximately 14 other generic formulations which means that the costs of most of these formulations are similar and the choice of the compound is not likely to have a tremendous effect on the budget. This is however not the case for all pesticides. Many generic pesticides are much cheaper than the original compound.

One must keep in mind that a less costly product does not mean the product is inferior. In many cases, the product is as good as the original compound. However, a generic product must be registered under Act 36 of 1947 of the DoA before it is to be used. Unregistered products may damage crops or may not show efficacy, as one would expect. Always check if a product is registered before using it.

Substitution of Recommended Fertiliser

Recommended fertilisers and chemicals for foliar sprays, for example, can be substituted with an equivalent elemental base. Provided that:

The chemistry of the replacement chemical and its reaction in the soil and on the leaf will not create unwanted side effects; and
The recommended mass or volume is adjusted to compensate for variations in the concentration of the active ingredient(s).

The person responsible for the formulation of the fertilisation program should be consulted before substitutions are made. Fertiliser manufacturers may also be able to assist in this regard.

The rate of application for the replacement fertiliser is calculated as follows:

The rate of application for a recommended product is multiplied by the % active ingredient in the recommended product, divided by the % active ingredient in the replacement product.
Rate of application for replacement product.

Receiving and Processing Incoming Stock

When agricultural inputs are delivered to a farm store, several tasks should be completed. As the delivery arrives, all cartons (boxes), bags, pallets and other items should be placed on the floor and checked. All boxes should be checked off against the invoice following to policy, procedures and guidelines of the specific site, industry or farm. In most cases the policy is likely to include:

Count the boxes to check if the correct number has been delivered.
Separate unopened boxes i.e., those that are sealed and labelled containing only one type and kind of input (e.g., a box containing 25, litre bottles of Roundup herbicide), from open, mixed boxes (i.e., those containing different items in one box.
Sealed boxes can be counted as unopened. Mixed cartons should be opened, and the contents checked. If time allows, check the contents of the whole boxes as well.
Open damp or damaged boxes and check the contents for damages and breakages. If cartons have been tampered with, their contents should also be checked. Any damaged or tampered-with contents must be returned to the supplier following the site procedures.
Check the goods for quality and expiry dates. If expiry dates have been exceeded return the goods to the supplier, following the site procedures.
Any discrepancies should be recorded on the invoice following site procedures.
It is a good policy to check the invoice against the order first and then check the contents.

All these checks should be done before the delivery note or invoice is signed off. When checking a delivery in upon boxes, employees should not allow themselves to be rushed or hurried by the delivery driver. All deliveries must be checked thoroughly. The only way to ensure that the correct quantity and undamaged goods are received is to check every box and container within the box or pallet. The following points should guide towards ensuring deliveries are properly checked:

When receiving multiple deliveries at the same time, each delivery must be checked separately and in an orderly manner.
All stock should be accurately recorded and checked against all original order documents.
All shortages, excess, missing and damaged goods should be noted on the delivery note as well as original order documents, following site procedures.
All differences must be reported to the supervisors or store manager according to site procedures.

Storage and Segregation

The various inputs should be separated within a store. Depending on the actual commodity being stored, the systems used in different stores may differ. In the case of pesticides, it is useful to separate the herbicides, fungicides, and insecticides by placing them in different designated areas within the store. This will help to ensure that a herbicide is not accidentally issued instead of an insecticide. When stacking pesticides, the powered and granular formulations should always be stored away from the liquid formulations. Store the dry formulations on an upper shelf and the liquids below. This ensures that should a liquid container leak, it will not contaminate the dry products. When stacking containers, there are several rules to be followed. These rules are set out in the Table below.

Storage and segregation of containers.

Container type	Number of layers allowed on a base plate	Number of packages allowed on a pallet
Steel drums = 200 l	1	3 – 4
Steel drums < 200 l	2	3 – 4
Fibre drums = 200 l	1	3
Fibre drums < 200 l	2	3
Plastic drums = 200 l	1	2
Plastic drums < 200 l	2	2
Paper bags	4 – 5	3
Plastic bags	4 – 5	3
Fibre case containing tins	4 – 6	3 – 4
Fibre case containing soft packages	4 – 6	2
Wooden cases	2 – 4	3 – 4

Stacking Positions and Heights

The stock should be arranged to use the oldest first (“first in – first out” principle) and to prevent obsolete stock from accumulating. Containers should be arranged to minimise handling and thus avoid mechanical damage giving rise to leaks. Floor spaces should be neat, with marked gullies (1 m wide) between shelves or stacks that permit easy inspection and allow free airflow. This also enables immediate clean-up in the event of any leakage or spills which can be easily seen. When using shelves for smaller packs, always place dry formulations on the upper shelves and the liquids below. This will ensure that leaking liquids will not contaminate the powders. Climbing on pesticide containers to reach other containers should not be permitted as damaged or corroded metal drums can easily give way under a person’s weight.

Containers should not be placed directly on the floor but rather onto dunnage (construction of bricks and timber allowing for a gap between the timber and floor). This will allow the identification of leaking or corroding containers. Dry formulations should be kept in boxes to avoid clotting. Where the chemicals are packed in glass, these should also be kept in boxes to prevent breakages. When inputs are packed on pallets, the total pallet height should not exceed 107 cm.

Pesticide Ordering and Shelf-Life

The shelf-life and rate of use must be considered when ordering inputs. Do not order for more than one year’s requirement. The date of manufacture and shelf-life should be visible on the outside of the container. If a larger quantity is ordered than can be used during the period of shelf-life, outdated stocks will accumulate and present disposal problems.

Stock Inspection and Shelf-Life

Stocks in a store should be inspected regularly for signs of deterioration, such as clotting of powders, sedimentation of liquids and discolouration through oxidation. Shelf life declines rapidly after containers have been opened and left partially empty. Stock turnover must be organised to ensure that the contents of a container are used as quickly as possible once the container has been opened. Unsealed containers of dust and wettable powders should not be kept for more than one year.

Containers are not only subject to deterioration caused by external factors (climatic, biological, and mechanical), but can also be corroded internally through the action of the pesticides they contain. Emulsifying concentrate formulations are particularly likely to affect weak spots, especially along seams or where there are imperfections in the internal coating of the container. Some pesticide’s acidity increases during storage, and this makes them more likely to corrode containers from within. Discolouration of pesticides is a sign of corrosion and should be looked for during stock inspections.

Manage and Control Stock Levels and Stock Records

A record must be kept of the stocks that are received. In most cases, the stock receipt systems and stock dispatch systems are synchronised. This will help in the decision-making process of when and what should be ordered. It also allows for less reliance on stocktaking and ensures stock levels are kept up to date. Records are needed to run an operation productively.

What follows are guidelines on what a record-keeping system should consider:

Minimum stock levels.
Maximum stock levels.
Standard orders and regular orders.
Order level – the level of stock at which a standard order must be placed before the minimum stock level is reached.
What do you want the system to do for you? – determine the value of the stock at any time, and ensure sufficient stock at all times (confirm with the sections to achieve this). Compare actual stock with stock records to detect theft or out-of-date stock.
Stock analysis – have a categorical list of all stock in the store which can be controlled by a computer data system and a backup manual system e.g.:
• Dangerous materials.
• Seed stock.
• Animal fee.
• Rations for staff.
• Mechanical.
• Maintenance stock.

A supervisor or manager of an agricultural inputs store is responsible to ensure that inputs required on the farm are stocked correctly. It is further his or her responsibility to ensure that all the stock is kept at the levels required by the farm. To help the supervisor or manager determine these levels, stocktaking is done regularly. Stocktaking is the physical counting of all the stock that is in a store at a particular time. These figures generated are then compared to the stock records kept over a certain period. Conducting stocktaking allows farm personnel to accurately record what is actually in their stores.

A. There are three main ways that stocktaking is conducted:

A full stocktaking where every item in the store is counted. Full stocktaking is generally undertaken yearly or six monthly.
A cyclical stocktaking is where only part of the stock is counted at any one time, but these counts are carried out on a regular, scheduled basis. In a store stocktaking of pesticides may be taken weekly during the spraying season because of the need for various compounds during the period.
Spot checks, where, in a particular area of the store, the stock is checked for discrepancies.

Stocktaking will only be beneficial if it is carried out accurately. Stocktaking can be carried out using stock sheets or tally sheets (where stock numbers are recorded manually), or by using electronic recording equipment. These are generally portable electronic handheld units that can record barcodes, prices, and quantities.

A store supervisor or manager does not necessarily take part in stocktaking. It is the task of the manager to design and implement a stocktaking schedule. The schedule can be made up of all three types of events, but these will not be implemented simultaneously. The manager will determine the number and time of full stocktaking during a season. It may be sufficient to do a full stocktaking once during the season, whereas cyclical stocktaking may be required regularly for fertilisers and pesticides during the active growing season, or periods where pest management is required. Different farms, sites and industries will have different policies and requirements concerning stocktaking. It is important that the manager implements these policies, and ensures all employees follow them.

Once stocktaking has been conducted, the manager will compare these with the actual stock records. These may be paper or electronic copies, depending on the system used on the farm. Any discrepancies in the stock should be recorded and reported to the relevant person. Totals should be signed and then recorded so that accurate crosschecking of the actual stock counts against the recorded stock records can be conducted. If the actual stock figures do not coincide with the record system (or book stock) then this may indicate inventory control or documenting problems.

B. Problems that may arise include:

Stock counting was incorrect.
Inaccurate stock recording at delivery, e.g., invoice errors, short deliveries, mistakes in recording, damaged stock, unordered stock and returns.
Calculating mistakes when reconciling the recorded stock records.
Mistakes in recording discounts, markdowns, or waste.
Theft by customers, staff, or vendors.

If problems like these are identified, it is the responsibility of the stock controller or store manager to identify the source of the problem and implement systems that will ensure these do not reoccur. Once final stock levels for various inputs have been determined, these figures must be reported to the section supervisors. These could be the farm manager and supervisors responsible for pest management, the fertiliser programme or dairy. These people again are responsible for the management structure of the farm. The management structure must be clear to all parties involved. The stock levels must be reported to those responsible for the use of these stocks so that they can determine whether more stock may be required.

Order Stock and Process Payment

A. Minimum stock levels:

A store that is constantly out of stock will cause the farming enterprise a loss in profit. This is because the inputs will not be available when they are required. The opposite is also true. If a store has too much stock and cannot use it quickly enough, the old stock builds up and will eventually become obsolete and must be disposed of.

Stores need to have sufficient stock to maintain requirements, but not so much that there is a stock build-up. The best way of ensuring an appropriate level of stock is to use an efficient stock ordering and maintenance system. By planning stock orders, the problems of too much or too little stock can be minimised. Factors such as what, how much and when to order stock must be considered so that it arrives in time to fulfil the need. The first step in the planning process is to identify the store’s minimum stock levels.

The minimum stock level of any item is the lowest quantity of that stock that should be always kept. When the number of items in a particular line reaches a set minimum level then more of that stock is ordered. This process means that the shelves should never empty and there should never be any excess stock or that the store should not run out of stock. In the case of a farm store, the minimum levels of a particular input may vary with the growing season. For example, if a fertiliser is applied to a crop three times during the season and the volumes are the same, the critical time and the minimum volume required would be that for a single application. The critical time during the season for the stock to be kept would be 2 – 3 weeks before the planned application date, as conditions may change requiring an earlier application.

B. Ordering stock:

A factor to be considered in the process of ordering stock is when to order stock so that it arrives on time. The time it takes from when an order is placed with a supplier to when it arrives in the store is called the lead time. The lead time can be anything from overnight to several months, depending on the type of stock, the supplier and minimum order requirements. Knowing the lead time enables the timing of orders to be more efficient. Once the need for ordering more stock has been established, there are several ways of completing the order.

Manual ordering involves counting the stock to establish minimum stock levels, recording the stock levels in a stock book or on stock cards, calculating the quantity to be ordered and then placing the order with the supplier. Hand-held electronic equipment scans the barcodes, and the stock levels are entered manually. This information can be downloaded or entered into a computer from which orders are generated.

The number of people ordering stock should be kept to a minimum. This reduces the risk of over/under ordering, reduces mistakes and eases the following up of undelivered orders more efficiently. Any undelivered stock should be entered into the stock recording system as soon as possible and be followed up immediately by the person who ordered the stock. Stock may not be delivered for several reasons, for example, it may be:

No longer available.
Out of season.
Placed on backorder.
Undeliverable because of transport problems.
Subject to quotas.
Stolen.

C. Substituting stock items:

In many cases, the stock order can be substituted with other comparable inputs. The quality criteria must be adhered to when substituting. Always determine the price of the item to be substituted as the price may influence the farm budget for the item.

Various Agricultural Inputs from Stores

A. Dispatching stock:

Agricultural inputs, as you know, are kept as stock in a store. When these inputs (pesticides for example) are needed for spraying a crop, somebody must withdraw it from the store before it can be dispatched to the spraying team. In conquering this problem some form of control must be in place. (It must be stressed that each farm is likely to have its procedures and systems intact). Now, according to the system, everybody knows who is doing what and how. There is a system in place that will track the requisition, dispatch, use and return of unused items to the store as different forms will be completed at different stages.

B. A system is likely to consist of:

A requisition form is completed, approved, and taken to the store. The requisition will request:

Identity of the person requesting the input.
The volume of the input required.
The reason why it is required.
The field or orchard that it is to be used on.
The size of the field and intended application rates.
Possible approval from the responsible person (farm manager of field (block) manager).
The input required, as well as the volume required, is noted in a log.
The person requesting the input verifies that it has been collected.
The person makes use of the input.
The remaining input is returned to the store.
The remaining (unused) input is recorded in the log system.
A note is made of containers that have been opened and the containers duly labelled and sealed.
The empty containers, which had been used, are also returned to the store.
The empty containers are disposed of by national legislation.

Stock Rotation

Rotating stock implies the moving of old stock to the front of a shelf to make way for fresh stock, which will now be stacked at the back of the shelf. Using this system means that the old stock is used first preventing the build-up of out-of-date stock. This principle is called First In First Out (FIFO). When rotating goods that may expire, the expiry dates must be monitored to ensure that outdated stock is not placed in with the current stock. When collecting stock from the storage area, the oldest stock should always be issued. This ensures that there is a constant turnover of stock and reduces waste resulting from an accumulation of outdated items. The excess stock should be placed in the storage area, or it should be disposed of correctly.

The store should have a disposal policy, which considers the relevant legislation and industry codes of practice, particularly when dealing with dangerous goods such as chemicals. The stock should be regularly rotated, and the storage area should always be kept clean and tidy. This is particularly important for items such as seeds as it reduces the incidence of mice and other vermin. Vermin and insect control should always be carried out to comply with the legal requirements of the relevant Occupational Health and Safety (OH&S) and Health legislation, industry and site-specific policies and national legislation on agricultural inputs. Safe lifting and carrying techniques must be always used and should be in line with the store’s OHS policies and legislative requirements.

END