Octavian Frunze, a dedicated farmer, has shared his experience of turning a passion for agriculture into a successful project. Over 11 years of hard work in this field, Octavian has learned valuable lessons about financial management, strategic investments, and adaptability in the face of unforeseen challenges.
Ten years into his journey, Octavian Frunze took the step to establish the Frunze Octavian Nicolai Peasant Farm. Following his brothers’ lead and driven by a passion for agriculture, he focused on vegetable cultivation.
“We planed to set up an animal farm, but after a thorough analysis of the necessary investments, we opted for vegetable cultivation, both in protected ground and in greenhouses. I found that investments in greenhouses are more sustainable and easier to manage financially. I strongly believe that making informed choices and carefully analyzing the costs and benefits of each investment before starting is essential,”the farmer reports.
Octavian has had different experiences with loans, noting that the first loan from a microfinance company had a very high interest. The lesson learned was to read the contract clauses carefully and choose financial institutions with favorable conditions. Currently, he has chosen to work with Mikro Kapital Moldova, where he found advantageous conditions.
“When we rush to take out a loan, we are often captivated by the excitement of starting a new business or the desire to develop an existing one. However, overlooking contractual details can lead to unwanted problems in the future. In my case, with the first microfinance company, I ended up with a loan under unfavorable conditions, with a very high interest rate. In the first years, I had to direct almost all my income to pay off the contract,” Octavian insists.
The farmer recommends that those intending to take out a loan invest the necessary time to read each clause and take responsibility for understanding every aspect of the financial agreement. Among the key aspects that should be carefully analyzed are the interest rate, repayment period, any fees or penalties, and conditions regarding unforeseen situations.
For example, it’s important to know how delays in repayment are managed or how penalties are applied in case of changes in economic circumstances. The experience accumulated in managing loans is essential for financial success, believes Octavian Fruze.
“This year I decided it was time to expand my greenhouse area, for which I opted for Mikro Kapital, where the lending conditions were more favorable. This time I was very careful with the contract clauses,” mentions the farmer.
To increase profitability, Octavian Frunze decided to diversify the business by expanding the cultivated area. The choice to plant peppers in the new greenhouses and plan for an increase in the total area demonstrates the importance of adaptability and diversification in the agricultural environment.
“With 7 greenhouses of 14 acres each and a large greenhouse of 8 acres, I want to expand the area by another 25 acres. Thus, borrowing becomes necessary, as the money earned from the greenhouses was invested in open field cultivation, and I found that this is not a profitable area. I plan to start planting in the new greenhouses in April, if the weather outside allows the completion of the welding work. In the future, depending on the business evolution, I intend to switch to a wood-fired boiler and install a generator to manage potential power outages,” says the farmer.
Following the lessons learned, Octavian understood the importance of calculating expenses and strategic planning before taking out a loan. He conducted a detailed analysis of the costs for building the new greenhouses and only took the necessary amount, avoiding taking on excessive debt.
“Carefully analyzing the construction costs of the new greenhouses, I only took the necessary amount – 400 thousand lei – directing half of it towards the purchase of metal, as we are working on the construction together with my father. And if necessary, we resort to day laborers. Later, we intend to apply for post-investment subsidies,” says the farmer.
Octavian highlights responsible money management, including directing a portion of the income to pay workers’ salaries and to cope with unforeseen situations, such as damages from unfavorable weather conditions.
“Throughout our journey in the agriculture sectorù, we have accumulated a solid understanding of efficient profit management. The funds derived from our agricultural activity are directed towards various needs, such as purchasing quality seeds, acquiring essential wood for heating the greenhouse, and securing peat. Even if we often find ourselves near or even below budgetary limits, we strive to allocate resources for unforeseen situations, such as potential damages caused by adverse weather conditions, like strong winds,” he says.
Moreover, the farmer believes that reinvesting the earned profit is crucial to maintain and constantly improve the business.
“I have over 10 years of experience in agriculture since opening the farm and am focused on developing the business. With hard work, we believe we will achieve success, even though agriculture is unpredictable and financial results can sometimes be fluctuating,” concludes Octavian Frunze.
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