 | Better Farming Series 14 - Farming with Animal Power (FAO - INADES, 1977, 57 p.) |
 |  | Income from animal power |
| | What animal power costs |
|
|
(introduction...)
To know what animal power costs,
you must know what you have to spend on:
· buying animals and
tools;
· feeding the animals;
· the upkeep and repair of the tools.
Prices vary from country to country and from region to
region.
The prices given here do not apply to all of Africa.
They are only
two
examples.
Buying animals and tools
Let us take two farmers, Toumba and Gambara.
Toumba and
Gambara each buy
|
a plough |
8000 francs |
|
a pair of oxen |
32 000 francs |
|
They each spend |
40 000 francs (CFA) |
Toumba buys a plough for 8000 francs. In 5 years the plough is worn out. Toumba has to buy another one. He needs money. But he never thought of putting aside any money. So he cannot buy a new plough. Toumba cannot use his oxen any more. He cannot farm with animal power.
Gambara also buys a plough for 8 000 francs. At the end of 5 years the plough is worn out. But Gambara has put some money aside every year. So he can buy a new plough and go on farming with animal power.
How much money be put aside?
Putting money aside to replace tools or oxen is called amortization.
· To replace a plough
The plough costs 8 000 francs.
It lasts 5 years.
To get 8 000 francs in 5 years, you must put aside each year
8 000 /5= 1 600 francs
These 1 600 francs are the amortization of the plough.
· To replace the oxen
The oxen cost 32 000 francs.
After 6 years they are too old and are sold for 20 000 francs.
In 6 years the oxen have lost in value
32 000 francs less 20 000 francs = 12 000 francs.
In order to have enough money in 6 years' time to buy new oxen a farmer must put money aside every year for the amortization of the oxen, that is:
francs /6= 2 000 francs.
For the amortization of the plough and the oxen the farmer must put aside every year
1 600 francs plus 2 000 francs = 3 600 francs.
Amortization
Amortization means putting aside every year the money to replace your tools and oxen.
Interest
Gambara buys
|
a plough |
8 000 francs |
|
two oxen |
32 000 francs |
|
Gambara spends |
40 000 francs |
But Gambara hasn't got 40 000 francs.
So he asks a friend or a bank to lend him the money.
His friend, or a bank that has 40 000 francs, could use the money to buy a shop and do business.
The 40 000 francs would bring in money.
This is why the friend or the bank that lends you money asks you to pay back more.
If the bank lends you 100 francs for one year, and asks you to pay back 105 francs at the end of the year, and say that the bank asks for 5 percent (5%) interest. The extra 5 francs are the price you must pay for the loan of 100 francs for one year.
For a farmer who is lent 40 000 francs, interest at 5% a year
works out as follows:
40 000 francs x 5/100 = 2 000 francs interest each
year.
Interest is the money a farmer must pay each year for the use of money lent to him
Each year Gambara must put aside in order to pay for his oxen and his plough:
|
Amortization |
3 600 francs |
|
Interest |
2 000 francs |
Total
_5 600 francs
To replace his animals and his plough, Gambara puts aside each year 5 600 francs.
The animals' food
Gambara gives a feed supplement to his working oxen (see page 27). Each animal gets 2 kilogrammes of sorghum on days when it works.
Instead of giving the sorghum to the animals Gambara could have sold the sorghum at, say, 12 francs a kilogramme.
Gambara should know how much money he could have got for this food.
Each working day the food for the two oxen costs him: 4 kilogrammes x 12 francs = 48 francs.
The oxen work 100 days a year.
Their food costs him: 48 francs x 100 = 4 800 francs.
Upkeep and repair of tools
Work wears out tools.
They must be mended, the ploughshare must be replaced.
Gambara spends 500 francs a year for mending tools.
· Gambara reckons