Economic considerations in introducing integrated agriculture-aquaculture technologies

The importance of economic analysis

HOW TO MAKE YOUR FARM BUDGET

FIRST, make a costs sheet.

· List the things that are required for you to use the technology.
· Write down how much is needed, its price and the amount paid.
· Add all amounts paid to find out the total costs.

Costs sheet

SECOND, make an income sheet.

· List all the products from the technology that were sold.
· Write down how much is sold, at what price and the amount received.
· Add all amounts received to find out the total income.

Income sheet

THIRD, work your Affiance or profit sheet.

· Write down the total income received from the technology.

· Write down the total costs that were required in doing the technology.

· Subtract the total amount paid for you to use the technology from the total amount received from the sales of the technology.

Balance

HOW TO MAKE YOUR MONTHLY CASH FLOW

Cash Outflow

· Work out your cash outflows.. Note down the activities of the technology that required money and write these on the lower pare of the calendar. Also, write down the costs involved.

· Under January, the first month of the technology, record plowing and harrowing where hired laborers were paid P320 for four days. Record also the purchase of rice seeds which cost P620.

· For the second month of the technology, record transplanting activities which required P160 as wages for hired laborers. Also, record the purchases and money paid for fingerlings, rice bran and Inorganic fertilizer.

· Repeat recording on the calendar the activities of the technology that I money and the amount paid for the

Cash Inflow

· Work out your cash inflows. Note down the products sold and the money received from these sales and write these on the upper pan of the calendar.

· In April, the fourth month of the technology, 25 knot fish were sold for P875.

· In May, 3,000 kg of rice were sold for P12,000 and 100 kg of fish for P3,500.

· Smaller size fish were kept in the pond for further grout. A total fish harvest was done in June and 25 kg of fish were sold getting P875 in receipts.

Cash

Cash Netflow

· The previous illustration of activities of the technology and the cash flows can be summarized by: 1) adding all money required to do the technology in particular month to get the total monthly cash outflow; and, 2) adding all the money received from the sales of the product of the technology in a particular month to get the total monthly cash inflow.

· Draw another calendar showing each month included in the previous calendar.
· Pat the total cash outflow by month on the lower part of the calendar.
· Pat the total cash inflow by month on the upper part of the calendar.
· The cash netflow is computed by subtracting the cash outflow from the cash inflow.

· A negative cash netflow, particularly the case in the first few months of the technology, means that the farmer spends money to buy and pay for things that are required by the technology. If he starts getting cash inflows, a negative cash netflow implies that more cash is required to pay for the technology than what is received from the sales of his products.

Cash netflow

· A positive cash netflow implies that the farmer receives money from the sales of the products of the technology. When there are cash inflows and cash outflows in a particular month, a positive cash netflow means that the farmer receives more cash from the sales of his farm products which are able to pay for the tame expenses at that particular month.

OTHER ECONOMIC CONSIDERATIONS

· The farmer may have several alternatives in using his resources such as labor, land or cash capital as shown in the following diagrams.

· Before adopting a new technology (for example, rice-fish farming), the farmer would like to know whether using his resources for rice-fish farming would give him better income than investing these in other alternative income-generating activities.

· When the farmer has alternative uses for his resources, he should choose the activities that will generate more income from using his resources.

Farmers labor resource

Farmers land resource

Farmers cash capital resource

OPPORTUNITY COSTS

· The opportunity cost of a resource (for example, labor, land or cash capital) is the value of the best alternative use of that particular resource. A new technology is worth adopting if the income earned from the use of the farmer's resources are greater than the opportunity costs (or what could have been earned) in other activities.

Additional labor hours spent by the farmer's wife and children for rice fish farming

Farmers wife spends more time in the farm: feeding the fish with rice bran and cleaning the dikes instead of cooking at home for the family. Children also help in the farm chores, thus spends less time studying school lessons.

RISKS AND MARKET

· Is the produce from the technology meant for household and local consumptions or for export?

· How diversified will the farm operations become when the new component technology is adopted? Will it increase/reduce risks in crop failure?

· Will the products of new technology be subjected to high degree of price uncertainty because of unstable market? How sensitive is the net return to changes in input costs and output vices?

EQUITY/INCOME DISTRIBUTION

· Is it going to place significant demand for labor time from family members? Who will meet such labor demand? What is the opportunity cost of additional labor hours in terms of leisure, children's schooling, household work by female labor force, etc.?

REDUCED RISKS IN CROP FAILURE IN RICE-FISH FARMING

Heavy insect/disease damage to the rice crop will result to poor yields. Income from rice may not even be enough to recover farm expenses. However, as the fishes are kept safe in the pond refuge, sales from fish relieve this situation.

Heavy insect/disease damage to the rice crop

Prepared by: MAHFUZZUDIN AHMED & MARY ANN P. BIMBAO

FARMER-PROVEN INTEGRATED AGRICULTURE- AQUACULTURE:
A TECHNOLOGY INFORMATION KIT (II RR -ICLAR M)