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close this bookInter-Regional project for participatory upland conservation and development (Field Document 6/97) - NEPAL - A framework for a participatory economic evaluation of improved goat production by women groups in the Bhusunde Khola watershed (1997)
View the document(introduction...)
View the documentAcknowledgements
View the document1. Project background
View the document2. Objective and rationale
View the document3. Method
View the document4. The project area
View the document5. Goat production in the project area
View the document6. The role of trees in goat production
View the document7. Economic analysis of improved goat production
View the document8. The framework for a participatory economic evaluation process
View the document9. Recommendations
View the document10. Conclusion
View the document11. References

7. Economic analysis of improved goat production

Inputs and outputs of goat production in general, and the improved goat production in particular were identified by the farmers during the interviews. These factors will be used in illustrating the framework for economic analysis.


Figure 1. The inputs and outputs of goat production in the Bhusunde Khola Watershed

Sporadic data concerning the costs and benefits related to these inputs and outputs were also discussed during the farm interviews. For most inputs and outputs there is no market price valid for the area and if a 'real' economic analysis of the goat production was to be made at this stage, estimates and best guesses would have to be made. Below is a list of the inputs and outputs as discussed with the farmers. As can be seen from the list, this material is not adequate for validation of the various factors important in the goat production, and would need further investigation. Inputs and outputs include both non-marketed and non-monetary values in addition to market inputs and outputs.

INPUTS

Type of input

Estimated value

Labour

If the farmers were in a more commercial farming system anticipated market prices could have been put to labour, whereas for the subsistence farmers in Bhusunde Khola we have to use opportunity costs to represent the values that the farmers place on labour. Reliable estimates of opportunity costs are not readily available.
The minimum government wage is 65 NRs/day, but this is unlikely to be paid for unskilled women' labour. A few women work now and then for the nursery at the base camp and get paid 40-45 NRs/day, depending on how hard the work is. This could be an expression for the market price of women' labour in the area.

Tree fodder and grasses

Labour for collection. A big 'bundle or a dhoko (basket) per goat were given as rough estimate. This could take from 10 minutes up to an hour to collect, depending on the distance the women would have to walk.
The interviewed farmers had 5-6 bigger animals and 2-6 goats. Their estimation of time spent for fodder collection varied from 1 hour during the dry season (mainly free grazing) to 2-4 hours in the rainy season. There is no tradition for buying fodder (hence, no market price), but if the trees were not lopped they might have an alternative use as firewood or timber which should be considered if a value was to be estimated.

Grazing/herding

Labour for herding. Goats from 3-4 households often graze together under the control of one herder.

Water

Labour input for collecting water is minor as the goats do not consume large amounts (especially compared to cattle and buffaloes).

Improved sheds

Labour
Local materials

De-worming tablets

10-12 NRs every 6 months

Local medicine

Labour for collection of herbs and preparation of the medicine.

Buck service

10 NRs per service for non-members


OUTPUTS

Type of outputs

Estimated value

Cash

Cash
300 NRs/dahrni of meat (1 dahrni = 2.5 kg)
Price estimates for
6 months old kid: 1,500 NRs
9 months old kid: 2,000 NRs
12 months old kid: 3,000 NRs
Besides income, the on-farm availability of meat might have an effect on the family's nutritional status.

Manure

Goat droppings are highly valued as manure. In trying to estimate the value, the cost of chemical fertilisers that equals the nitrogen value of the goat manure could be used. A rough estimate of the amount of manure produced by 1 goat/year was given as 3 muri (a special basket), 50-100 kg.

Food security

Socio-economic factor of high importance for decision-making and should be considered in an economic analysis on household level

Savings

- do -

Social prestige for the women

- do -

Partial budget analysis

As a means to establish the basis for planning changes, or for evaluating the consequences of already made changes in farm practices that affect only part of the farm, partial budget analysis can be a useful tool. The idea is to set up a budget including only factors contributing to changes in the activity under consideration. The activity in question is evaluated by the changes in extra costs, costs saved, revenue foregone, and extra revenue, as well as by evaluating the non-quantifiable often socio-economic benefits or losses. Partial budgeting is most often used to evaluate the effects of relatively small changes in farming practices. It only shows the extra expenses and the extra revenue resulting from the change. It is a relatively easy procedure, although it requires validated estimates of inputs and outputs (losses and gains) of the activity being considered.

In the Mahila Chetna Samaj case, as well as other groups involved in goat production and organised in the same way, partial budget analysis can be carried out on two levels: 1) at the group level for the purchase of the improved buck, and 2) at the household level for the investment in improved goat production.

1) Analysis at group level for the purchase of the improved buck:

The group' purchase of an improved buck can be regarded as an activity of the group separated from the goat production of the individual women. A partial budget for this activity will make it possible for the group to compare the benefits and costs. If a partial budget is set up for other possible activities, comparisons can give indications on what will be most interesting for the group to develop according to the objectives of the group.

The group kept the last buck for 18 months, but the present expectations are one year. The estimated values in the budget should be for the same timespan.

Table 2. An example on how to set up the partial budget for a group purchase of an improved buck, and suggestions for which factors to include in the evaluation. All values are supposed to cover the period the buck is expected to be kept.

LOSSES (comparative additional losses)

GAINS (comparative additional gains)

Extra costs


Costs saved


· purchase of buck

? NRs

· possible factors?

? NRs

· transport, if paid by group

? NRs


· kudho?

? NRs


· tree fodder?

? NRs


· special treatment during adjustment phase and possibly later?

? NRs


Revenue forgone


Extra revenue

· alternative use of fodder trees needed for extra fodder, e.g. for fuelwood or timber?

? NRs

· income from selling buck after 1 year

? NRs

· income from selling maize used for extra fodder (kudho)?

? NRs

· payment for mating services, cash

? NRs

· Alternative use of the money invested in the improved buck?

? NRs

· payment for mating services, fodder

? NRs

Total losses

xxxx NRs

Total gains

yyyy NRs

Extra profit = total additional gains - total additional losses

Other considerations:


· Possibility of increased outcome from improved goat production


· Prestige for the women in the group


· Veterinary services


· Risks related to serious illness/death of buck; low 'service level' of the buck

Extra costs

Extra expenses or costs that occur in relation to the planned (or already made) change. In this case it would be the cost of investment in the improved buck plus the extra expenses to extra fodder and caretaking, compared to using local bucks.

Revenue foregone

Any revenue which would (or could) be received under the present farming practice, but which would not be received under the changed practice. In this case it would be the income

'lost' (not received) from the alternative use of the fodder and/or the 'extra profit' from enterprises that money invested in the buck could have been used for (e.g. commercial vegetable production).

Costs saved

Costs saved as a consequence of the changes, i.e. costs that are avoided as a consequence of the change.

Extra revenue

Any revenue which is received as a result of the change in the farming practice. In this case it is profit from mating services and from selling the buck.

2) Analysis at household level for the use of an improved buck:

Table 3. An example on how to set up a partial budget for the production of improved goats. The factors included under the different headings are suggestions derived from the case (using the service of an improved buck paid for either with fodder or cash). All values are supposed to cover the full period the goats are expected to be kept until selling/slaughtering.

LOSSES (comparative additional losses)

GAINS (comparative additional gains)

Extra costs


Costs saved

· payment for buck service?

? NRs

· possible factors?

? NRs

· extra kudho?

? NRs


· extra labour for caretaking?

? NRs


· extra tree fodder?

? NRs


· improvement of shed?

? NRs


Revenue forgone

Extra revenue

· alternative use of fodder trees needed for extra fodder, e.g. for fuelwood or timber?

? NRs

· difference in price when selling the offspring

? NRs

· income from selling maize used for extra fodder?

? NRs


Total losses

xxxx NRs

Total gains

yyyy NRs

Extra profit = total additional gains - total additional losses
Other considerations:
· Improved food security
· Prestige for the women
· Veterinary services
· Fodder situation

If 'total gains' are greater than 'total losses', the budget obviously indicates that the proposed change is profitable. In a situation where 'total losses' exceeds 'total gains' and the 'extra profit' becomes negative the farmer might still be in favour of the new activity or practice due to the importance of the so-called 'other considerations'. For example, if the group activity 'purchase of improved buck' shows a negative result the expectations of increased outcome from goat production at the household level might be important enough to keep the interest in the 'purchase of improved buck' group activity. (For further reading on partial budgeting, refer to Dillon and Hardaker, 1993).

The difficult task in this exercise is to get good estimates of the technical and financial values used in the calculations. The framework described in the following section is an attempt to set up a process with maximum farmer involvement where optimal estimation of these factors is an important part.