Better Farming Series 14 - Farming with Animal Power (FAO - INADES, 1977, 57 p.)
 Income from animal power
 What animal power costs
 (introduction...) Buying animals and tools Amortization Interest The animals' food Upkeep and repair of tools

Let us take two farmers, Toumba and Gambara.

 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.