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Title: Economic perspectives in the analysis of technological alternatives for limited resource family farmers
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Permanent Link: http://ufdc.ufl.edu/UF00073338/00001
 Material Information
Title: Economic perspectives in the analysis of technological alternatives for limited resource family farmers
Physical Description: 6 leaves : ; 28 cm.
Language: English
Creator: Wotowiec, Peter J
Hildebrand, Peter E
Publication Date: 1987
 Subjects
Subject: Agriculture -- Technology transfer -- Economic aspects   ( lcsh )
Farms, Small -- Economic aspects   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
non-fiction   ( marcgt )
 Notes
Statement of Responsibility: Peter J. Wotowiec and Peter E. Hildebrand.
General Note: Cover title.
General Note: Typescript.
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Bibliographic ID: UF00073338
Volume ID: VID00001
Source Institution: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: oclc - 80954452

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ECONOMIC PERSPECTIVES IN THE ANALYSIS OF TECHNOLOGICAL
ALTERNATIVES FOR LIMITED RESOURCE FAMILY FARMERS


























Peter J. Wotowiec and Peter E. Hildebrand
University of Florida
1987








ECONOMIC PERSPECTIVES IN THE ANALYSIS OF TECHNOLOGICAL
ALTERNATIVES FOR LIMITED RESOURCE FAMILY FARMERS


OUTLINE

1. What is Economic Analysis and Why is It Needed?
2. Identifying Units of Analysis
3. Recognizing Individual Roles in Farm Production
4. Understanding Farm Production Incentives, Goals and Strategies.

LEARNING OBJECTIVES

After reading this handout students will be able to:

1. Explain why economic analysis of technological alternatives in on-farm research is an
essential complement to biological analyses.

2. Discuss important considerations in selecting the individual farmer, the farm-household or
other groupings of people as units of analysis.

3. Explain why it is important to examine and understand the farm production goals, roles
and strategies of individuals as well as households.

4. Discuss important factors which influence the farm production incentives, goals and
strategies of individuals and households.

KEY POINTS

Economic analysis, performed after biological analysis of technological alternatives in on-
farm research, provides additional information which is essential to developing appropriate
technologies which are likely to be adopted by farmers.

Often the farm household is considered the most relevant unit of analysis but additional
attention must be given to individual household members and to links between households and
others outside these units.

Any farm enterprise is the outcome of the efforts of various individuals who participate in
differing ways or have a stake in the outcome (decision-makers, investors, beneficiaries).

Most farm producers follow both subsistence and market production strategies. On most
farms, some crops and livestock are raised for home use and others are produced directly for
market.

Important factors to consider in understanding farm production goals and strategies
include individual and household consumption preferences, resources, other farm and nonfarm
production activities and the social, cultural, economic and institutional environment outside the
household.






Economic Perspectives...Family Farmers
Page 2

DEFINITIONS

Commercial:
Crops or animals which are produced primarily for sale or exchange.

Economic Analysis:
Any one of various methods of evaluating the consequences of possible allocations of
resources which are designed to satisfy human wants and needs.

Economics:
The study of how to satisfy human wants and needs given scarce resources.

Farm Enterprise:
A crop, livestock or other type of production activity conducted by a farm household or
by individual farmers for commercial or subsistence purposes.

Farm Household:
A group of people who reside and consume together and who are engaged in farming as
well as non-agricultural activities.

Stakeholders:
Individuals who participate in a crop or livestock production activity or who are affected
by the outcome. Three major types of stakeholders are decision-makers, investors and
beneficiaries.

Decision-makers:
Stakeholders who use management expertise and/or authority to make production
decisions.

Investors:
Stakeholders who provide resources such as time, labor, land, capital and animal
traction for a crop or livestock production activity.

Beneficiaries:
Stakeholders who receive positive or negative benefits from a crop or livestock
production activity. Examples of benefits might include a portion of the harvest, part
of the sale proceeds, time freed from production or food to eat.

Subsistence:
Crops or animals which are produced primarily for home consumption or use.

Unit of Analysis:
The basic social grouping of decision-making, production and consumption. An
individual, a household, a communal work group, a village or another grouping of people
may be equally appropriate as a focal point for research depending on the situation.






Economic Perspectives...Family Farmers
Page 3

1. What is Economic Analysis and Why is It Needed?

In the biological realm, crop and livestock responses to alternative technologies in a given
environment are measured, recorded and interpreted to produce recommendations. Plants and
animals are the primary biological units of analysis. In the economic realm, attention shifts more
toward the farmer as decision-maker, producer and consumer.

In a general sense, the term "economic analysis" refers to a comparison of the costs of a
change with the benefits which are an outcome of that change. In this paper, economic analysis
is discussed in reference to potential technological changes in small farm production. Economic
analysis in this sense involves the comparison of alternative practices or technologies with
farmers' existing practices.

What does economic analysis have to offer? Frequently, an economic analysis concerned
with net income may screen out the very technology considered "best" on the basis of yield
because it is too costly to farmers. Thus, economic analysis provides additional information
which allows researchers and extensionists to further screen out alternatives which are
unacceptable to farmers. It often happens that technologies which give similar yields differ
greatly in cost or resources used. Researchers or extensionists using economic analysis
techniques will note this and be able to recommend the least costly alternative to farmers. Risk
factors considered important by farmers can be incorporated into the analysis providing a fuller
picture of the suitability of a proposed alternative or current practice.

Before actually addressing specific economic analysis techniques, it is useful to have an
understanding of basic economic perspectives and considerations which provide the essential
foundation for the techniques. An ample understanding of individual and farm household goals,
incentives, farming and non-farming activities, available resources and constraints is also essential
to a successful analysis. The intent of this paper is to provide the beginning of this basic
understanding.

2. Identifying Units of Analysis

Sometimes use of the word "farmer" raises difficulties in gaining a clear understanding of
farm circumstances. Who or what is a "farmer"? For some a farmer is the person in the field
with a hoe. Others use the term to mean the male head of a rural household who farms to
support his family. Yet others use the term to mean a "farm household" or a group of people
who reside and consume together and who are engaged in farming as well as non-agricultural
activities.

Often a single person, the "farmer", is considered to represent an entire household. This
often occurs when efforts are focused solely on individual farm operators, usually male heads of
households. The problem with thliis the associated assumption that farm households are made
up of similar people who share common goals, have equal access to resources, participate
similarly in production activities and evenly partake of the benefits of production. On the
contrary, research findings show that individual household members have differing goals, needs
and resources, some conflicting, some independent, and some complementary.






Economic Perspectives...Family Farmers
Page 4

Nevertheless, from an economic perspective, an appropriate focus for analysis is the basic
social unit of decision-making, production and consumption. Depending upon the situation, an
individual, or a household, or another grouping of people may be equally appropriate units of
analysis. The farm household is usually considered as the most relevant focus with additional
attention given to individual household members and to links between households and others
outside these units.

3. Recognizing Individual Roles in Farm Production

Any farm production enterprise is rarely the outcome of the efforts of a single person.
Household members and others participate in differing ways or have a stake in the outcome.
These stakeholders can be grouped by the roles they fulfill, even though each often has more than
a single role. Decision-makers use management expertise and/or authority to decide what to
produce, and when and how to produce it. Investors provide resources such as time, labor, land,
capital and animal traction. Beneficiaries receive benefit from the production activity. Examples
of benefits might include a portion of the harvest, part of the sale proceeds, or time freed from
production. It is usually assumed that beneficiaries gain some positive outcome but frequently
negative benefits are also the case.

Level of involvement in each of these production roles is often associated with age,
gender and/or position in the household or community. Since individuals in different roles have
differing goals and incentives, it is useful to consider stakeholders by their production role and
also by the socioeconomic categories o age, gender and position.

To ensure adequate consideration of individual perspectives and circumstances, farming
systems practitioners must constantly ask "who?". Who participates in the decisions to produce?
Who provides what resources? Who participates in the production enterprise? Who receives the
benefits of production? This questioning helps to ensure awareness and consideration of the
needs and roles of different household members throughout the analysis.

4. Understanding Farm Production Incentives, Goals and Strategies.

The general end sought by the farm household can be considered to be improving or
maintaining the overall welfare and security of its members. However, underlying this overall
end is a complex of individual and household goals. Some goals such as obtaining food for
mutual consumption are common to the household, while others like increasing individually
controlled cash may be held by individual members and even may conflict with goals common to
the entire household.

Households and individuals, considered as farm production units, are commonly placed
into two categories. Those producing for home consumption are classified as subsistence. Those
producing for sale or exchange are considered as market or commercial. However, most farm
producers actually follow strategies which are both subsistence and commercial in nature. On
most farms, some crops are grown for direct home use while others are destined for market.
Likewise, some livestock are raised to produce products for family consumption, other livestock
products are sold.






Economic Perspectives...Family Farmers
Page 5

For primarily subsistence crop or animal enterprises, the strategy followed by producers
is to produce directly to meet home consumption needs. Producing at least a minimum
subsistence level of outputs is of greater concern than gaining high yields. Common strategies
for lessening the risk of failure to meet minimum needs include intercropping, farming parcels
located in different ecological zones and microenvironments, and maintaining mixed herds of
differing aged animals. Production arrangements frequently substitute farm produced resources,
such as household labor, fodder, manure, seed from previous crops, and so on, for off-farm
resources requiring cash purchase, such as hired labor, commercial feed and fodder, chemical
fertilizer and hybrid seed. However, there usually is a need for a minimal cash return to ensure
the purchase of essential consumption items and some farming supplies not produced on the farm.

For primarily commercial or market crops and livestock, the strategy followed by
producers is to gain maximum returns on resources invested, usually in the form of profit or net
income. This may be done by increasing yields, improving product quality, or decreasing inputs
until maximum return per unit of land or other relevant resource is reached. Often, commercial
plantings and livestock herds are managed as businesses, somewhat apart from household
concerns. Therefore concern for minimizing risk is less intense than under a subsistence strategy
where failure means hunger in the family.

Household factors such as consumption preferences, resources like time, labor and cash,
and activities such as food preparation and processing are of consequence in setting farm
production goals and strategies. For example, a decision to purchase materials for a new roof on
the home might limit the cash available for buying fertilizer. In another case, a consumption
preference for a local type of chicken leads to a decision against raising other breeds which might
provide more eggs and meat. Maize yields might be limited by less than timely weeding, but a
recommendation requiring more time spent at weeding might not be accepted if that time is
needed in collecting fuelwood or for carrying water for the household or if the weeds are needed
for animal fodder after harvest.

Household commitment to farming is affected by other nonfarm production activities and
wage employment opportunities. Some households farm only as a secondary activity, while
deriving primary income from home food processing activities like making tortillas or beer for
sale. Others may depend on the wages of one or more members, working part-time or full-time
either locally or as migrants. Successful evaluation of proposed farming improvements is
undertaken with full consideration of possible effects on nonfarm production activities.

Community, social and cultural factors outside the household are also of concern in
understanding farming decisions and strategies. A young man might not be considered a full-
fledged adult by the community until he first owns land and farms it. The social prestige and
standing of a family in a community might depend upon the number of cattle it owns. In areas of
communal land holdings, a household might continue to farm a depleted field simply to maintain
control of it.

Macroeconomic factors including government policy, prices, and access to credit,
information, supplies and markets also influence farming decisions. Obviously, when market







Economic Perspectives...Family Farmers
Page 6


prices for beans at harvest are traditionally low and farmers are unable to store their harvest,
few are likely to plant beans commercially.


4164/ECPERSPEC




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