Citation
Economic perspectives in the analysis of technological alternatives for limited resource family farmers

Material Information

Title:
Economic perspectives in the analysis of technological alternatives for limited resource family farmers
Creator:
Wotowiec, Peter J
Hildebrand, Peter E
Publication Date:
Language:
English
Physical Description:
6 leaves : ; 28 cm.

Subjects

Subjects / Keywords:
Agriculture -- Technology transfer -- Economic aspects ( lcsh )
Farms, Small -- Economic aspects ( lcsh )
Genre:
non-fiction ( marcgt )

Notes

General Note:
Cover title.
General Note:
Typescript.
Statement of Responsibility:
Peter J. Wotowiec and Peter E. Hildebrand.

Record Information

Source Institution:
University of Florida
Holding Location:
University of Florida
Rights Management:
The University of Florida George A. Smathers Libraries respect the intellectual property rights of others and do not claim any copyright interest in this item. This item may be protected by copyright but is made available here under a claim of fair use (17 U.S.C. §107) for non-profit research and educational purposes. Users of this work have responsibility for determining copyright status prior to reusing, publishing or reproducing this item for purposes other than what is allowed by fair use or other copyright exemptions. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder. The Smathers Libraries would like to learn more about this item and invite individuals or organizations to contact Digital Services (UFDC@uflib.ufl.edu) with any additional information they can provide.
Resource Identifier:
80954452 ( OCLC )

Full Text























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
ALTERNA171VES 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 onfarm 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: I
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. 'Ibree 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 . Fwnily 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 0--is 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 Perspeaives . Family Farmers
Page 4


Nevertheless, from an econon-dc 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 Famers
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 comn-dtment 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 undertak6n'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 fullfledged 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/ECPBRSPEC