Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd Logo
Upload

Welcome to Scribd!

  • 117 views

    Module 1.1 Production Cost and Farm Productivity

    Uploaded by

    Rheneir Mora
    This document provides training materials for a module on production costs and farm productivity. The module objectives are to understand what determines price levels, compute plot-level production costs, explore factors affecting farm productivity, and examine policy implications. Exercises walk through calculating costs of production for individual plots, analyzing cost histograms and supply curves, and estimating yield functions using regression. Key conclusions are that raising productivity through investments in research, extension, and infrastructure can lower costs for farmers and consumers, and public procurement policies should aim to purchase from efficient farmers.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd

    Module 1.1 Production Cost and Farm Productivity

    Uploaded by

    Rheneir Mora
    117 views26 pages
    This document provides training materials for a module on production costs and farm productivity. The module objectives are to understand what determines price levels, compute plot-level production costs, explore factors affecting farm productivity, and examine policy implications. Exercises walk through calculating costs of production for individual plots, analyzing cost histograms and supply curves, and estimating yield functions using regression. Key conclusions are that raising productivity through investments in research, extension, and infrastructure can lower costs for farmers and consumers, and public procurement policies should aim to purchase from efficient farmers.

    Original Description:

    FARM

    Copyright

    © © All Rights Reserved

    Available Formats

    PPT, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document provides training materials for a module on production costs and farm productivity. The module objectives are to understand what determines price levels, compute plot-level production costs, explore factors affecting farm productivity, and examine policy implications. Exercises walk through calculating costs of production for individual plots, analyzing cost histograms and supply curves, and estimating yield functions using regression. Key conclusions are that raising productivity through investments in research, extension, and infrastructure can lower costs for farmers and consumers, and public procurement policies should aim to purchase from efficient farmers.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    117 views26 pages

    Module 1.1 Production Cost and Farm Productivity

    Uploaded by

    Rheneir Mora
    This document provides training materials for a module on production costs and farm productivity. The module objectives are to understand what determines price levels, compute plot-level production costs, explore factors affecting farm productivity, and examine policy implications. Exercises walk through calculating costs of production for individual plots, analyzing cost histograms and supply curves, and estimating yield functions using regression. Key conclusions are that raising productivity through investments in research, extension, and infrastructure can lower costs for farmers and consumers, and public procurement policies should aim to purchase from efficient farmers.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    You are on page 1of 26

    AAMP Training Materials

    Module 1.1: Production Cost and Farm Productivity


    Steven Haggblade (MSU)
    blade@msu.edu
    Module Contents
    Objectives
    Background material
    Exercises
    Conclusions
    Objectives

    Understand what determines the price level of a good


    Compute plot-level production costs and compare
    between farmers
    Explore what affects farm productivity using estimate
    yield functions
    Examine policy implications (for stimulating agricultural
    growth & government procurement pricing)
    Background Material

    Review determinants of price


    What factors affect the cost of supplying maize to the
    market?
    Why does productivity vary across farms?
    Determinants of price
    Determinants of price (contd.)
    What affects the cost of supplying maize to
    the market?
    Farm-level cost of production
    Transport costs (distance to market)
    Marketing costs (handling, storage, profit, risk premium)
    Why does productivity vary

    Among farmers?
    Across plots?

    Q: Is this a good farmer or


    a bad farmer?
    Good farmer? Bad farmer?
    Good farmer? Bad farmer?
    Good farmer? Bad farmer?
    Where are the good farmers and bad farmers on
    this supply curve?
    Exercise 1: Compute Plot-level Cost

    Open Production Cost and Price Variability.xls


    Read the red NOTES tab to familiarize yourself with the
    contents of the workbook
    Click on the [data1 plots] tab and explore the data
    There are 200 farmers represented
    Focus on yield
    Why is yield so variable?
    Exercise 1: Compute Plot-level Cost contd.

    Click on the [ex 1 cost of production] tab


    Values in yellow refer to [data1 plot]
    Values in green are results
    What do you notice?
    On average, do farmers have positive revenue?
    What are the major costs?
    Compare farm productivity between farms
    Select a farmer from [data1 plot]
    Link the yellow highlighted values to a farm in [data1 plot]
    How does this compare to the mean?
    Repeat for several different farms
    How do they compare to each other?
    Exercise 1: Results

    Farm productivity varies greatly


    Some farmers in the sample receive negative revenue
    from maize
    Policy should focus on increasing farmer productivity
    Raises farmers profits
    Lowers consumer costs
    Exercise 2: Cost Histogram & Supply Curve

    Examine the Cost Histogram in [ex 2 cost groups]


    What do you see?
    Can you make generalizations about smallholder
    production costs based on this histogram?
    Exercise 2: Cost Histogram & Supply Curve

    Next, examine columns Z, AA & AB in [data4 cost per


    ton]
    Copy column AB (tot_cost_ton) from [data4 cost per
    ton] and paste it into [ex 2 cost per ton]
    Sort the column in ascending order (small values to large
    values)
    Select the entire column and make a line chart
    What does this chart show?
    Compare with the chart in slide 11 of this presentation
    If you were asked to choose a fair maize price based on this
    chart, what price would you choose?
    Exercise 2: Results

    Individual farmers cost of production varies greatly


    Setting a price floor based on production costs has
    several problems
    Who decides whats fair? Where do you draw the line?
    Set the price too high government buys large volumes from
    inefficient farmers
    High price risks pushing out private traders & hurting consumers
    Policy that focuses on lowering farmers cost of
    production evades these problems
    Exercise 3: Estimate Plot-level Yield Function

    What are the factors affecting plot-level yield?


    Seed Type (high yielding varieties vs. local)
    Fertilizer application (kg/ha)
    Time of planting (number of days after November 1)
    Tillage system (hand hoe, conservation farming basins, plowing,
    ripper)
    Number of years experience with conservation farming
    Plot size
    Gender

    Yield = a + b Fert + c HYV + d Till +


    Yield is a function of Fertilizer, seed type, tillage type etc....
    Exercise 3: Regression Equation

    Open a new sheet in Excel


    Use the Regression Tool to estimate the yield function
    See notes in this presentation, as well as the NOTES tab in the
    Excel workbook for tips
    Examine the coefficients
    Which variables have the most impact on maize yield?
    Are there any surprises?
    How can this information be used in agricultural policy?
    Research?
    Extension?
    Exercise 3: Interpreting Regression Coefficients
    Exercise 3: Interpreting Regression Coefficients
    Exercise 3: Results

    High yielding seed varieties, planting basins, and


    fertilizer have a positive impact
    Which has the biggest impact?
    Which is cost effective? Look at the coefficient on fertilizer is
    that a big enough increase in yield to justify the cost?
    The planting date variable has a strong negative impact.
    Highlights the importance of timeliness in agriculture.
    What does this mean for agricultural extension?
    Conclusions: empirical
    Cost of production differs across farmers and plots
    Efficient farmers produce at lowest cost
    Conclusions: policy
    Raising farm productivity higher farmer profits and
    lower costs to consumers
    Key public investments for lowering farmers cost of
    production
    Agricultural research (breeding, agronomy)
    Extension (improves agronomic and management practices)
    Infrastructure improvements (lowers input cost prices)
    If government sets procurement prices
    High price large volumes procured. Purchases made from inefficient
    farmers
    Low price lower volumes procured. Purchases made only
    from efficient farmers
    References
    Chirwa, E. 2007. Sources of Technical Efficiency among
    Smallholder Maize Farmers in Southern Malawi. AERC
    Research Paper 172. Nairobi: African Economic Research
    Consortium.

    You might also like