4.2.3 Stability:
When conditions are unfavorable, such as the decrease of
product price, yield instability and increase of production cost there is
always recourse to the diversification of activity, crop rotation, increasing
storage capacity or better post-harvest efficiency. The best strategy for a
good system stability is to work with robust solutions while knowing the
market. For the following part, we will take into account the market risks and
production risks. Table 7 summarizes the risks and the years respectively in
which the risks will be taken into account.
Table 7 Production risks taken into account
|
Market risk
|
Production risk
|
Year
|
|
no risks
|
no risks
|
1
|
|
10% increase in production costs
|
2
|
|
10% increase in labor costs
|
3
|
|
10% yield reduction
|
4
|
|
10% reduction in sales price
|
|
5
|
Source: GIZ/ FBS Potato. 2020. Module 6
Taking into account these risks, the gross margin for 5 years
will be calculated in table 9. The production is done on two plots as follows.
Peanuts follow potato in the first plot. In the second plot, only onion is
produced. The following year, only the onion is produced on plot 1 and the
peanut follows the potato in plot 2. The rotation continues this way in the
following years.
Table 8 The gross Margin for 5 years including risks of the 3
crops
|
Crop
|
Potato
|
Onion
|
Peanut
|
|
Scenario
|
Current
|
Improved
|
Current
|
Improved
|
Current
|
Improved
|
|
Input prices
|
791,000
|
986,900
|
520,600
|
611,100
|
168,200
|
257,600
|
|
Labor Cost
|
157,500
|
171,000
|
142,500
|
151,500
|
70,500
|
70,500
|
|
Yield
|
30,000
|
40,000
|
50,000
|
70,000
|
1000
|
3000
|
|
Price
|
33
|
34
|
20
|
21
|
260
|
260
|
|
GM Year 1
|
41,500
|
202,100
|
336,900
|
707,400
|
21,300
|
451,900
|
|
GM Year 2
|
-37,600
|
103,410
|
284,840
|
646,290
|
4480
|
426,140
|
|
GM Year 3
|
25750
|
185,000
|
322,650
|
692,250
|
14,250
|
444,850
|
|
GM Year 4
|
-57,500
|
66,100
|
236,900
|
560,400
|
-4700
|
373,900
|
|
GM Year 5
|
-57,500
|
66,100
|
236,900
|
560,400
|
-4700
|
373,900
|
Therefore, the income stability of the current and the
improved scenario will be measured and analyzed. The calculation is as follows
in Table 9:
32|
Table 9 Calculation of the Coefficient of Variation (CV) for
the improved Scenario
|
Current
|
Improved
|
|
Total Revenue Year 1
|
399,700
|
1,361,400
|
|
Total Revenue Year 2
|
251,720
|
1,175,840
|
|
Total Revenue Year 3
|
362,650
|
1,322,100
|
|
Total Revenue Year 4
|
174,700
|
1,000,400
|
|
Total Revenue Year 5
|
174,700
|
1,000,400
|
|
Mean (X )
|
272,694
|
1,172,028
|
|
SD
|
104,723.6
|
171,252.9
|
|
CV %
|
38.4
|
14.6
|
Mean (Y( ) = ? ????/??
??
??=1
Standard deviation (SD)=[ ? (???? - ??)2
?? / (n- 1)] ^1/ 2
??=1
|
Coefficient of variation CV= 100(SD/ Y(
|
)
|
With a CV of 14.6% in the improved Scenario and 38.4% in the
current Scenario, we can conclude that the income of the 3 crop is more stable
in the improved Scenario.
4.2.4 Diversification
Diversity is a strategy of increasing the number of activities in
a system to reduce the risk to household income on the one hand, and on the
other hand, to increase income with a better allocation of resources on the
other hand.
Table 10 Calculation of Simpson's Diversity Index for both
scenario
|
Scenario / crop
|
Current Scenario
|
Improved Scenario
|
|
income (ni)
|
(ni/N) 2 (S=3)
|
income (ni)
|
(ni/N) 2 (S=3)
|
|
Potato
|
41,500
|
0.010780227
|
202,100
|
0.02203744
|
|
Onion
|
336,900
|
0.710450338
|
707,400
|
0.2699968
|
|
Peanut
|
21,300
|
0.002839821
|
451,900
|
0.11018264
|
|
Sum
|
399,700
|
0.724070386
|
1,361,400
|
0.40221688
|
|
DI
|
|
0.275929614
|
|
0.59778312
|
Simpson's Diversity index (DI)= 1 - ? (ni/N)
2
??
??=1
The calculated DI values of 0.5977 for the improved Scenario
and 0.2759 for the current scenario, which indicates that the farm-income is
more diversified in the improved case in economic terms. The (ni/N)
2 values also indicate that the farm's economic structure is
dominated by Onion in Both Scenario.
33|
|
|
