SIERRA LEONE maq 4ª.indd - agrilife - Europa

5 Survey Methodology
78
cash flows of the farm which is expressed by the
indicator of Farm Net Cash Income (FNCI).
FNI = OV - IC [1]
Output Value (OV) represents all agricultural
production: for sale, self-consumption and
stocks. The output value for sale was calculated
from the market prices declared in the survey of
each household. It should be noted that stocks
include the seeds which may be used as input in
consequent production cycle.
[2]
Where: Ci is crop i production, Lj is livestock
j, pi and pj are crops and animals prevalent
market prices respectively. Being Ci = (yieldi *
areai), where yieldi is yield/acre for crop i and
area is the total number of acre per crop i.
Input Costs (IC) of the production is the
sum of Variable Costs and Fixed Costs. Variable
Costs (VC) are proportional to the amount of the
production, such as labour (Labi,j) seeds, livestock
maintenance costs (Equation 3).
[3]
Where: Labi,j is the labour used for crop and
livestock production, pw is the wage of labour,
Seedsi is the costs of seeds per crop type, Lj is the
number of livestock and pjm is the variable cost of
the livestock maintenance.
Fixed Costs (FC) include the value of fixed
assets such as land, tools, machinery, buildings
and livestock purchase (Equation 4). Our
survey results show hardly any machinery and
building assets for production in the possession
of smallholders, thus these components are not
included in the calculation. Likewise, information
on tree crops is not available in the survey.
Therefore, it is not possible to estimate their sunk
cost value.
[4]
Where: LRent is the amount of rent paid per year
for land rent, Toolst is the quantity of tools per tool
type, dt is the annual depreciation value of purchased
tools, Lj is the number of purchased livestock and dj
is the annual depreciation of the purchased livestock.
To account for the annual depreciation of fixed
equipment and livestock a calculation on the basis of
a linear depreciation was introduced as follows:
Where: d is the annual depreciation, Iv is the
initial value, is the final or residual value and n is
the economic life expressed in years.
Initial value (Iv) corresponds to the observed
market value of the fixed equipment, or
livestock. In the case of the Sierra Leone survey,
smallholders only reported to have small hand
tools as fixed equipment, and purchase livestock
for multiannual use. These tools are practically
always used until the end of their life time.
Therefore Final value (Fv) for such type of fixed
equipment is valued at 0.
Farm Net Income indicators
Farm Net Income per acre:
By expressing the total farm area A = ∑iai,
where ai, is the utilised area per crop i (with
the condition: 0≤A) Farm Net Income can be
expressed in the form a linear relationship with A:
FNI = (OV/A - VC/A)*A - FC [5]
Where: (OV/A - VC/A) is the angular
coefficient and (FC) is the intercept. FNI=f(A)
linear function is positively sloped when GO/A >
VC/A or, in other words, when unitary production
exceeds unitary variable costs to farm area.