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SIERRA LEONE maq 4ª.indd - agrilife - Europa

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stock or exchanges at the village level. Since own<br />

stocks are accounted in the output value and since<br />

exchanges imply a cost that is even for both parts,<br />

this means that for the measurement of variable<br />

costs seeds must be taken into account for their<br />

entire value independently of whether cash was<br />

involved in the transaction or not. Consequently,<br />

seeds are calculated in the same manner under<br />

both income calculation approaches. However,<br />

in the cash income calculation it is taken into<br />

account that approximately ¼ of seeds were<br />

acquired without entering into a monetary<br />

exchange. Livestock purchases were valued at<br />

market price (as reported in the survey) under<br />

both income calculation approaches.<br />

Fixed costs were calculated for tools and<br />

land rent. The cost of tools was calculated on<br />

the basis of a linear depreciation of their market<br />

value over the number of years it has been<br />

utilised by smallholders. Land rent payment is<br />

usually made in the form of a token which is a<br />

part of the harvested output (FAO, 1999).<br />

In the discussion of results, these two<br />

approaches are used for calculating Farm Net<br />

Income. FNI-NA is the income calculation based<br />

on Neoclassical Approach (NA) principles of<br />

complete markets and FNI-PF is based on the<br />

assumption that Peasant Farming (PF) relies on a<br />

partial integration to the market economy and faces<br />

incomplete market. Quantitative evidence suggests<br />

that the latter approach is closer to the context in<br />

which farm households produce and interact.<br />

Reproduction Threshold<br />

The Reproduction Threshold (RT) 35 is<br />

introduced as a benchmark for assessing the<br />

economic viability of different farming or<br />

production systems. For farm households, the<br />

RT is the minimum output/revenue level per<br />

Household Working Unit (hhWU) below which<br />

farmers are unable to adequately pay for all inputs<br />

35 Refer to FAO (1999) for wider definitions of the<br />

Reproduction Threshold of a farming system.<br />

and to completely restore capital productivity in<br />

order to begin a new production cycle. Without<br />

any additional outside-farming income, farms<br />

can survive in the short run either by underpaying<br />

the labour and/or by not replacing the capital<br />

depreciation, but in the medium-to-long run such<br />

survival strategies will inevitably exclude some<br />

farms from the market. RT is strongly affected<br />

by national economic policies, international<br />

trade etc., and producers have very little hope<br />

of influencing. These thresholds can also differ<br />

by region. The macro-economic changes that<br />

have no immediate relationship with local farm<br />

production systems can completely modify<br />

thresholds and turn well-off producers into<br />

deprived ones.<br />

Since farm net income is a micro-economic<br />

indicator, and the minimum acceptable income<br />

(RT) needs to be determined separately for each<br />

region by taking into consideration the general<br />

economic and social situation, the difference<br />

between these elements can link the farms’<br />

economic performance to the prevailing regionaland<br />

macro-economic and social conditions.<br />

For the two regions, two different<br />

Reproduction Thresholds were identified. For<br />

the Northern region, where farms have hardly<br />

any opportunity work off-farm, it was assumed<br />

that the Reproduction Threshold is equal to<br />

zero Farm Net Income per household working<br />

unit (RT north). For the Eastern region, where<br />

some alternative work can be found outside the<br />

farm, the opportunity wage was defined as the<br />

minimum agricultural wage from off-farm work<br />

(RT east) attainable locally, therefore set to be<br />

equal to 700000 Leones36 of Farm Net Income<br />

per household working unit.<br />

A positive difference between NFI and RT<br />

(RT north as well as RT east) indicates that the<br />

36 The approximate days of the working opportunity outside<br />

the farms were assumed at around 60 - 100 working days<br />

per year (the average collection period for coffee cherries<br />

and cocoa pods) (Source HIS 2003/04).<br />

Rural poverty reduction and food security: The case of smallholders in Sierra Leone<br />

83

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