Agroindustrial project analysi

72 AGROINDUSTRIAL PROJECT ANALYSISshould recognize, however, that new land may be of marginalquality and may produce lower yields.Land, the basic asset in agriculture, has multiple uses. Hence, afarmer has several planting options. Analysts should examine theextent to which farmers switch among crops (or livestock) for anindication of the yearly supply variations in the crop (or livestock)needed by the processing plant. Because some farmers are restrictedto one or two crops by soil or rainfall conditions or tradition, variabilitycan often be reduced.The analyst should consider the nutritional consequences to thecountry when farmers change crops to supply the processing plant.For example, switching from corn to a condiment crop might decreasethe national supply of a staple, thus increasing its price(assuming no imports) and decreasing consumption by low-incomeconsumers.In areas surrounding major urban centers, farmland can also beused for urbanization and industrialization projects. Industrializationnot only absorbs land but also bids away labor. For example,one fruit and vegetable processor found that farmhands and farmersbegan to change their occupations as automobile manufacturingplants located to the area. After several years the area becamedominated by part-time farmers (see table 3-1). The number offarmers had declined by 28 percent between 1949 and 1967, withTable 3-1. Distribution of Full- and Part-time Farmersafter Location of Automobile-manufacturing Plantin Baden-Wiirttemberg, Federal Republic of Germany, 1970FarmsAcreage'Farmers Thousands Percent Thousands PercentFull-time(100 percent of income) 12 4 930 22Part-timeMore than 50 but less than100 percent of income 121 42 2,420 57Less than 50 percent ofincome 156 54 867 21Total 289 100 4,217 100Source: Otto Strecker and Reimar von Alvensleben, "The Unterland Corporation(B)," in Case Study no. 4-372-252 (Boston: Harvard University, GraduateSchool of Business Administration, 1972).a. An acre = 0.405 hectares.