Agroindustrial project analysi

74 AGROINDUSTRIAL PROJECT ANALYSISTable 3-2. Use and Primary Reasons for Nonuseof Agrochemicals and Improved Seedsby Small-scale Farmers in Mexico, 1973(percent)Reason for nonuseUncertaintyandlack ofInput Us- knowledge High cost OtherFertilizer 26 53 37 10Herbicides 13 66 18 16Improved seeds 16 74 19 7Insecticides 23 61 25 13Source: Compafiia Nacional de Subsistencias Populares (CONASUPO) (MexicoCity, 1973).receive little technical advice, whereas larger farms heavily useagrochemical inputs and technical assistance. For example, in theMexican study only 4 percent of the traditional farmers receivedformal technical assistance, a figure that reflects both the dichotomiesbetween modern and traditional and commercial and subsistenceagriculture and the inequalities in land and income distribution.If an agroindustrial plant is to increase its supply of raw materialby improving farm technology, it may have to stimulate governmentagencies or input suppliers to provide farm assistance or itmay have to offer technical assistance independently. Althoughthe plant should encourage reforms in the structure of land tenure,these changes generally occur slowly.The fundamental factor in the farmer's choice of which crop toplant or livestock to raise is economic, involving the weighing ofalternative prices, costs, risks, and profits. The agroindustrial supplyanalysis should examine these assumptions, which affect afarmer's decisions, to make the projections of raw material supply.This examination is discussed further in the section on "ReasonableCost," below.Raw material supply is uncertain because of the variables inherentin agronomic production. The project analysis should, therefore,include a "supply sensitivity analysis" to measure the effecton total output of changes in area planted and crop yields. If thereare no government or enterprise programs to stimulate output, theanalyst should use historical planting and yield variations to de-