Agricultural Economics, Marketing and Farm Records
Farm as a business
A farm is a business: it uses inputs (seed, fertiliser, feed, labour, fuel) to produce outputs (crops, milk, meat, eggs) sold for income. Know fixed costs (land rent, insurance, depreciation - incurred whether or not you produce) versus variable costs (seed, fertiliser, casual labour, fuel - change with output). Traps: putting depreciation or rent among variable costs, and confusing gross margin with profit.
Key calculations
Gross margin = gross output (income) − variable costs. Profit = total income − total costs (fixed plus variable). Gross margin per hectare compares enterprises. Break-even is where income equals total costs. Cost of production per unit = total cost ÷ units produced. Return per pula invested = income ÷ cost.
Marketing
Know marketing channels (farm gate, local market, cooperative, abattoir, processor, export), the marketing mix (product, price, place, promotion), and factors affecting price (supply, demand, quality, season, transport, storage). Value addition (grading, packaging, processing) raises returns. Know the role of the Botswana Meat Commission for beef and the importance of quality grading.
Farm records
Records include inventory, labour, production, financial (receipts, invoices, cash book) and breeding/health records. Records support decisions, credit applications, tax and planning. Trap: keeping only a cash book and calling it full accounting.
Worked example
A poultry enterprise earns P12 000 from eggs; variable costs are P7 000 and fixed costs P3 000. Gross margin = 12 000 − 7 000 = P5 000. Profit = 12 000 − (7 000 + 3 000) = P2 000. Show the working; marks are for method.