Two hectares, two crops: a West Region smallholder's choice
Ms. Ngo Bakang farms two hectares in the West Region. She can plant the whole plot to maize or to beans, or split it. Last season maize gave 2.5 tonnes per hectare and sold at 180,000 FCFA per tonne; beans gave 1.2 tonnes per hectare at 320,000 FCFA per tonne. Maize costs 110,000 FCFA per hectare for seed, fertiliser and hired labour; beans cost 150,000 FCFA per hectare. Her family has 60 person-days of labour available before hiring; maize needs 25 person-days per hectare and beans need 40. Hired labour costs 2,000 FCFA per person-day. She also needs 80,000 FCFA cash for school fees before harvest and can borrow at 10% for six months. A local trader offers a forward contract for beans at 300,000 FCFA per tonne, but only if she devotes at least one hectare. She is risk-averse because last year's beans were damaged by rain.
1. Calculate the opportunity cost of planting one hectare to maize rather than beans, using the data. Show your working and state any assumption.
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Using cash costs and treating family labour as having no cash cost because she has 60 days available:
- Maize net cash return per hectare = (2.5 × 180,000) − 110,000 = 450,000 − 110,000 = 340,000 FCFA.
- Beans net cash return per hectare = (1.2 × 320,000) − 150,000 = 384,000 − 150,000 = 234,000 FCFA.
- Opportunity cost of one hectare of maize = net return forgone from beans = 234,000 FCFA.
If family labour is valued at the hired wage of 2,000 FCFA per day, maize net return = 450,000 − 110,000 − 50,000 = 290,000 FCFA; beans net return = 384,000 − 150,000 − 80,000 = 154,000 FCFA; opportunity cost = 154,000 FCFA. With the forward contract, beans revenue is 1.2 × 300,000 = 360,000 FCFA and net cash return is 210,000 FCFA, so the opportunity cost would be 210,000 FCFA. The correct figure depends on whether the family labour has an alternative paid use; a clearly stated assumption should be accepted.
2. Using scarcity, choice and opportunity cost, explain why Ms. Bakang might still choose beans even though maize appears to give a higher net return.
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Scarcity means she cannot use the same hectare and the same labour for both crops. Choosing maize means forgoing beans, and the forgone beans are the opportunity cost. A higher maize return on paper does not settle the choice because the returns carry different risks and timing.
Beans may be chosen because: the forward contract at 300,000 FCFA per tonne reduces price risk, even though it lowers expected revenue; beans may mature earlier and provide cash before the school-fees deadline; a legume can improve soil fertility and reduce future fertiliser cost; and splitting the plot diversifies rain and pest risk. Her risk aversion matters because last year's bean loss shows that expected profit is not the same as secure income. The opportunity cost of maize is therefore not only the forgone bean profit but also the forgone insurance against a bad season. A rational farmer may accept a lower expected money return for a more reliable cash flow.
3. Evaluate whether she should devote the whole two hectares to maize. Use the labour constraint and consider risk.
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Whole-farm maize needs 2 × 25 = 50 person-days, which is within the 60 family days, so no hired labour is needed. Net cash return = 2 × (450,000 − 110,000) = 680,000 FCFA. Whole-farm beans need 2 × 40 = 80 person-days, so 20 days must be hired at 2,000 FCFA, costing 40,000 FCFA. Bean net cash return = 2 × 384,000 − 2 × 150,000 − 40,000 = 428,000 FCFA. Maize therefore gives 252,000 FCFA more cash and uses less hired labour.
However, whole-farm maize is risky: one price fall or pest attack affects all income; it gives up the forward contract; and it may reduce soil fertility. A split such as 1.5 hectares maize and 0.5 hectare beans uses 37.5 + 20 = 57.5 person-days, stays within family labour, and keeps some diversification. The best judgement is probably not all maize: the labour data favour maize, but risk and cash-flow needs justify at least partial diversification.