Teff Harvest: Selling at the Farm Gate or at Market
A farmer in the Anseba region farms three plots of teff. Plot A is 1.5 hectares and last season produced 12 quintals per hectare. Plot B is 0.8 hectares at 15 quintals per hectare. Plot C is 2.2 hectares at 9 quintals per hectare. A trader offers 2,100 Nakfa per quintal at the farm gate. The nearest market pays 2,600 Nakfa per quintal, but transport costs 45 Nakfa per quintal plus a 300 Nakfa market fee for the whole load. The farmer also spent 4,200 Nakfa in total on seed and oxen hire. A neighbour with a truck offers to carry the entire harvest for a flat 3,000 Nakfa.
1. Calculate the total harvest and the net income under each selling option. Which option should the farmer choose, and by how much is it better?
Read the worked answer
Step 1 – Total harvest
- Plot A: 1.5 × 12 = 18.0 quintals
- Plot B: 0.8 × 15 = 12.0 quintals
- Plot C: 2.2 × 9 = 19.8 quintals
- Total = 18.0 + 12.0 + 19.8 = 49.8 quintals
Option 1 – farm gate
- Revenue: 49.8 × 2,100 = 104,580 Nakfa
- Net: 104,580 − 4,200 = 100,380 Nakfa
Option 2 – market (per-quintal transport)
- Revenue: 49.8 × 2,600 = 129,480 Nakfa
- Transport: 49.8 × 45 = 2,241 Nakfa
- Market fee: 300 Nakfa
- Net: 129,480 − 2,241 − 300 − 4,200 = 122,739 Nakfa
Comparison: 122,739 − 100,380 = 22,359 Nakfa. The market is better by about 22,400 Nakfa. The seed and oxen cost is the same in both options, so it does not affect the choice - only the size of the profit.
2. The neighbour's flat rate of 3,000 Nakfa replaces both the 45 Nakfa per quintal and the 300 Nakfa fee. For what harvest size does the flat rate become the cheaper way to reach the market?
Read the worked answer
Let q be the harvest in quintals.
- Flat rate cost = 3,000
- Per-quintal cost = 45q + 300
The flat rate is cheaper when: 3,000 < 45q + 300 2,700 < 45q q > 60
Check with the actual harvest of 49.8 quintals:
- Flat rate per quintal: 3,000 ÷ 49.8 ≈ 60.2 Nakfa
- Per-quintal route: 45 + (300 ÷ 49.8) ≈ 45 + 6.0 = 51.0 Nakfa
- Saving by using per-quintal transport: about 459 Nakfa
So the flat rate is only worth taking if the harvest exceeds 60 quintals. Below that, paying per quintal plus the fee is cheaper.
3. Suppose poor rains cut Plot C's yield to 60% of its previous level while Plots A and B are unchanged. Recalculate and state whether the selling decision changes.
Read the worked answer
New harvest
- Plot C: 19.8 × 0.60 = 11.88 quintals
- Total: 18.0 + 12.0 + 11.88 = 41.88 quintals
Farm gate
- 41.88 × 2,100 = 87,948
- Net: 87,948 − 4,200 = 83,748 Nakfa
Market
- Revenue: 41.88 × 2,600 = 108,888
- Transport: 41.88 × 45 = 1,884.60
- Net: 108,888 − 1,884.60 − 300 − 4,200 = 102,503.40 Nakfa
Decision: The market still wins, by 102,503.40 − 83,748 = 18,755.40 Nakfa. The decision does not change, but the advantage falls from about 22,359 to about 18,755 Nakfa. This makes sense: transport is a per-quintal cost, so a smaller harvest carries a smaller transport bill; the fixed market fee of 300 Nakfa is spread over fewer quintals but is too small to reverse the choice.