What we need to do here is to adopt an accounting practice-the doctrine of materiality. Although, the rearing of pig and its consumption is not popular in Moslems areas in Nigeria because of the religion. Converting project financial prices to economic values-say, changing the market price of the weight gain of the animals on the pasture and the market price of paddy rice to their economic equivalents if these are seen to be different from the market prices-automatically revalues the opportunity cost of the change in land use from financial to economic terms. Project boundary price Prices used in analyzing agricultural projects are not necessarily farm-gate prices. . Because intangible benefits are a factor in project selection, it is important that they be carefully identified and, where at all possible, quantified, even though valuation is impossible. In addition, both pairs of authors recommend deriving specific conversion factors for particular groups of products that will allow for any difference between market prices and opportunity costs and for the foreign exchange premium on traded items.
Then, table 3-1 indicates the farmer should reduce the amount of fertilizer applied to a hectare from 80 kilograms to 70 kilograms, since between 60 and 70 kilograms the marginal value product was some P8. For example, do land prices reflect the price boom for agricultural commodities and bio-energy? Then we would add any tariffs and subsidies in this case there are none ; add local port charges for harbor dues, fumigation, handling, and the like; and add local transport to the relevant inland market. If the analyst has laid out the financial accounts to show the situations with and without the project for farm budgets as suggested in chapter 4, then the incremental net benefit that is, the incremental cash flow of the project, when financial prices have been converted to economic values and the accounts aggregated as suggested in chapter 8, will include an allowance for the net value of production forgone by changing the land use. Costs of Agricultural Projects In almost all project analyses, costs are easier to identify and value than benefits. For such goods as concrete for irrigation canals, fertilizer and pesticides for increasing production, or materials for the construction of homes in land settlement projects, it is not the identification that is difficult but the technical problems in planning and design associated with finding out how much will be needed and when. Nor should more rental value be allowed than the family would be expected to pay for a comparable house in the vicinity or in a similar area elsewhere if the new settlement is in a distant locale. Before embarking on this series of adjustments, we will examine the problem of determining the appropriate premium for foreign exchange.
Again, although valuation is impossible, intangible costs should be carefully identified and if possible quantified. Thus, the first step in valuing costs and benefits is finding the market prices for the inputs and outputs, often a difficult task for the economist. In the analytical system here, we will take as formal criteria very straightforward objectives of income maximization and accommodate other objectives at other points in the process of project selection. In developing countries, however, it is shortage of capacity that is characteristic. The best initial guess about future prices is that they will retain the present relationships, or perhaps the average relationship they have borne to each other over the past few years. Environmental degradation in most rural areas in Nigeria has increased over the years and both human activities.
In general, project cost estimates also assume that there will be no relative changes in domestic or international prices and no inflation during the investment period. Afribary publishes latest agriculture topics for students. But this kind of analysis is useful only for determining the yield of past projects in the hope that judgments about future projects may be better informed. Specifically the study were designed to assess the contributions of mobile phone in beef cattle marketing, to identify factors affecting use of mobile phone in beef cattle marketing and to identify. Usually the price at point of first sale can be accepted as the farm-gate price; even if this point is in a nearby village market, the farmer sells his output there and thus earns for himself any fee that might be involved in transporting the commodity from the farm to the point of first sale. Does the loan reduce the national income available? Another is simply to increase the number of productive job opportunities so that unemployment may be reduced-which may be different from the objective of income distribution itself.
But the economic value of the new production, despite the fall in price, is not lower to the old users of the product; to them, it is still worth what the price was without the project. The government has undertaken a large investment to enable farmers to plant Malayan Dwarf coconuts, which are resistant to the disease. No more should be allowed for the rental value than would normally be paid by a prospective tenant family. One word of warning: both the rate and the extent of the benefit from quality improvement can easily be overestimated. This being the case, consideration of the distribution-weighted conversion factors proposed by Little and Mirrlees and Squire and van der Tak may be left aside, and we may focus our discussion on the Squire and van der Tak standard conversion factor as it relates to efficiency prices. A frequently encountered intermediate good in agricultural projects is irrigation water. But as the intensity of application increases, each additional kilogram of fertilizer has less and less effect on production.
Nigeria is predominantly an agricultural society. Family labor is treated differently. This is the case, for example, for manioc and cocoyam in Africa. It is important to emphasize that taking the income a project will contribute to a society as the formal analytical criterion in economic, analysis does not downgrade other objectives or preclude our considering them. Some individual nations systematically collect production and price information for crops and livestock products of interest to them, and they often are willing to share this information with analysts in other countries without charge or restriction. Seedcotton is converted into lint, seed, and scarto assuming 1 ton of seed cotton yields 400 kilograms seed, and 10 kilograms scarto.
The analyst must then calculate the appropriate price to use in the project accounts, either at the farm gate or at the project boundary. Tangible Benefits of Agricultural Projects Tangible benefits of agricultural projects can arise either from an increased value of production or from reduced costs. Suppose the farmer had only 2 hectares, 1 planted in rice and 1 in maize, and resources sufficient to purchase just 80 kilograms of nitrogen. If traded items were to be taken into the project analysis at an economic value obtained by simply multiplying the border price by the official exchange rate without adjusting for the foreign exchange premium, imported items would appear too cheap and domestic items too dear. Such costs might be incurred if new projects disrupt traditional patterns of family life, if development leads to increased pollution, if the ecological balance is upset, or if scenic values are lost. This convention serves well whenever financing can be used for a range of projects or even versions of roughly the same project. An example may clarify our use of willingness to pay and opportunity cost.
The credit element may also include credit for building on-farm storage so that farmers will have a safe place to store their production until they decide to market it at a better price. Hence, the net value of production forgone was clearly zero, and no value for the land was entered in the project economic accounts. The resources needed to produce the fertilizer or import it from abroad reduce the national income available to the society. The result is the wholesale price of imported maize. This reduces the income-since the manager must be paid a salary-but it is a sensible choice.