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Abstract

This paper compares the returns from different tree crops on basis of their gross margins. Although banana dominates the cropping pattern, it does not offer the highest returns per acre or the best returns to labor. The classic gross margin analysis does not adequately explain what farmers do. The gross margins do not cater for varying amounts of riskiness associated with alternative crops. The paper goes on to identify the main risk as markets. In many non-banana tree crops, lack of an organized market meant that only 20% to 30% of potential crop was harvested. The other factors accounted for are the seasonality of crop and its effect on a farmer's cash flow, and the tolerance of a crop to negligent husbandry. These factors are quantified in the form of a yield discount factor. Returns discounted for risk show that banana is one of the more· attractive crops.

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