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5 stepsOkay, elsiekaburu, let's solve this one in English.
Part a· 5 steps
Prepare a Partial Budget and Show the Effect of the Change
Calculate Added Returns from Potatoes.
This is the revenue Mr. Onyango will gain by planting potatoes on .
- Potato yield per hectare:
- Potato yield for :
- Price of potatoes per bag: Ksh 300
Calculate Reduced Costs from not planting Maize.
These are the costs Mr. Onyango will save by not planting maize on .
- Maize Fertilizer:
- Maize fertilizer rate:
- Maize fertilizer for :
- Cost of fertilizer (50kg): Ksh 1400
- Maize Seeds:
- Maize seeds needed for :
- Cost of maize seeds (50kg): Ksh 200
- Maize Fertilizer:
Calculate Added Costs for planting Potatoes.
These are the new costs Mr. Onyango will incur for planting potatoes.
- Potato Fertilizer:
- Potato fertilizer rate:
- Potato fertilizer for :
- Cost of fertilizer (50kg): Ksh 1400
- Potato Seeds:
- Potato seeds needed for : (of 10kg)
- Cost of potato seeds per bag (10kg): Ksh 1350
- Extra Labour:
- Extra labour days per hectare:
- Extra labour days for :
- Cost of labour per day: Ksh 150
- Potato Fertilizer:
Calculate Reduced Returns from not planting Maize.
This is the revenue Mr. Onyango will lose by not planting maize.
- Maize yield per hectare:
- Maize yield for :
- Price of maize per bag: Ksh 1200
Construct the Partial Budget and Calculate the Net Change in Profit.
Partial Budget for Changing 0.3 ha of Maize to Potatoes
Item Amount (Ksh) A. Added Returns Returns from Potatoes (0.3 ha) 8100 Total Added Returns 8100 B. Reduced Costs Maize Fertilizer Saved (0.3 ha) 840 Maize Seeds Saved (0.3 ha) 200 Total Reduced Costs 1040 C. Added Costs Potato Fertilizer (0.3 ha) 1050 Potato Seeds (0.3 ha) 13500 Extra Labour (0.3 ha) 1800 Total Added Costs 16350 D. Reduced Returns Lost Returns from Maize (0.3 ha) 20160 Total Reduced Returns 20160 Net Change in Profit (A+B)-(C+D) -27370 The effect of the change is a decrease in profit of Ksh 27,370.
Part b
Advice to the Farmer
Based on the partial budget analysis, switching from maize to potatoes would result in a significant loss of Ksh 27,370. Therefore, the advice to Mr. Onyango is not to make this change as it is not economically viable.
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