TRAINING OF TEACHER FARMERS IN PLANT NUTRITION MANAGEMENT

TCP/ZIM/7822(T)

ECONOMIC ANALYSIS REPORT

1998/99 CROPPING SEASON
ZIMBABWE

J. KAYE
Associate Professional Officer

African Centre for Fertilizer Development

Harare, Zimbabwe

Contents

page
INTRODUCTION

RESULTS FROM THE TEACHER FARMERS IPNS PRACTICE PLOTS

Crop Productivity
Costs of Production
Total Variable Costs
The Share of Fertilizer in the Cost of Production and the Farmers Purchasing
Ability
Profitability of the IPNS Plots
Revenues and Gross Margins
Rates of Return
Labour Input Requirements and Labour Productivity
Labour input requirements
Returns per unit of labour

1
1
1
1
3
3
3
5
6
6
6

CONSTRAINTS THAT MAY LIMIT INCREASED PRODUCTION IN 1999/2000

Input Costs and Output Prices
Accessibility of Inputs
Credit
Agricultural Support Services

6
6
7
8
8

ANNEX: PRODUCTION BUDGETS

Fifteen crop production budgets of the Teacher Farmers IPNS
practice plots, 1998/99

Economic analysis report: 1998/99 cropping season

INTRODUCTION
The Training of Teacher Farmers in Plant Nutrition Management project had as its main
objective to build the capacity of farmers in communal areas of Zimbabwe in plant nutrition
management of maize-based cropping systems. The specific objectives of the project included
improving the soil fertility levels in communal areas, improving crop productivity, increasing
cash incomes of the resource poor farmer and diversifying their diet.
The sixteen Teacher Farmers have maize-based cropping systems. Mainly rotating maize
with various other food- and cash crops. On the IPNS Practice Plots, the farmers were encouraged
to utilize all sources of organic plant nutrients available on their farms and in the neighborhood,
introduce legumes into their cropping systems and make up the balance of plant nutrients
requirements with fertilizers based on the soil analysis recommendations. The major sources
of organic plant nutrients that were relatively easily available for most of the Teacher Farmers
included cattle manure, and composted crop residues.
Most farmers in communal areas have various sources of income, from crop production,
livestock production, off-farm income generating activities and remittances from relatives in
urban areas. The farmers involved in the IPNS project primarily depend on crop production as
their main source of income, growing maize as the main food crop, with less than 20% of the
group growing cotton. Farm sizes range between 1 - 6 hectares. On average, as is typical in
communal areas, livestock production plays a secondary role, as the majority keeps a few cattle
mainly for drought power. Of those owning cattle, only a few keep beef cattle and goats for sale
during the off-farm season. Other income generating activities are very varied, with some of
them involved in market gardening, trade of household wares, construction, photography, fish
farming, etc.
RESULTS FROM THE TEACHER FARMERS IPNS PRACTICE PLOTS
Crop Productivity
Each Teacher-Farmer selected crops to be grown on the IPNS practice plots according to his/
her farming objectives. Among the crops grown were maize, sunflower, beans, cowpeas, ground
nuts, and bambara nuts. Most of them selected maize as the main crop, with the objective to
increase its production for consumption and market the surplus. Fifteen plots showed substantial
improvement in yield compared to previous seasons, ranging between 2.7 tons per hectare in
NR IV and 9.3 tons per hectare in NR II. The percentage increase in maize yields realized in the
IPNS plots was between 40% and 100% compared to yields realized from their respective
farms in the previous season. One Teacher Farmer had a complete crop failure due to excessive
rains.
By comparison, the national average estimates of maize yield in the communal areas have
been declining from 0.95 tons per hectare in 1996 to 0.55 tons per hectare in 1998 (Central
Statistical Office, Statistical Yearbook 1999). Table 1 shows the yields of maize, legumes and
other crops obtained by the Teacher Farmers on the IPNS Practice plots.
Costs of Production
Total Variable Costs
The costs incurred in producing the maize-legume inter-crops on the Teacher Farmers IPNS
plots varied from farmer to farmer. Most of their costs included soil analysis fees, land preparation

Zimbabwe

Table 1: Crop Yields on the Teacher-Farmers IPNS Practice Plots 1998/99

Name
Natural Regions
Maize Yields
Legume Yields
Masakara

2A

Goredema

Sunflower

(tons/ha)

(tons/ha)

(tons/ha)

9.3

3.4

2.1

2B

2.9

0.82

Chambe

5.1

0.11

Chipanga

2.7

0.63

Magaya

5.6

0.93

Manyonga

4.7

0.004

Mapinga

4.2

0.03

Mnkhandla

6.4

0.23

Mukwangwariva

4.1

0.67

Timuri

6.03

0.15

Zindiye

5.94

0.13

Mabgwe

7.5

0.5

Maseko

2.9

0.11

Ncube

3.3

0.02

Saungweme

4.2

0.11

5.0

0.5

Average

Average amounts of rainfall received in each Natural Regions:

NR I : > 1000mm
NR II : 750 - 1000mm
NR III : 650 - 800mm
NR IV : 450 - 650mm
NR V : < 650mm

Figure 1

Contribution of Each Cost Component to the Total Variable Costs on the Farmers IPNS Practice
Plots, 1998/99
10000.00
9000.00

7000.00
6000.00
5000.00
4000.00
3000.00
2000.00
1000.00

Teacher Farmers
Land preparation & Labour costs (Z$/ha)

Seed costs (Z$/ha)

Fertilizer & Agro Chemicals (Z$/ha)

Marketing costs (Z$/ha)

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Variable Costs (Z$/ha)

8000.00

Economic analysis report: 1998/99 cropping season

costs, seed, fertilizers, soil amendments and agro-chemicals, storage, and transport costs for
the inputs and produce. Very few used hired labour and only for some of the tasks at peak
periods.
Of the sixteen Teacher Farmers, none have high valued fixed assets in form of farm buildings,
infrastructure for processing of the agricultural produce or expensive farm machinery. All the
16 Teacher Farmers use cattle for drought power; and they do not hire permanent labour, but
generally rely on family labour for most of the farming operations.
Figure 1 compares the contribution of the various costs to the total variable cost as incurred
by each Teacher Farmer during the 1998/99 cropping season. The cost components have been
grouped into four categories, namely:

Land preparation & labour costs: costs for land clearing, cultivation, and labour. Labour

costs were insignificant.

Seed costs: Costs for all the seed used on the IPNS plots
Fertilizers & agro-chemicals: includes costs for fertilizers, manure, soil amendments, and
agro-chemicals. Costs incurred for pest & disease control were minimal
Marketing costs: this category includes storage costs, which were limited to the purchase of
insecticides for the grain; and transportation of outputs.
From Figure 1, the percentage cost of fertilizers and agro-chemicals is the highest in most of
the cases. Although Goredema and Manyonga had the highest fertilizer bills, their yields and
gross margins were not proportionate. On Goredemas plot, the low yield was due in part to a
high pest infestation especially wild pigs, that was not adequately controlled, and cob rot due
to late rains. On the other hand, Manyonga did not apply agricultural lime to correct the soil pH
as was recommended, which affected the crop response to fertilizers applied.
Considering that there is no significant hired labour input in the above costs implies that
there would be a substantial increase in capital requirements if a farmer were to cultivate more
than 5 hectares. With a higher acreage, an average family size of five people would not be able
to manage intensive farm operations efficiently without substantial mechanization.
The Share of Fertilizer in the Cost of Production and the Farmers Purchasing Ability
The proportion of the cost of fertilizers in the total variable costs ranged between 32% and
70.9%; and on average the share of fertilizers in this cost was 51.2%. This indicates that fertilizers
are the most expensive item in production.
Using the general assumption that crops contribute approximately 70% of total cash income
in the smallholder farming sector, it is indicated that 53% of the Teacher Farmers would afford
to pay for fertilizers from their cash incomes. As a rule of thumb, if the Fertilizer Cost-toIncome ratio (FC:I) is equal to or less than 7% of the cash income, the farmer is able to pay for
fertilizers from his resources.
Profitability of the IPNS Plots
Revenues and Gross Margins
Production budgets were calculated for each IPNS practice plot1, and a summary of the total
revenues, total costs and gross margins are presented in Table 3. All the Teacher farmers realized
1

Production budgets appended.

Zimbabwe

Table 2: Share of fertilizers in the production costs of IPNS practice plots, 1998/99 cropping
season
Teacher Farmer

Fertilizer
Costs
(Z$)

Chambe
624.70
Chipanga
1015.00
Goredema
1695.90
Mabgwe
910.00
Magaya
584.60
Manyonga
724.26
Mapinga
603.20
Maseko
388.00
Masakara
235.84
Mnkhandla
419.18
Mukwangwariva 349.10
Ncube
690.88
Saungweme
1580.00
Timuri
820.71
Zindiye
985.05

Total Variable
Costs
(Z$)

Fertilizer
Share
(%)

Fertilizer
Cost
(Z$/ha)

Total Revenue

1141.59
1465.15
2447.85
2366.78
1043.7
1233.23
1380.77
1038.25
543.34
1308.72
785.26
1685.22
2326.35
2037.41
1390.05

54.7
69.3
69.3
38.4
56.0
58.7
43.7
37.4
43.4
32.0
44.5
41.0
67.9
40.3
70.9

2974.76
4229.17
4239.75
1820.00
2015.86
5173.29
1827.88
1686.96
1572.27
1905.36
2493.57
2763.52
3098.04
3156.58
2462.63

Cash
Income
(Z$/ha)

FC:I
ratio
(%)

36544.21
28809.53
35658.16
45791.43
34627.97
28328.86
25525.33
18299.44
38199.04
46298.70
31111.11
20651.94
26204.29
45402.30
42767.86

8
15
12
4
6
18
7
9
4
4
8
13
12
7
6

(Z$/ha)

25 580.95
20 166.67
24 960.71
32 054.00
24 239.58
19 830.20
17 867.73
12 809.61
26 739.33
32 409.09
21 777.78
14 456.36
18 343.00
31 781.61
29 937.50

FC:I ratio is the Fertilizer Cost to Income ratio

Table 3: Gross Margin realized from the Teacher Farmers IPNS Practice plots

Teacher Farmer Total Revenue

(TF)
(Z$/ha)
Chambe
Chipanga
Goredema
Mabgwe
Magaya
Manyonga
Mapinga
Maseko
Masakara
Mnkhandla
Mukwangwariva
Ncube
Saungweme
Timuri
Zindiye
Average

25 580.95
20 166.67
24 960.71
32 054.00
24 239.58
19 830.20
17 867.73
12 809.61
26 739.33
32 409.09
21 777.78
14 456.36
18 343.00
31 781.61
29 937.50

Variable Costs
(Z$/ha)

Gross Margin
(Z$/ha)

5 436.14
6 104.79
6 119.63
4 733.56
3 623.96
9 014.84
4 184.16
4 573.77
3 622.27
5 948.71
5 816.74
6 878.44
4 525.08
7 806.61
3 475.13
5 457.59

20 144.81
14 061.88
18 841.08
27 320.44
20 615.62
10 815.36
13 683.57
8 235.84
23 117.06
26 460.38
15 961.04
7 577.92
13 817.92
23 975.00
26 462.37
18 072.69

Return to
Variable Cost
ratios
3.7
2.3
3.1
5.8
5.7
1.2
3.3
1.8
6.4
4.4
2.7
1.1
3.1
3.1
7.6

a positive gross margin, which if compared to the national average, is a very significant
achievement2.
2

Using the 1998 national average estimate of maize yield in the communal areas of 546 kg/ha (CSO,
Statistical Yearbook 1999) and the average cost of production on all IPNS plots, the projected average
income in communal lands would be a loss of $3164.39 at the 1999 producer prices. The assumption
made is a similar level of fertilizer use. If the cost of fertilizers were omitted in the estimation of costs,
the projected average Gross Margin would still be a loss of $370.10 at the 1999 Producer prices.

Economic analysis report: 1998/99 cropping season

Rates of Return
For the small holder farmers who do not invest in farm infrastructure development, the level of
investment is low and is simply the working capital, the amount of money they spend on variable
costs.
The Return-to-Variable Cost ratios (RVC) ranged between 1.1 and 7.6, indicating a return
on invested working capital that is more than 100% per annum in all cases. The majority of the
farmers, 81.3%, had a ratio that was higher than 1.56, which is currently the average acceptable
by financial institutions offering credit to small holders. The current interest rate ranges between
55% and 57% per annum.
Only 12.5% of the Teacher Farmers recorded a RVC ratio below 1.56. This implies that
although these farmers recovered what they invested with some profit, they would not be capable
of paying back money borrowed at the current level of interest. On the other hand, 25% of the
Teacher Farmers obtained a ratio higher than 4.5. These along with 43.8% others would be
capable of repaying a loan at the current level of interest, and remain with substantial funds
equivalent to or more than the amount previously borrowed. With 68% of the Teacher Farmers
obtaining ratios higher than 2.56, it indicates that maize cropping was a good investment and
viable enterprise. This was achieved due to a better level of plant nutrient and soil management,
which led to a higher crop response to applied inputs and higher crop productivity.
A positively high correlation has been observed between the RVC ratio and good soil fertility
and plant nutrition management. The RVC ratios were higher for those farmers that managed
their soil pH, and followed a good plant nutrition regime, especially those that applied good
amounts of locally available organic plant nutrients e.g. Zindiye, Masakara and Mabgwe. The
organic sources improved the crop response to the fertilizers, and increased the nutrient supply
to their crops while minimizing their costs, which led to higher yields. Zindiyes RVC was still
higher due to a higher business acumen.
A clarification on the seeming discrepancy between Masakara and Zindiyes plots is essential.
The Gross Margin and the Return to Variable Cost Ratios computed are for all the cropping
enterprises on each plot, and not for one crop.
Table 4: Gross Margins and the RVC Ratios for all the Cropping Enterprises on Each Plot

Name
Masakara
Zindiye

Maize Yield
(tons/ha)
9.29
5.94

Gross Margin
(Z$/ha)
23 117.07
26 462.37

Variable Cost
(Z$/ha)
3 622.27
3 475.13

Fertilizer cost as
a % of TVC
43.4
70.9

RVC
ratio
6.4
7.6

Although Masakaras maize yield was much higher than Zindiyes, Zindiye had a price
advantage on his second enterprise and thus a higher total Gross Margin. On the contrary,
Masakara invested in the production of Sunflower that was not very profitable with high costs
of production and very low returns. This brought his total costs much higher and the Gross
Margin in all his enterprises considerably lower. Because of this, Masakaras invested capital
returned less value for money than Zindiyes.
Table 5: Gross Margins and Costs of Production for the Maize Enterprises
Name
Maize Yield
Production Costs for
Gross Margin from Maize
(Tons/ha)
Maize (Z$/ha)
(Z$/ha)
Masakara
9.29
1,841.73
37,176.27
Zindiye
5.94
2,798.80
22,140.80

RVC
ratio
20.18
7.9

Zimbabwe

On the other hand, considering the gross margin and costs of production for just the maize
enterprise in both cases, Masakaras gross margin and RVC ratio would be much higher than
that of Zindiye.
Labour Input Requirements and Labour Productivity
Labour input requirements
On average, 93% of the farmers said there was no significant increase in labour requirements
for all the farming operations, although 60% reported that weeding, as an independent activity
was considerably less on the inter-cropped plot. 6% of the farmers reported a difficulty in the
weeding activity since planting of both crops was done on the same day, and therefore weeding
was done by hoe rather than using an ox-drawn cultivator. One farmer reported that he had
found a way of adjusting the ox-drawn cultivator in such a way that it would be easy to work
through the inter-cropped plot, thus not increasing the demand for labour.
Returns per unit of labour
Of the fifteen Teacher Farmers that had activities on the IPNS plots, three had incomplete or
inaccurate labour records, and these have been disregarded.
Based on the above data set, the average number of man-days that were required to complete
the farming operations on a hectare were 54.35 man-days. The returns per unit of labour averaged
at $340.89 per man-day. The opportunity cost of labour during the 1998/99 season was $29.00
per man-day.
By comparison, if the returns were spread across the farming season, during which period
the farmer is not able to take on any other gainful employment activities, the returns per unit of
labour per day from each hectare planted in the season comes to $88.23. Assuming no other
economic activity during the calendar year, the returns per day would come to $50.76 which
compares favorably to the minimum wage rate. It is therefore plausible to say that migration of
labour from the agricultural sector to other sectors or rural-urban migration would be limited;
especially if the farmers have some income generating activities during the non-farming season
to increase the level of household income.
CONSTRAINTS THAT MAY LIMIT INCREASED PRODUCTION IN 1999/2000
During this period of economic liberalization and privatization of state enterprises, the
agricultural sector is in a phase of decontrolling prices for inputs and outputs. The current
unstable macro economic climate of high exchange rates and high inflation is leading to more
uncertainties in the agricultural sector.
Input Costs and Output Prices
The prices for agricultural inputs are now completely decontrolled; and the effects of high
inflation are seen in unstable and rising prices of agricultural inputs, especially fertilizers. The
shortage of the foreign currencies contributes to scarcity of the products, as the fertilizer
manufacturing companies depend on imported raw material. The spiraling fuel and energy
costs over the past year has led to a substantial increase in production costs, transport costs and
marketing margins of agricultural inputs.

Economic analysis report: 1998/99 cropping season

There are only three companies manufacturing fertilizers in Zimbabwe; and fertilizer imports
are low.
Over the last three years, the fertilizer prices show an upward trend. Take for instance the
two fertilizers commonly used by the small holder farmer in maize production, namely
Compound D (NPK 8:14:7) and Ammonium Nitrate. There has been an increase of 146.3%
and 126.9% respectively, between 1997 and May 1999 in the ex-factory prices.
Farm gate prices for maize grain, which is the countrys staple food, are still controlled by
the state, in an effort to control consumer prices. During the 1998/99 season, the price of maize
grain was adjusted upwards from $2400 to $4200 a ton of A-grade maize, a 75% increase. It is
not certain that the maize grain price will be adjusted again to offset the latest increase in prices
of agricultural inputs that have been experienced before the 1999/2000 farming season.
As costs of production increase, and profitability is eroded there will be a shift in the farmers
decision making and a shift in their goals. Although maize is the staple food, production of this
crop may be reduced in the long run if the grain prices remain controlled. Large scale farmers
may change to more lucrative farming enterprises while small scale farmers may reduce
production to just enough for their households and/or abandon agriculture, leading to a shaky
national food security situation.
The viability of agriculture is generally eroded when input prices are responsive to market
forces while output prices are held constant. Below, are projections for the 1999/2000 cropping
season, of Gross Margins and Value Cost Ratios. In the first table, the Gross Margins have been
estimated at the price levels that are currently paid for the different grades of maize, and at
three levels of yield. The assumption is a 128% increase in the average costs of production
from the last cropping season3. In the second table, the Return-to-Variable Cost ratios
corresponding to the projected Gross Margins are estimated. The estimated ratios indicate that
the returns to invested capital in the production of maize will be greatly reduced if the output
prices are not adjusted upwards.
Table 6: Gross Margins at various yield
and price levels:
Gross Margins ($/ha)

Table 7: VCRs corresponding to the various

yield and price levels:
Value Cost Ratios

Price
At 6 mt/ha At 7 mt/ha
At 8
(Z$/kg)
mt/ha
4.20 13518.05 17718.05 21918.05
4.10 12918.05 17018.05 21118.05
3.75 10818.05 14568.05 18318.05

Price level
($/kg)
4.20
4.10
3.75

at 6 mt/ha
1.16
1.11
0.93

at 7 mt/ha
1.52
1.46
1.25

at 8 mt/ha
1.88
1.81
1.57

Accessibility of Inputs
Most of the fertilizers required for maize production are available at reasonable distances in
the communal areas, with the exception of lime. Out of the 16 Teacher Farmers, ten had very
acidic soils and needed to apply lime to correct the soil pH. None of them could obtain lime
within a distance of 30 km from their farms. Farmers in Mhondoro, for instance, could only
obtain lime from Harare, which is more than 100 km away.

On average, all the major cost items recorded in the production of maize have increased between
112% and 146%, as of November 1999.

Zimbabwe

Credit
Better plant nutrition management requires that sufficient nutrients be provided to the growing
crop for optimum production and maximum economic returns. This implies a higher level of
fertilizer use than the average 14 kgs of nutrients per hectare in communal lands. Increasing the
level of fertilizer use requires additional sources of capital to pay for the increase in the costs of
production. The average total variable costs incurred was Z$5,458 per hectare; which is high
for a typical resource poor farmer, as lack of capital is generally cited as a major constraint to
increased input use. Farm incomes are usually low, and often less than the farmers disposable
incomes. With inflationary pressures, the production costs keep rising, thereby further increasing
capital requirements. Credit is one possible source of capital.
Although the 1998/99 results from the IPNS plots showed that the 56% interest rate was
affordable in maize production, this was possible because of the maize prices that were increased
at the time of harvest. Therefore, with maize produce prices controlled and the input market
liberalized, the farmers must obtain a high level of productivity for maize production enterprise
to remain profitable, since neither of the prices are set or determined by the farmer. From the
Value Cost Ratio projections above, it is clear that unless the maize produce prices are increased
again, the smallholder farmers will have to increase their crop productivity to more than 8 tons
per hectare to be able to afford credit and remain with a small profit margin!
Another issue is that of availability and accessibility of credit by the small holders. A high
risk in agriculture, a high level of inflation that affects the interest rate and administration
costs, and lack of assets for collateral are some of the factors that limit commercial banks from
providing enough funds for agricultural loans.
To address this problem on the IPNS program, a Revolving Fund has been initiated. Some
cash-strapped trainees will borrow for the purchase of inputs or for other costs. This is necessary
to cater for the growing number of farmers in the communal areas that are interested in improving
plant nutrition, particularly the level of fertilizer use. The capital base of the fund will need to
be built up gradually.
Agricultural Support Services
With Farmer Field schools enabled, pressure on the extension personnel for the simple
technologies will be curtailed, releasing the limited time and resources for more professional
consultation, transfer of new technologies and scientific advice.
Access to soil testing labouratories is still limited. Government facilities are still centralized
in Harare with plans to build a few in the urban cities of the main agricultural areas.
The small holder-farming sector has little or no access toup-to-date market information that
would enable them make good planning and important decisions. Without knowledge of current
input-output price ratios, or knowledge of marketing opportunities that exist in the domestic
and international markets, and how to access them, the communal farmer will not venture into
more lucrative agricultural enterprises. He will continue growing the less risky and less profitable
crops.

Economic analysis report: 1998/99 cropping season

Production budgets