World Food Policy
resources. There are General Charges are recorded as part of the Total Farm
and Capital Equipment Repairs, Opera- Fixed Costs.
tion (C—All Farm Fixed Costs), which
Table 2. Indicators and Derived Measures for Annual Whole-farm Evaluation
Measure Calculation
Notes
Notes
A. All outputs/returns (pooled) B. All purchased activity direct
inputs (pooled) C. All farm-fixed costs (except
depreciation) D. All capital depreciation E. Farm gross margin A − B F. Farm net actual returns E − C Depreciation not yet
charged.
G. Farm net sustainable returns F − D Depreciation charged;
system now sustainable.
H. Family farm available income H = F But only if depreciation is
not covered.
I. Family farm sustainable income I = G Long-term sustainable
farm income.
J. Total available family income (H or I)
+ S S is non-farm income,
here assumed to be zero.
Depreciation recorded in
D below
Source: McConnell and Dillon (1997).
makes no provision for replacing capital
equipment as it wears out. If this is an
important consideration, the Farm Net
Actual Returns should be decreased by
the depreciation charge in order to ob-
tain the Farm Net Sustainable Returns.
The Total Farm Gross Margin is
the easiest to derive: it consists of the
sum the gross margins of all activity,
or if activity costs/returns have been
pooled, the total value of farm output of
final products minus total farm direct
costs. If required, this is a good mea-
sure of performance to compare similar
farms supposing their capital structures
(levels of fixed costs) are similar or rel-
atively unimportant. An alternative
measure is to use the index of Farm Net
Returns. But this level of “income” is
not stable over the long term because it
In this study, the analysis mea-
sured terms of farm performance from
records in the following areas: Farm
Gross Margin (E), Farm Net Actual Re-
turns (F), Farm Net Sustainable Returns
(G), Family Farm Available Income
(H), Family Farm Sustainable Income
(I), and Total Available Family Income
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