1. Understand and apply principles of agronomy to various crops

1.4. Analyze the Economic Aspects of Different Crop Enterprises

Chapter 5: Analyze the Economic Aspects of Different Crop Enterprises


๐ŸŽฏ Learning Outcomes

By the end of this chapter, the learner should be able to:

  1. Define a crop enterprise and understand basic farm economics.

  2. Identify and categorize the costs associated with crop production.

  3. Analyze income, profit, and break-even points for different crops.

  4. Compare economic returns across crop enterprises.

  5. Make informed decisions based on cost-benefit analysis.


๐Ÿ“– Chapter Notes


๐Ÿ”น 1. What is a Crop Enterprise?

A crop enterprise is a farming activity focused on the commercial production of a specific crop or group of crops. It is treated as a unit of economic analysis within a farm business.


๐Ÿ”น 2. Types of Costs in Crop Production

Cost Type Examples
Fixed Costs Land lease, depreciation of tools, salaried labor
Variable Costs Seeds, fertilizers, hired labor, pesticides, water
Opportunity Costs Income lost by choosing one enterprise over another
Hidden Costs Family labor, own capital, transportation effort

๐Ÿ”น 3. Key Economic Terms

  • Gross Income = Yield ร— Market Price

  • Total Cost = Fixed Costs + Variable Costs

  • Net Income (Profit) = Gross Income โˆ’ Total Cost

  • Break-even Yield/Price = Minimum output/price needed to avoid loss

  • Return on Investment (ROI) = (Profit รท Total Cost) ร— 100


๐Ÿ”น 4. Sample Enterprise Budget (Per Acre โ€“ Tomatoes)

Item Cost (KES)
Seeds 3,000
Fertilizer & Lime 6,000
Pesticides 5,000
Labour 10,000
Irrigation 4,000
Total Cost 28,000
Expected Yield 6,000 kg
Selling Price KES 10/kg
Gross Income KES 60,000
Net Profit KES 32,000

๐Ÿ”น 5. Crop Enterprise Comparison Example

Crop Cost/Acre (KES) Income/Acre (KES) Profit (KES)
Maize 18,000 30,000 12,000
Tomatoes 28,000 60,000 32,000
Beans 14,000 22,000 8,000
Cabbage 25,000 48,000 23,000

Tomatoes yield the highest profit, but also require higher investment and labor.


๐Ÿ“ Summary

Understanding the economic side of crop production helps farmers make smart choices. Every crop has its own cost, risk, and return. Enterprise analysis allows comparison between crops so farmers can maximize profit, reduce waste, and plan for financial sustainability.


โœ… Quiz Section (With Answers)

1. What is net income?
A. Total cost minus profit
B. Gross income plus expenses
โœ… C. Gross income minus total cost
D. Market price times yield


2. Which of the following is a variable cost?
โœ… A. Fertilizers
B. Land rent
C. Equipment depreciation
D. Permanent labor


3. If a crop costs KES 20,000 to grow and earns KES 25,000 in sales, what is the profit?
A. 5,000
โœ… B. KES 5,000
C. KES 45,000
D. KES 20,000


4. Which crop had the highest profit in the sample comparison?
A. Beans
โœ… B. Tomatoes
C. Maize
D. Cabbage