Gross Margin Analysis – A tool for better farm management – ICRISAT

Participants discuss their learning during the training session. Photo: C Umutoni, ICRISAT
20
Nov

Gross Margin Analysis – A tool for better farm management

Nov 20, 2020

A training session for farmers in Niger.

Participants discuss their learning during the training session. Photo: C Umutoni, ICRISAT

Participants discuss their learning during the training session. Photo: C Umutoni, ICRISAT

In order to guide farmers in Niger to make better informed decisions about their farming activities, a training on Gross Margin Analysis was organized to empower them with necessary skills to determine their farms’ profitability. Gross Margin Analysis (GMA) is a simple, reliable tool to assess the financial performance of an enterprise. This training would help farmers to calculate the productivity of their farms and compare the performance of different technologies and practices they applied, leading to better management of their farms.

Farmers in Niger are eager for a change in the way they manage their farms. Traditionally, they have planted crops and raised animals without knowing for sure if they were going to make a profit out of that. Many farmers claim, “We farm what we know we can farm and hope that the season is a good one.” There is little evidence of the economic viability of farming activities and minimal adoption of profitable technologies. Possibly, this leads to their incomes remaining very low.

“I’ve always practiced sheep fattening in the traditional way, but after carrying out a gross margin analysis on sheep fattening, it is clear that I can make around 20,000 CFA (US$ 40) more per sheep if I adopt a better feeding strategy for my sheep,” says Ms Mariam Yero, one of the training participants. “Also, from the gross margin of goat rearing I realized that I can make around 185,000 CFA (US$ 335) per year by only starting with two female goats and one male goat.”

“Until now, I never realized that we only make a profit of 30,000 CFA/ha of millet we cultivate,” says Mr Moussa Oumarou. “From the analysis we conducted, I can see that we can raise this amount to 160,000 CFA (US$ 300) just by adopting an integrated production system (using improved dual-purpose millet +cowpea, using compost and applying the fertilizer to seed hole). This training is an eye-opener to us.”

The GMA training session was a success, with participants getting a clear understanding on why gross margin was important and how they could use this simple tool to assess the performances of technologies and productivity of their farms. By knowing the gross margin of the crops grown and other farm enterprises, farmers can determine how much money the different activities can generate, enabling them to select appropriate technologies and/or products to focus on.

The training session was held for 75 Innovation Platform members, including 22 women, on 3-4 November 2020 in Torodi and on 7-8 November in Maradi in Niger.

For more on our work in Niger, click here: http://exploreit.icrisat.org/profile/Niger/334

About the authors:

Dr Clarisse Umutoni
Post-doc Livestock Scientist, Dryland Systems and Livelihood Diversification
Innovation Systems for the Drylands
ICRISAT-WCA

Dr Vincent Bado
Principal Scientist, Dryland Systems and Livelihood Diversification
Innovations Systems for the Drylands
ICRISAT-WCA

Project: Enabling Value Chains to Create Sustainable Income for Vulnerable People in Crop-Livestock Systems of Burkina Faso and Niger
Funder: USAID through Feed the Future Innovation Lab for Livestock Systems
CGIAR Research Program: Grain Legumes and Dryland Cereals
Partners: International Livestock Research Institute (ILRI); the Institut de l’Environnement de Recherches Agricoles (INERA) in Burkina Faso; Conseil National de Recherche Agronomique (CNRA) in Niger; Resilience and Economic Growth in the Sahel –Enhanced Resilience (REGIS_AG); Mercy Corps Niger; Association pour la Promotion de l’Élevage au Sahel et en Savane (APSS); and ICRISAT
This work contributes to UN Sustainable Development Goal. 1-no-poverty 2-zero-hunger 17-partnerships-goals 

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