2. Analyze Agricultural Production Options
It is important to design an SPIS that is affordable and profitable. Profitability depends on the revenues, or the income earned from selling the crop. The choice of crops to grow is therefore critical:
- Tree crops, such as oranges and mangos, only start generating revenues after 3 to 5 years.
- Vegetables are difficult to grow and transport, but generally bring high revenue.
- Staple crops such as millet, sorghum and maize are often low value and seldom justify the investment in irrigation systems.
- Other crops or crops for processing (biofuel) can bring high revenues, depending on the local market.
Each crop has a different crop budget: costs of production vs. expected revenues. The role of the agricultural extension advisors is to inform producers what (mix of) crops bring the best returns in a particular area. The producer then draws up a crop calendar for the whole year indicating which crop should be grown when and on what area of the field. Since the market for crops is dynamic, it is crucial remain up-to-date on price developments. Prices for vegetables can easily multiply 3 to 4-fold within a season.
Important: The profitability of an irrigated farm highly depends on the cultivation of the right crop at the right time. Two identical SPIS systems, where one farmer grows maize and the other grows tomatoes, will show very different financial returns.
The definition of a high-value crop depends on the market. In general vegetables and fruits are considered to be high-value crops. Proper production of fruits and vegetables requires skilled labor and a suitable strategy on soil fertility and pest management. Agricultural advisors play an important advisory role in this regard and should be able to give farmers access to capacity building programs.
- Overview of crop budgets showing costs of production and expected revenues based on local market information;
- Model cropping calendar.
The data required for analyzing agricultural production is available from the farm’s own records and external service providers. It includes:
- a compilation of all crops in the farm’s actual cropping pattern;
- yield level and market price for crops;
- production costs (seed, fertilizer, plant protection, traction, transport, labor, services).
- Producers/farm households;
- Agricultural extension services;
- Technology and service providers.
- The agricultural extension agent should be able to help producers to develop an annual cropping calendar with the optimum mix of crops.
- Depending on water availability, producers should aim to cultivate year-round to justify the investment in the irrigation infrastructure.
- The capacity of the producer to grow high-value crops is critical.