Explaining Profitability and Borrowing

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This booklet is part of a series that is designed to be used by farmer discussion groups, farmer field schools and extension or advisory officers involved in agricultural or rural development.

The ability to adopt or introduce changes to agricultural production methods and non-farm enterprises depends on the availability of money. It is, therefore, very important for farmers to be able to think carefully about their financial circumstances. Predicting costs, prices, profit margins and cash flow patterns is vital for planning and decision-making and the poorer the farmer, the more important it is.

These concepts need to be explained in a way which small scale, possibly illiterate, farmers can understand. The "Talking About Money" booklets aim to introduce financial topics to farmers using a variety of tools, some of which can be used even when people are not able to read or write. The concepts are intended to provoke discussion and be used in a participatory manner.

Field officers involved in giving agricultural advice in developing countries are most commonly technical experts of some kind, e.g. agronomists, livestock, irrigation or engineering specialists. They usually do not have much experience in giving advice about money and this topic is generally avoided, apart perhaps from some simplified profit calculations. It is hoped this series will help them "talk about money" more readily and enable them to give good advice to farmers about the use of financial services such as credit.

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