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VIII. other practical recommendations for income-generating activities

VIII. other practical recommendations for income-generating activities

Potential money-making activities should be chosen with great care. Certain precautions should therefore be taken when considering the various options.

8.1 Agricultural production

Bear in mind that this is to be a money-maker and not just a subsistence activity. Our choice of crop should take account of the following:

8.2 Handicrafts

Anticipate all the operations involved

Once we have carefully chosen our activity, we should identify and list all the operations involved in logical and chronological order. This is very important so as to avoid improvising as and when problems crop up.

Schedule the operations

Once the operations have been identified, draw up a timetable for them. This means that all the facilities and resources needed to carry out a given operation must be available in good time to avoid delay and ensure that the other operations begin on schedule.

Estimating funding and input costs

All possible sources of funding must be sought or, at least, anticipated at the start of the crop season or production process. This means that you must:

Preparing the estimated operating account

This means estimating all disbursements and receipts. This will give some idea of the profit we can expect if everything goes as planned.

The estimated operating account draws the group's attention to possible constraints and bottlenecks, allowing it to reach decisions before actually embarking on the activity.

For instance: If estimated expenditure is higher than estimated receipts, the group may decide not to undertake the production or manufacturing activity, or to seek ways of reducing expenses or increasing receipts. In any event, this decision should be taken before the activity is launched, not when it is already underway.

Calculating actual production costs

Once the production process gets underway, all expenditure must be closely monitored. So as to be sure not to leave anything out, draw up a detailed list of the operations undertaken and the expenditure corresponding to the implementation of each one. This should be done daily as it allows us to:

Activity planning

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8.3 Commodity processing

If well managed, commodity processing activities quickly generate income. Below are the most important bottlenecks which bring this type of activity, often managed by women, to a standstill:

Calculating the costs incurred in commodity processing activities

- Calculating the cost of raw material

The cost price of the raw material for processing must be calculated as accurately as possible. The cost components usually included in this calculation are:

Provided they are all accurately estimated or calculated, the total is the cost price of the raw materials for processing.

Incorporating the equipment depreciation cost into the production cost (here the processing cost)

In time, the equipment used to process the raw materials (shellers, graters, mills, presses, etc.) wears out or depreciates. Money must therefore be set aside so that this equipment can be replaced when no longer usable. Two major factors must be taken into account when calculating the amount needed: the value of the equipment and its life span.

When we have these two pieces of information, we first divide the value by the life span (number of years), then divide the result by the number of times the processing operation is done per year. This gives us the amount we must add to the production cost to cover equipment depreciation.

For instance: The Azovè women's group bought a palm oil press for 150 000 CFAF. They have estimated that they will be able to make 10 batches of oil per year, provided they received adequate supplies of palm oil nuts. They have also estimated that, given this rate of utilization, the equipment may last as long as three years.

The depreciation value to be added to the oil manufacturing cost for each processing cycle will be calculated as follows:

150 0300 F /3 = 50 000 F; then 50 000 F /10 = 5 000 F

This means that for each batch of palm oil produced 5 000 F must be added to the production cost to cover equipment depreciation costs.

N.B.: When several pieces of equipment are used for the same manufacturing operation, the depreciation value is calculated for each separate piece and added to the manufacturing cost.

Calculating the cost of labour for processing

This involves evaluating (or estimating) the salary paid (or which would have been paid) to the person(s) working on the processing operation.

We often forget to include labour costs in the production cost, especially in family ventures, such as market gardens, weaving and harvesting activities.

The cost of energy used in the processing operation

In certain processing units, the equipment needs energy (fuel and lubricant, etc.) in order to run. If these items are purchased by the group their cost must be calculated and included in the production (or manufacturing) cost.

All expenditure of this type must be recorded, added up at the appropriate time, and included in the production or manufacturing cost.

To sum up, the components to be calculated as production costs are:

Storage or store rental costs

The finished product (gari, palm oil, or coconut oil) is not always sent directly to market; the women may decide to wait a while until market prices rise. When this happens, and the commodities have to be stored, the group has two options:

Depreciation here is calculated in exactly the same way as for the processing material and equipment. The only difference is that the sum is not calculated as a production cost, but only as part of the sale price for the finished products.

The cost of packaging (bags and/or baskets or granaries) must also be added to the depreciation cost.

To sum up, in order to calculate the selling price of the processed (or finished) products, we must take account of the following cost components:

Example: The TORI BOSSITO group produced 5 000 kg of gari. The production cost was estimated at 500 000 CFAF. The commodity was stored for three months in a warehouse rented at 3 000 F per month. At the general assembly, the women decided to apply a 1096 profit margin. At what price should one kilo of gari be sold on the TORI BOSSITO market?

N.B.: Should the group have other expenses in addition to those mentioned, they should be included in the total amount. These further costs may be:

Members are strongly recommended to do these tasks themselves, as calling in people from outside will only increase the group's expenses and reduce its profits.

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