Opportunity Cost in Agriculture Strategies

Opportunity cost is the cost of the next best alternative foregone when making a decision. Decision making in any sphere often posses an opportunity cost. In agriculture for example, a decision to plant coffee or cotton (cash crops) on a field means that maize or potatoes (food crops) cannot be grown. Farmers constantly face such enterprise choice decisions. However, farmers make decisions based on factors within their control, taking into account the factors out of their control. For example, enterprise choice may be based on soil type, input and labour availability, market accessibility, availability of credit, infrastructure, etc. These are further influenced by the wider macro environment including but not limited to legislation, taxes, tariffs, and polices.

At the national or policy making level, planning is about choices between focusing on large farms or small farms; investing in intensive or extensive agriculture; promoting food crops or cash crops; insisting on a free market or state intervention; creating self reliance or trade; e.t.c. Whatever strategy is chosen, there is a need for investment in stable markets, agricultural research, extension and credit services, and good infrastructure. Governments should create an enabling environment and increase its budget allocation to agriculture, given that agriculture is the backbone on many African countries.