1. List at least five sources of risks and uncertainty experienced by PICs farmers. Classify them as production, price, and financial, legal or personal risks.

2. Explain Balance sheet content, the purpose and its use.

3. Explain briefly the difference between balance sheet and profit and loss statement.

4. Explain briefly the important uses of cash flow budget in farming.

5. Calculate the Total Fixed Cost from the following information;

A farmer had borrowed $50,000 term loan at 7% interest and purchased the mini tractor and expected to last for 10 years. At the end of the 10th year its salvage value would amount to $5,000. The farmer is also servicing $200 and $150 as insurance premium and annual property tax respectively.

6. Calculate the partial budget for the farmer who is switching from Rain fed Tomato to Irrigated Tomato cultivation. Farmer currently farms 2ha of Rain fed Tomato and planning to convert the whole 2ha to Irrigated Tomato.

For this to happen, farmer needs irrigation equipment valued at $60,000, a salvage value amounts to $6,000 and expected to last up to 10 years. The additional insurance premium cost amounts to $600/annum.

The Rain fed Tomato has a yield level of 0.50 tons/ac and Irrigated Tomato expected to yield 1.50 tons/ac. The levels of input used in the production of Tomato under respective situations are furnished below.

Inputs	Rain Fed Tomato	Irrigated Tomato
Fertiliser	$100/ac	$120/ac
Fuel & Chemicals	$70/ac	$100/ac
Labour	$220/ac	$300/ac

7. As the new manager of a commercial farm recently opened from virgin bush in Kelepi Island, for commercial rice production; you must decide on how much fertilizer to apply to the first rice crop. The only information available on the likely local response of rice to fertilizer is the mean of 5 years trial on a research station in a similar-ecological area 4 miles away.

This is as follows:

Kg fertilizer/ha	Kg paddy rice/ha
0	1700
100	2700
200	3500
300	4100

You expect fertilizer response in commercial farming to be 50% less of that obtained on the research station. You estimate that the variable costs of harvesting, shelving & transport will be about $40/tons of paddy rice

(i)What is the best fertilizer rate if fertilizer costs $900/ton and paddy fetches $300/ton?

(ii) You speculate that the fertilizer price may rise by 20% next year and that the marketing board may raise the grain price to $600/ton. If this occurs, what would then be the best fertilizer application rate?