The use of algorithms B should make it possible for the analyst to select and handle the data (on culture units, enterprises and farms contained in BFPD and BFEDF or BFEDFN) in such a manner that the analysis truly reflects the situation of the person who is expected to employ the conclusions of the analysis as an input to his decision making process. The broad categories of decision situations within which (Hungarian aquaculture) decision makers fit, have been discussed in section 432.
The computer programming of the algorithms naturally can be done only when the exact shape of the basic data formats are known. Those have not yet been defined; a minimum number of formats and their content are given in Annex 1. However, we know the data needed to carry out the types of analysis specified for the system. These data are definite. Thus, at this stage it is possible to identify the principles according to which the manager would select and handle data for the six basic categories of analysis. The principles are independent of the presentation of data, and therefore can be described here.
Figure 2 in the main text identifies six categories of analytical contexts which fit the decision situations of the three groups of decision makers predominant in Hungarian aquaculture. However, on inspection one can, without much difficulty, find within each category variations of the types of economic analysis proposed. For example, within the category ‘Farm manager - short-term’, the main issue facing the economist/analyst is determining which are avoidable costs. This, to a large degree, depends on the scope of the analysis; culture bit, enterprise bit or farm bit.
However, it seems rational to start by developing six basic algorithms, one for each category. In fact, standard algorithms have much to speak for them. Consistent data handling methods (and interpretation of criteria) would seem to be a bench-mark of an economist expecting to generate and maintain confidence in his analysis of investment and production possibilities. Therefore, the person who is not trained in economics will do well to use a standardized approach. The system proposed in this report will help him to do so.
The six categories of ‘analytical contexts’ naturally fall into two groups: those which confront the national planner and those which confront the fish farm manager. The essential difference between the two is the selection of price information. The physical reality (that is, the description of resource use in, and output from, the fish farm) naturally should be independent of who observes it. The farm manager will either use the unit prices which he experienced or those he expects, while the national planner (for some types of analysis) will use those that he believes better reflect the scarcities and marginal productivity of the particular resource or service.
Thus, in this context it will be sufficient to list the principles used by either the manager or the planner when selecting data. In what follows, we will enumerate and discuss the principles (generally) used by the fish farm manager.
The basic principles are two:
use the prices which the manager expects actually to work with (both with regard to inputs and outputs) and
only include as costs those (periodized) expenditures which would be avoided if the culture bit was not carried out.
Therefore, the detailed instructions for the algorithms will be the following:
| Unit prices: | Use those that are specified for the farm-level; that is, those that the farm manager actually expects to have to either pay or charge. |
| Manpower: | Include amongst costs the salaries of those categories of staff (managers, technicians, labourers, etc.) which will be employed (and not be used elsewhere in the farm), irrespective of whether or not the particular culture bit is executed. |
Recurring inputs:
| - stocking material | : | |
| - fertilizers | : | |
| - feed | : | include |
| - electricity | : | |
| - fuel | : | |
| - miscellaneous | : |
Use of infrastructure/machinery/non-expendable equipment:
A part of the cost of using machinery/equipment/infrastructure will be included under recurrent inputs and manpower. The only other true (actual) cost is that of obsolescence; the difference between the second hand value of the equipment/machinery at the beginning and the end of the culture period. In most instances, some decline in this value would be noted even if the equipment/machinery had not be used.
Depreciation charges should not be included (or only to the extent that they reflect obsolescence - as defined above).
Debts: repayment of principal should not be included amongst costs. Neither should payment of interest on loans (normally) considered to be long-term. Interest charges on short-term loans, such as suppliers credits (unless included in the price) should be included if the credit was occasioned by purchase of supplies/equipment required for the culture bit.
The basic difference between the ‘production planning problem’ and the ‘investment decision’ is the following: production planning means deciding the use of infrastructure/equipment/machinery and staff already owned/controlled/employed in the farm, while the investment problem is related to a decision about whether or not to acquire/purchase a new piece of machinery/equipment/skill. The investment, if made, is expected to influence production possibilities over several production periods.
The basic principles are:
| Unit prices: | use expected ‘farm level’ prices |
| Manpower: | include costs for all staff involved, using a pro-rata system for those who do not exclusively work, during the culture period, with the culture bit. |
| Recurrent inputs: | include all (marginal) inputs |
Use of infrastructure/machinery/other non-expendable equipment:
In principle, the cost (expressed as depreciation) should be included. However, depreciation factors are decided by man, and their magnitude depends upon the purpose to which they are put. In this context, those established by Hungarian commercial law should be used. However, to the extent that they do not reflect the normal loss of value of equipment, the manager might, for internal use, want to replace them with factors, which, when used will provide a truer idea of the changes in equity
Debts: repayment of principal should not be included amongst costs. All interest payments should be computed (at actual rates) and considered as costs.
