Tracking Production Expenses A tool for crop selection and market evaluation.
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Transcript of Tracking Production Expenses A tool for crop selection and market evaluation.
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Tracking Production Expenses
A tool for crop selection and market evaluation
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The goal is PROFIT !
• P = I – E• Profit = Income – Expenses• The big picture is an average of:
• P = I – E
• P = I – E• P = I – E
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Estimating Income
• Don’t plant until you know your market• Talk to potential buyers about demand for
new products• Estimate farmers’ market weekly sales for
each crop or product• Put it together into a simple marketing
chart
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Outlet: Saturday Farmers’ Market
Thursday Farmers’ Market
CSA Marin Organic
Berkeley Bowl
Bunched Greens
150 bunch/wk @ $1.50 X 30 weeks = 4500/$6750
100 bunch/wk @ $1.50 X 30 weeks = 3000/$4500
Total # bunches/Total Estimated $
Bunched Carrots
Salad mix
Oriental Eggplant ? ? ? ? ? ?
Total EstimatedSat FM Income
Total EstimatedThurs FM Income
Total EstimatedSales Income $
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Estimating Production Expenses
• Production Operating Costs– Land preparation– Planting– Irrigation – Fertilization– Crop Protection– Support System – Pruning– Pest Management
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Estimating Production Expenses
• Production Operating Costs, continued– Field Cleanup– Harvest– Post-harvest: clean, sort, pack – Packaging and labels– Equipment Operating Costs– Interest on Operating Capital
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Estimating Production Expenses
• Cash Overhead (whole farm expenses)– Property Taxes– Insurance– Office Expense – Land Rent– Investment Repairs
• Non-Cash Overhead : depreciation
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Production Operating Costs + Allocated Share of Overhead
(Whole Farm Costs)
= Total Crop Production Expenses
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UC Cost of Production Studies
• Available for a variety of crops• A variety of regions, production scales• Some for organic production• Diversified crop study coming soon
• Some studies include excel spreadsheets for farmer self-entry and modification
• Studies chart profitability in relation to price and yield (Ranging Analysis)
• http://coststudies.ucdavis.edu/current.php
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Estimating Marketable Yield
• Ask other growers• Ask your UC Cooperative Extension Farm
Advisor• Ask your supplier
• Check county agricultural commissioner’s annual crop reports
• http://www.cdfa.ca.gov/statistics/ to find average crop yields, 1998-2007
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Estimated Wholesale Break-even
• Break-even yield– Number of marketable boxes per acre needed to pay
all costs = (total costs per acre)/(expected price per box)
– Break-even yield varies with price per box• Break-even price
– Price per box needed to pay all costs = (total cost per acre)/(expected number of marketable boxes per acre)
– Break-even price varies with yield per acre
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After the Estimates
• Revise your marketing chart • Create a budget for each planned crop based on
your projected income and expenses– Budget land, inputs, labor – Include owners’ labor– University of Florida’s One hundred Foot Row
Budgets:• http://smallfarms.ifas.ufl.edu/planning_and_management/bud
gets.html
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Recording Reality
• Create a crop journal for each crop – Record all inputs, activities and hours– Create a system for each worker to record time spent
on each crop• Some use pocket notebooks in the field
– Record yields, harvest dates, etc.• Keep a paper trail for every aspect of production,
not just finances• Check reality (from journal) against crop budget
and estimates
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Planning for Profit
• Compare budget to reality for each crop• Evaluate new crops• Plan the next year with a little bit more
information