Tracking Production Expenses

1
Tracking Production Expenses

• A tool for crop selection and market evaluation

2
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

3
Estimating Income

• Dont 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

4
Outlet Saturday Farmers Market Thursday Farmers Market CSA Marin Organic Berkeley Bowl
Bunched Greens 150 bunch/wk _at_ 1.50 X 30 weeks 4500/6750 100 bunch/wk _at_ 1.50 X 30 weeks 3000/4500 Total bunches/ Total Estimated
Bunched Carrots
Salad mix
Oriental Eggplant ? ? ? ? ? ?
Total Estimated Sat FM Income Total Estimated Thurs FM Income Total Estimated Sales Income
5
Estimating Production Expenses

• Production Operating Costs
• Land preparation
• Planting
• Irrigation
• Fertilization
• Crop Protection
• Support System
• Pruning
• Pest Management

6
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

7
Estimating Production Expenses

• Cash Overhead (whole farm expenses)
• Property Taxes
• Insurance
• Office Expense
• Land Rent
• Investment Repairs
• Non-Cash Overhead depreciation

8

• Production Operating Costs Allocated Share
  of Overhead
• (Whole Farm Costs)
• Total Crop Production Expenses

9
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

10
Estimating Marketable Yield

• Ask other growers
• Ask your UC Cooperative Extension Farm Advisor
• Ask your supplier
• Check county agricultural commissioners annual
  crop reports
• http//www.cdfa.ca.gov/statistics/ to find
  average crop yields, 1998-2007

11
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

12
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 Floridas One hundred Foot Row
  Budgets
• http//smallfarms.ifas.ufl.edu/planning_and_manage
  ment/budgets.html

13
(No Transcript)
14
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

15
Planning for Profit

• Compare budget to reality for each crop
• Evaluate new crops
• Plan the next year with a little bit more
  information