Cost Benefit Analysis is essential for farm budgeting and planning enabling farmers to effectively compare and determine the profitability of various commodities; thereby creating an opportunity to identify and venture into farming as an enterprise based on current data. Cost Benefit Analysis, also known as Gross Margin Analysis is a tool for determining agricultural enterprises profitability by assessing the gross revenues from an enterprise less the variable costs incurred.
Such information aids a Farmer or Entrepreneur understand how to determine their crops and products mix depending on profitability(Market), input costs, land availability and labor intensity as some of the major cost drivers during the farming venture.
Plainly saying; It is important that (during Planning) before selecting an enterprise to venture into, you do a Cost Benefit Analysis to assess it’s Profitability as per the form you plan to market it in. For example Maize can be Marketed(Sold) as Grains, Fresh Cob, Flour, Pop Corns etc….Here’s how you could go about it!.
Case Maize Production:
| PROJECTED INCOME PER ACRE | |||||
| Sn | Form | Unit | Quantity | Price | INCOME |
| 1 | Grains | Kgs | 1,080 Kgs | 1,200/= | 1,296,000/= |
| 2 | Fresh Cobs | Pcs | 15,000 Pcs | 100/= | 1,500,000/= |
| 3 | Maize Flour | Kgs | 750 Kgs | 1,800/= | 1,350,000/= |
| 4 | Maize Bran | Kgs | 100 Kgs | 1,000/= | 100,000/= |
| PRODUCTION COSTS PER ACRE | |||||
| Particulars | COST | ||||
| 1 | Seed | 80,000/= | |||
| 2 | Pesticide | 50,000/= | |||
| 3 | Fertilizer | ||||
| DAP | 150,000/= | ||||
| NPK | 150,000/= | ||||
| 4 | Land Hiring | 100,000/= | |||
| 5 | Labour | ||||
| Bush Clearing | 80,000/= | ||||
| Land Opening | 120,000/= | ||||
| Harrowing | 80,000/= | ||||
| Planting | 100,000/= | ||||
| First Weeding | 80,000/= | ||||
| Second Weeding | 80,000/= | ||||
| Harvesting | 100,000/= | ||||
| Total Costs | 1,170,000/= | ||||
| Net Profit | |||||
| S/n | Form | Projected Income | Profit | ||
| 1 | Grains | 1,296,000/= | 126,000/= | ||
| 2 | Fresh Cobs | 1,500,000/= | 330,000/= | ||
| 3 | Maize Flour | 1,350,000/= | 280,000/= | ||
| 4 | Maize Bran | 100,000/= | |||
| These are Projections and are Case by Case so your findings may vary! This is a guide. |
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[…] Cost-benefit analysis is essential for farm budgeting and planning that enables farmers to effectively compare and determine the profitability of different commodities; thus creating an opportunity to identify and invest in agriculture as an enterprise based on current data. Cost Benefit Analysis, also known as Gross Margin Analysis is a tool for determining the profitability of agricultural enterprises by estimating the gross revenues of the enterprise less the variable costs incurred. Such information helps the farmer or entrepreneur understand how to determine their crop and product mix depending on profitability (market), input costs, land availability and labor intensity as some of the main cost drivers during the agricultural cycle. venture. Clearly stating; It is important (during planning) before choosing a venture to venture into that you do a cost benefit analysis to assess its profitability according to the form in which you plan to market it. For example, corn can be marketed (sold) as grains, fresh cobs, flour, popcorn, etc… Here’s how you could do it!. Box Maize Production: PROJECTED REVENUE PER ACRESnFormUnitQuantity PriceREVENUE1GrainKgs1,080 Kgs1,200/=1,296,000/=2Fresh CobsPcs15,000 Kcs100/=1,500,000 Ks100/=1,500,000 ks. 000/=4 Maize branchesKgs100 kg1,000 /= 100,000/=PRODUCTION COSTS PER ACRE INDIVIDUAL UNIT 1Seed 80,000/=2Pesticide50,000/=3Fertilizer DAP150,000/= NPK150,000/=4Soil compaction100,000/=5 Race cleaning up the labor of the bush80,000/= Clearing bushes80,000/= Planning the bush80,000/= Opening8,001/0 Opening0000 00/ = = First weeding80,000/= Second weeding80,000/= Harvesting100,000/=Total costs1,170,000 /=Net ProfitS/nFormProjected IncomeProfit1Grain1,296,000/=126,000/1,000/1,000/1,000/1,000/1,000/1,000/1,000/1,000/1,000/1,000/1,50= 350,000 / =280,000 /=4 Maize Bran100,000/= These are projections and are case by case, so your findings may vary! This is a guide. Posted by “The Agribusiness Guy” Crop Production Technician with a keen interest in Agribusiness. Worked as an agricultural worker/officer or simply as a change agent. I am glad to have this opportunity to share and learn through this platform set up by Smart Agriculture Universe. View all posts by The Agribusiness Guy Source link […]
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