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  • Emily Potter, NOFIA Project Development Advisor

Cost of Production & Your Farm


The Agri-Food Management Institute, Grain Farmers of Ontario and Grant Ag held a two-day “Women in Grains” workshop in New Liskeard. The workshop focused on better understanding the financials, such as cost of production, and marketing the end product from the farm. A major focus was determining cost of production on a crop-by-crop basis. While this seminar focused on the grain industry, knowing your cost of production on any type of operation is key to running a successful farm business.

What are the most successful farmers doing differently?

  • Never stop learning

  • Keep finances up-to-date to help make business decisions

  • Seek the help of advisors/consultants

  • Write down their business plan, follow it and review it annually

  • Know their cost of production and what it means for their profits

  • Conduct a risk assessment and manage risks

  • Develop a budget and financial plan

Why do you want to know your cost of production?

  • Can help you to assess the impact of production and marketing decisions on your operation

  • Can help you better manage input costs

  • Can allow you to determine break-even or target market prices

  • Can allow you to develop a marketing strategy or plan

Overall, knowing your cost of production can help you to establish your on-farm profitability and allow you to make better business decisions. With the right tools, it can take you as little as a half an hour to calculate your total cost of production!

Calculating Cost of Production:

The idea is simple: you want to compare your expenses with what you hope to produce, resulting in the dollar amount it takes to produce one unit.

Click here for a sample grains cost of production worksheet! This can be modified for any commodity, and you can always talk to a financial advisor for assistance in determining your cost of production.

#grains #crops #costofproduction #finance

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