Crop costing

To many people the economics of crop production is associated almost entirely with crop enterprise costing. The latter is illustrated in Table 12.1, the example being an above-average crop of maincrop potatoes. The costs are classified first by operations and materials and secondly by factors of production. Such costings are normally required as a necessary basis for price negotiations where government guarantees are operating or where contract prices are being fixed. Furthermore, if trends over time are considered, they do give some broad idea, together with normalised returns, of how the general profitability of the crop is changing. However, for reasons explained in detail in Chapter 20 (pp. 537–9), such costings have little relevance for the purposes of individual farm planning. Many of the costs can only be allocated arbitrarily, especially the general farm overheads, and cropping changes are unlikely to result in profit changes in the way suggested by these figures. Of special importance would be the effect of such changes on the total labour bill, as determined by seasonal requirements and the proportion of hired and family labour.

To illustrate from Table 12.2, suppose Farmer A has a 40-hectare arable farm with 5 hectares of sugar beet. He gets a rather poor yield and his costs are high. Consequently complete costings show the crop making a loss of £30 per ha.