Posted  21 Nov, 2017 
In: Articles

Originally published on Alberta Agriculture and Forestry

Signups for Alberta Agriculture and Forestry (AF)’s AgriProfit$ crops program are open until the end of November.

“AgriProfit$ is a cost of production program which the economics section of AF administers,” says Rawlin Thangaraj, production crops economist, AF. “It’s a free program wherein producers can sign up and get a business analysis report of the entire farm. The business report the producer gets has an income sheet, balance sheet and field level crop reports. The producer can get important financial indicators like net income and returns to equity at the whole farm level and gross margins for all fields and even unit costs.”

Thangaraj says the AgriProfit$ program gives producers key financial and economic indicators for their decision making. “Now that harvest progress is virtually complete, producers are thinking about pricing the crop. Knowing the farm’s cost of production can help with this. Unit costs, gross margins, returns to equity and debt to assets ratio all can help make important business decisions for the farm. AgriProfit$ does just that.”

There are several reports involved in AgriProfit$, explains Thangaraj.

“For those participants in the last year program, I have sent the individual reports by mail or email. You should have received it by now for the 2016 year. It has whole farm analysis (income and revenue statement) and field reports. That’s the first report. I’m currently working on the crop benchmarks by soil zones and will make it available on the website once it’s completed. This second report will give an average of the cost of production for the different crops by soil zones.”

A producer can use this second report to get a general idea of the averages of the cost of production in that region. “For example, a producer in the black soil zone can compare their individual reports with the averages of others in that zone to see where they stand and to get an idea on their farm’s performance relative to averages.”

This report also shows the averages of the top third of producers in that region. “If the producer is in the top third, it’s commendable. If not, it may be a worthwhile exercise for the producer to understand the differences between the top third and their individual farm. They can pick out the line items that show differences in costs or revenues and examine if the farming realities of their region explain this difference. In some cases, these could provide management tips for improvement.”

Thangaraj notes that participants in Agri-Profit$ will need to keep tracks of a number of records.

“Good memory will certainly help if the producers can remember all of their cost numbers and sales receipts for the entire farm. This’ll be difficult as farms become increasingly large. Look for records on costs and revenues. You’ll need to keep tracks of bills, sales receipts for crop sales, invoices for seed, fertilizer, chemicals, prepays and labour (paid and unpaid), and crop insurance premiums and receipts.

“When it comes to fixed costs, you’ll need the market value or book value of the machinery and buildings in the farm and also land values. This’ll help us calculate depreciation and also assess the asset values for the balance sheet. Actual numbers are best but we can work with best estimates as well.”

For more information or to sign up for Agri-Profit$, go to AF’s webpage or call toll free 310-0000 and 780-422-4056 for crops and 780-422-4088 for cow-calf.

Rawlin Thangaraj

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