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Drilling down into production costs

AgriProfit$ is a free program that breaks down cost of production for every enterprise on a farm

Enrolment for this year’s AgriProfit$ program is open until the middle of January.

“With changes in today’s environment and economy, there seems to be renewed interest in building business plans, following cost of production and getting adequate returns for that production,” said provincial research analyst Pauline Van Biert. “The AgriProfit$ is a business analysis program that provides economic analysis and farm business management information to cow-calf and crop farmers using their own numbers.”

After providing their farm information, participants receive a detailed analysis that drills right down to their own cost of production on a per-unit basis, such as the cost per pound of calf weaned, cost per tonne of hay, or cost per bushel of barley.

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“We’ve learned that while two farms may look pretty similar on the outside, their costs and profits can vary widely for a number of reasons,” said Van Biert. “Differences in profitability have more to do with differences in their costs of production and less about commodity prices. In knowing these differences and using their own numbers, farm managers can better control their business.”

While financial statements summarize the activity of the business, they don’t dig down to how each activity, crop, or enterprise contributes to the overall farm profitability, she said.

“Each enterprise is reported on individually and can be looked at as a unit to see where there are strengths or weaknesses. AgriProfit$ also brings it all back together into a farm analysis so farmers can also see their overall farm picture.”

Provincial averages, or benchmarks, are also provided to participants. Data from all participants is used to establish these benchmarks. These can be used as reference points by producers to see how they compare to their peers.

AgriProfit$ is for the 2015 production year and producers are sent forms to fill in. A farm visit is made between January and March to finish up and pick up the forms.

“Producers tell us that they have become more effective at analyzing, budgeting, and planning, and that they are making better management decisions,” said Van Biert. “They understand what their long-term average costs are, can identify targets for what their costs should be, and are more effective at identifying business options and opportunities.”

The only cost for the program is in the time invested in it.

“In return, the producer receives a business analysis of their own farm, using their own numbers, to use in making profitable management decisions.”

For more information or to register contact Pauline Van Biert at 780-415-2153 or [email protected]. The deadline for registration is Jan. 15. Details of the program can be found at agriculture.alberta.ca.

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