ALBERTA: Cost of Production Helps
Identify Business Strengths - A simple
example using AgriProfit$ data from
Alberta's grey-wooded soil zone (2008-
10) demonstrates the importance of
knowing the cost of production and
related information. Regional average
gross revenues for canola and oats were
$446 and $310 per acre, respec-tively.
If price and yield are the choice
criteria, then there will be a lot of
canola grown in this region. However,
once the cost of production is
introduced into this example with canola
averaging $321 per acre and an average
oat crop $191 per acre. First off, the
cost of canola looks daunting at about
70 per cent higher, but net profit works
out to $125 per acre. And comparably the
net profit for oats works out to $119
per acre. If net returns are the choice
crite-ria, then canola still has the
advantage, although it's not as large as
many first perceive. "Higher costs of
production typically increase cash
risk," says Wood. "In this example,
there is significantly more cash at risk
with the canola crop, in a worst case
scenario, production costs average about
$130 more per acre.
So if Seed for Canola and Spray and Fert
go up were approaching a money loosing
crop for Canola!
Identify Business Strengths - A simple
example using AgriProfit$ data from
Alberta's grey-wooded soil zone (2008-
10) demonstrates the importance of
knowing the cost of production and
related information. Regional average
gross revenues for canola and oats were
$446 and $310 per acre, respec-tively.
If price and yield are the choice
criteria, then there will be a lot of
canola grown in this region. However,
once the cost of production is
introduced into this example with canola
averaging $321 per acre and an average
oat crop $191 per acre. First off, the
cost of canola looks daunting at about
70 per cent higher, but net profit works
out to $125 per acre. And comparably the
net profit for oats works out to $119
per acre. If net returns are the choice
crite-ria, then canola still has the
advantage, although it's not as large as
many first perceive. "Higher costs of
production typically increase cash
risk," says Wood. "In this example,
there is significantly more cash at risk
with the canola crop, in a worst case
scenario, production costs average about
$130 more per acre.
So if Seed for Canola and Spray and Fert
go up were approaching a money loosing
crop for Canola!
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