The business of farming

Justin Seward
Times Reporter

 

The farming industry, like many other industries, has its ups and downs, but a way for farmers to have a healthy business is to plan ahead with the purchasing and selling of crops.
“From my point of view, knowing your cost of production is a high factor to consider in farm business health. But knowing your own cost of production is key when you’re developing your gross margin and analyzing your own enterprises and finding out what your breaking even yields and prices are, especially when it comes to crops,” said Dean Dyck, Farming business and management specialist for Alberta Agriculture.
“That leads into profitability and if you know you’re breaking even yields and prices then you can have a solid marketing plan.”
Dyck believes that some of the contributing costs that farmers need to include into the marketing aspect of their operations are fuel, equipment and seed costs.
” The cost production of seeds, fertilizer, chemicals, machinery costs such as fuel and repair, are what I call variable costs of producing a crop. In addition to that they need to have an idea is what their fixed costs are,” said Dyck.
“So costs that are ongoing on the farm that you need to take account of, so down the road you’re able to make money on the specific crop. We’re talking about things like depreciation, investments and things like that.”
A successful farming business will have multiple benefits to those involved in the operation.
“We’re talking about input suppliers and financial institutions. If farm business health is strong and their overall financial health is good, then they can repay their loans,” said Dyck.
He thinks it will be a promising year for the crop prices.
“I was looking at some product projections from Agriculture Canada and prices are looking quite good. Canola is holding steady, lots of world oil seed supplies are (dictating) it a little bit, but prices look really strong and it’s a lot to do with the Canadian dollar,” said Dyck.
“It’s good from an agricultural point of view because exports cost less for import.”
If farmers have any questions, they can log onto agric.ab.ca or call them at 403-310-3276.
He strongly recommended staying in contact with financial institutions and their agronomists.