Wednesday, March 28, 2012

What is The Cost of Production?

 It's easy to imagine gold in a ripe wheat field. Explaining the cost of turning wheat seed into a crop of ripe wheat is more complicated.
  
 Her adult life has been spent living off the farm and Iris tells me that she has had many conversations trying to explain that it costs money to raise crops on a farm. She has been surprised at how few really understood. 
 It is important to understand that food comes to your plate at a cost.
The Cost of Production is similar to the cost of doing business. Most people understand that there is a cost involved in canning, freezing, packaging and shipping food to your grocery store.
 
 Cost of Production is the farmer's cost of producing the raw materials and getting them to market. It is then sold to processors, distributers or overseas markets.
 It is the price farmers pay for planting a crop,

Maintaining and enhancing plant health during the growing season. 
Through the harvest and sale of the crop. 
Here are the basic cost elements for farm production.

Land:  Owned or Rented
Machinery: Used for seeding, tillage, application of plant health enhancements, harvesting and transporting.

Buildings:  Used for storage and maintenance including bins, sheds, shops.
Inputs: Seed, Plant health enhancements including fertilizer, herbicide and insecticide.
 Fuel: Gasoline and diesel fuel for over the road and in the field use, Propane for grain drying and heat, Electricity for grain drying fans, power tools, and lights.
Labor: Farm labor is job that has includes getting dirty and taking responsibility for expensive equipment. It's a job you will learn to love or leave.

We love it.
Iris and I hope this sheds light on the concept of the Cost of Production on a farm.

3 comments:

  1. Great post explaining cost of production! Something a lot of people don't understand. Love the photos!

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    Replies
    1. that is true, it is a very great explaining of
      the cost of production.

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