GROSS MARGIN FOR SUGARCANE (Burdekin River Irrigation Area) - Dry Tropics

(CCS 14.5)
(1) GROSS INCOME Yield (Tonnes/Ha)
Plant 140.0
Ratoon 1 120.0
Ratoon 2 110.0 110
Ratoon 3 100.0

(2) PRE HARVEST COSTS

Operations $/Operation
Machinery Costs Plant Fertilising and Cultivating 1 $14.00
(F.O.R.M.) Discing 2 $38.82
Ripping 2 $47.47
Spraying Herbicide 1 $7.78
Aerial Spraying 1 $30.00
Ratoon Spraying 1 $7.78
Fertilising 4 $8.18

Kgs/Ha $/Kg
Plant Cane Seed Cane 5 $35.00
Contract Planting

Kgs/Ha $/Kg
Fertiliser Plant Urea (S) 250 $0.42
DAP 250 $0.54
Ratoon Urea (S) 344 $0.42
Leichardt (S) 900 $0.45

Applications L or Kgs/Ha
Herbicide Plant Gesapax Combi 2 6
Diuron 2 2
24-D 2 1
Ratoon Gesapax Combi 1 7
Diuron 1 2
24-D 1 1

Applications L or Kgs/Ha
Insecticide Plant Suscon Blue 1 2
Lorsban 1 1.5
Carbaryl 1 0
Fungicide Shirtan 1 1

ML/Ha $/ML
Water Charges 10 $38.60

TOTAL PRE HARVEST COSTS

(3) HARVEST COSTS

$/Tonne
Harvest Plant $5.30
Ratoon 1 $5.30
Ratoon 2 $5.30
Ratoon 3 $5.30
TOTAL HARVEST AND MARKETING COSTS

SUMMARY TABLE
TOTAL VARIABLE COSTS - Plant
TOTAL VARIABLE COSTS - R1
TOTAL VARIABLE COSTS - R2
TOTAL VARIABLE COSTS - R3
GROSS MARGIN - Plant
GROSS MARGIN - R1
GROSS MARGIN - R2
GROSS MARGIN - R3

SENSITIVITY ANALYSIS - $ PER TONNE (Plant Only)

$/Tonne

$20.00
$25.00
$30.00
$35.00
$40.00
 Developed by Bill Johnston (Last updated 1998)

$/Tonne $/Ha The data provided here is an

$30.00 $4,200 example only and should be
$30.00 $3,600 revised to reflect your
$30.00 $3,300 particular situation.
$30.00 $3,000

$/Tonne $/Ha
$0.10 $14.00
$0.55 $77.64
$0.68 $94.94
$0.06 $7.78
$0.21 $30.00
$0.07 $7.78
$0.30 $32.72

$1.25 $175.00
$2.43 $340.00

$0.75 $105.00
$0.96 $135.00
$1.31 $144.48
$3.68 $405.00

$/Kg or L
$7.50 $0.64 $90.00
$7.50 $0.21 $30.00
$6.50 $0.09 $13.00
$7.50 $0.48 $52.50
$7.50 $0.14 $15.00
$6.50 $0.06 $6.50

$/Kg or L
$13.75 $0.20 $27.50
$18.38 $0.20 $27.57
$20.26 $0.00 $0.00
$20.00 $0.14 $20.00

$2.76 $386.00

$17.27 $2,237

$/Tonne $/Ha
$5.30 $742.00
$5.30 $636.00
$5.30 $583.00
$5.30 $530.00
 $21.20 $2,491

$/Tonne $/Ha
$16.54 $2,315
$14.22 $1,706
$15.03 $1,653
$16.00 $1,600
$13.46 $1,885
$15.78 $1,894
$14.97 $1,647
$14.00 $1,400

Gross Variable Gross

Income Costs Margin
$2,800 $2,315 $485
$3,500 $2,315 $1,185
$4,200 $2,315 $1,885
$4,900 $2,315 $2,585
$5,600 $2,315 $3,285
 Information

1. Introduction

This template aims to assist farmers to make more informed production and business decisions. By using the gross marg
product, a farmer may be better able to identify areas within his/her business where the margins can be improved. It shou
adapted to the individual’s situation. Every farmer has different soil types, costs & returns, application rates, and so forth.
production and crop selection.

2. What is a Gross Margin?

The Gross Margin (GM) is a financial yardstick used for comparing alternative farm enterprises. The GM is calculated by
gross income received for the sale of the produce. Variable costs include land preparation, fertiliser, planting, seed, chem
Gross income is that received before any agents commission, levies, freight or other selling costs are subtracted. A Gross
fixed costs of the enterprise. These include rates, operators labour, insurance, interest, depreciation, administration, and
farm overheads (fixed costs). Gross margins for different cropping enterprises can only be compared if they use the same
case a more detailed analysis is required.

The Gross Margin is expressed in several ways; per hectare, per carton, or per tonne. Expressing the GM as $ per Mega
The basic calculation of a Gross Margin is as follows:

GROSS INCOME (Price x Yield)

Less: TOTAL GROWING COSTS ($/ha)

HARVESTING COSTS ($/Carton x Yield)
PACKING AND PACKAGING COSTS ($/Carton x Yield)
FREIGHT COSTS ($/Carton x Yield)
MARKETING COSTS (Commission/Levies Rate)

Gross Margins can also be very useful in the following situations:

• Selecting the most desirable (profitable, time efficient, water efficient, etc.) cropping enterprise or rotation.
• Comparing different farming methods eg. seed v. speedling, or trickle v. flood irrigation.
• Preparing cash-flow budgets.
• Estimating farm profit and loss.
• Calculating costs of production.
• Assisting with investment decisions (which enterprise? on or off farm?)

3. Assumptions

This Gross Margins is based on the following assumptions:

• Fixed or overhead costs are not included.

• Owner’s labour is not included.
• Casual labour is included, but the hours per hectare that are included can vary widely.
• Yields are based on the average for fertilisers, water and chemical inputs.
• Machinery operations are costed for a range of tractors that are required to carry out each particular operation. For exam

Discing - Requires a 100hp Tractor that uses 22.28L/hour and takes approximately 2.5 hours to disc 1 hectare.

Fuel Cost per hour - $10.03 (Assuming cost of fuel is 45c/L)

Oil Cost per hour - $1.50 (15% of fuel cost)
Repair and Maintenance per hour - $4.00
Total Cost per Hectare (x 2.5 hours) - $38.82

All machinery operations include fuel, oil, repairs and maintenance (F.O.R.M.). This process is followed for all machinery
insurance, interest, and depreciation are not included.

• Fertiliser and crop protection costs are envisaged to be ‘typical’ for the region in the average season to produce average
• Crops grown with irrigation have been costed accordingly where this is seen to be the most common practice.
• Input costs are based on retail prices at the time of preparation.

4. Using the Template

Coloured cells
There may be a number of coloured cells in the template provided. The yellow cells indicate where you should enter data

Making Data Entries Page 5

Data entry in the package is simple. Numbers are entered into the yellow data cells. These figures will be used in formula
once the required data has been entered into the appropriate cells. When entering data you can press Enter to store the d
• Fertiliser and crop protection costs are envisaged to be ‘typical’ for the region in the average season to produce average
• Crops grown with irrigation have been costed accordingly where this is seen to be the most common practice.
• Input costs are based on retail prices at the time of preparation.
Information
4. Using the Template

Coloured cells
There may be a number of coloured cells in the template provided. The yellow cells indicate where you should enter data

Making Data Entries

Data entry in the package is simple. Numbers are entered into the yellow data cells. These figures will be used in formula
once the required data has been entered into the appropriate cells. When entering data you can press Enter to store the d

Sensitivity Tables
In some of the templates you will find sensitivity tables. One is labelled Yield, and the other Price. You will notice there are
that you might see how price and yield changes will effect the gross margin. These tables can be used as a tool to observ
might refer to a large change in gross margin derived from a small change in price or yield. By knowing the sensitivity you
certain crop. A crop’s gross margin may be sensitive to one, both or none.

5. Some Definitions of Headings Used

Package - Generic term for Cartons, Cases, Trays and Tonnes.

Yield/Ha - Cartons, Cases, Trays or Tonnes produced per hectare.

$/Package - Price received, or expected price, per package. Also represents a break up of costs per package.

$/Hectare - Represents the income per hectare, or cost per hectare.

Operations - Number of times a certain farm machinery operation is carried out.

$/Operation - Represents Fuel, Oil, Repairs and Maintenance (F.O.R.M). These

individual components provide the running costs of the machinery.

Units/Ha - Kilograms, Litres or Number used per hectare.

$/Unit - Represents cost per kilogram, litre or number.

Applications - Number of times a chemical is applied to the crop over its life.

ML/Ha - Amount of water in Megalitres used to irrigate the crop over its life.

$/ML - Cost of water used to irrigate crop.

Hours - Number of man hours required to grow the crop.

$/Hour - Value of one man hour (casual wages)

Metres - Total length of equipment used on one hectare.

$/Metre - Cost per metre of irrigation equipment.

Packages/Hr - The number of cartons, cases, trays or tonnes picked in one man hour.

$/Pallet - The cost of transporting one pallet to a selected destination. Prices vary depending on wether you require refrig

Pallets - Number of pallets required to transport the yield of one hectare.

6. Key Notes

Some trade names are used for the purpose of providing specific information and because growers may be unfamiliar wit
does not constitute a guarantee, warranty or endorsement by the Department.

Application rates and frequencies are those found to be most commonly applied (at the time the template was prepared)
Application rates and frequencies are not recommendations by the Department. Producers should seek further advice reg

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does not constitute a guarantee, warranty or endorsement by the Department.

Application rates and frequencies are those found to be most commonly applied (at the time the template was prepared)
Application rates and frequencies are not recommendations by the Department. Producers should seek further advice reg
Information

Page 7
 Information

ecisions. By using the gross margin guideline, to understand what it costs to grow and sell an agricultural
margins can be improved. It should be emphasised that this template is only a guide and should be
s, application rates, and so forth. It should be used as a framework to determine your own costs of

rprises. The GM is calculated by subtracting all variable costs directly incurred by the enterprise from the
n, fertiliser, planting, seed, chemicals, casual labour, picking, packaging, freight, and selling expenses.
ing costs are subtracted. A Gross Margin is not a measure of farm profit as it does not take into account
depreciation, administration, and so forth. You may consider the Gross Margin as a contribution towards
be compared if they use the same land, permanent labour, and machinery resources. If this is not the

xpressing the GM as $ per Megalitre can also be useful as water can be a limiting factor of production.

erprise or rotation.
.

ach particular operation. For example,

ately 2.5 hours to disc 1 hectare. Therefore,

ess is followed for all machinery operation costing. The fixed costs of ownership such as registration,

erage season to produce average yield and quality.

most common practice.

ate where you should enter data. The red cells are locked and secured against tampering.

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se figures will be used in formulas to calculate the $/Package and $/Hectare. These will be calculated
you can press Enter to store the data in that cell, or simply move the cursor off that cell.
erage season to produce average yield and quality.
most common practice.
Information

ate where you should enter data. The red cells are locked and secured against tampering.

se figures will be used in formulas to calculate the $/Package and $/Hectare. These will be calculated
you can press Enter to store the data in that cell, or simply move the cursor off that cell.

her Price. You will notice there are yellow cells for data entry. You are able to enter data in these tables so
s can be used as a tool to observe the effect a fall or rise in price and yield might have. High ‘sensitivity’
ld. By knowing the sensitivity you are able to crudely measure some of the risk involved in growing of a

of costs per package.

ding on wether you require refrigerated transport, or freight can be sent hot.

se growers may be unfamiliar with actual chemical/active ingredient names. Mention of a trade name

ime the template was prepared) by producers and/or those recommended by chemical producers.
ers should seek further advice regarding chemical and fertiliser rates if they have any queries.

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 ime the template was prepared) by producers and/or those recommended by chemical producers.
ers should seek further advice regarding chemical and fertiliser rates if they have any queries.
Information

Page 10