Publication Date

2014

Document Type

Report

DAFWA Collections

Natural resources

Publisher

Department of Agriculture and Food, Western Australia

City

South Perth

Abstract

This report outlines the main drivers of profit – price, production, costs and management. Knowing a farm’s profit drivers assists managers to analyse the risk and resilience of their business and to make more informed expenditure decisions. With significant volatility in both prices and production, farm managers need to have strategies that smooth price volatility and allow adjustments to costs of production.

When analysing business profitability it is important to look beyond gross margins and capture all cost items particularly large fixed costs like finance and machinery allowance costs. By critically examining the full cost structure of their business managers can:

  • assess the flexibility of their business in different production scenarios
  • know the profit implications of pricing decisions
  • evaluate expenditure on inputs
  • plan more effectively for the future.

Number of Pages

30

Keywords

Western Australia, Farm planning, Business planning, Farm management.

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