Is There a Right Way to Calculate Farm Cost of Production?
Tuesday, January 5, 2021
It depends on whether you’re budgeting or performing an investment analysis. Improved cost of production budgets can improve management decisions. “Know your cost of production” is an annual farm advisor’s rallying cry. This is still good advice with ever-rising costs and uncertain revenue. How exactly should you calculate cost of production when there seems to be different approaches throughout the industry? More specifically, what should you include and not include?
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Agriculture