Gross Margin Calculations
Calculating the gross margin on different crops (or different farming methods) will give you a basis for comparing profit margins and making more informed decisions on what crops to grow for your particular economic situation.
By combining the gross margins for each crop you are thinking of producing you can assess your budget and ensure the profitability of your business prior to making final decisions and purchases. You can also assess how any changes you make can affect this profitability.
NFW Agronomists can assist you by providing you with calculation tables, advice on current market prices (of seeds, herbicides, etc) and the production of farming budgets.
A gross margin is the difference between the gross income and the variable costs of producing a crop. It is a guide to the earning potential of a particular crop in an average situation after the growing costs have been met. Gross margins do not measure farm profit as they do not take into consideration fixed or overhead expenses. [source: dpi]