Get a Grip on Your Per Crop Profitability by Implementing Crop - - PowerPoint PPT Presentation

Get a Grip on Your Per Crop Profitability by Implementing Crop Costing

2019 National Direct Agricultural Marketing Summit October 7 – 9, 2019

What We Do

We are a complete business incubator designed to nourish the talents of local enterprises and create

• pportunities for them to flourish.

We are devoted to helping Chicago area entrepreneurs and growers improve their current processes so they can grow and prosper.

Focus today – how to improve your bottom line

Problem: How do you improve profitability ?

• Some key questions
• Do you know how much it costs to produce and sell

each crop?

• Is your pricing covering your costs per crop AND your
• verhead?
• If you sell wholesale, are you still making money on a

per crop basis?

• What are your yields per crop?
• Are you planting too much or too little?
• Are you tracking what you sell?
• Are you collecting sales tax?
• What is the relative overhead of each crop you grow?

• How do you do that?
• Financial planning (aka budgeting) is essential and

depends on

• Historical information
• Solid record keeping
• Analysis
• Required tools don’t have to be fancy or expensive
• QuickBooks
• Spreadsheets
• Willingness to do it

Solution: Planning by crop and tracking results

• Budget at a different level
• Traditional approach = planning at a farm level
• Better approach = planning at a crop level
• Category breakdowns for Labor and Materials
• Acreage allocated with anticipated number of

plants produced and likely yield

• Predict crop sales
• Retail
• Wholesale
• Packaging options

Solution: Plan by crop and capture actuals by crop

• General Per Crop Information
• Total Amount Planted
• Rows
• Plants per row
• Pounds per acre
• Yield
• Anticipated yield
• Anticipated waste
• Total available for sale
• Acreage
• Total acreage
• Crop Allocation (as % of all crops planted) –

determines overhead attributable to this crop

Solution: Identify each crop as a part of the

• verall

planting

• Quantify the projected crop sales

Solution: Identify each crop as a part of the

• verall

planting

• Materials, allocating cost per category
• Pots
• Soil
• Pre‐planting Heating
• Seeds/Starter Plants
• Fertilizers
• Insecticides
• Fungicides
• Herbicides
• Other

Solution: Identify the materials needed for the crop

• Materials, allocating cost per category

Solution: Identify the materials to be used for the crop Solution: Identify the materials needed for the crop

• Labor, including rate per category

Solution: Planning by crop and tracking results

• Pre‐planting care
• Laying Plastic
• Planting
• Spraying
• Hoeing
• Cultivating
• Harvesting
• Washing/Packing
• Other

Solution: Identify the labor to be used per crop Solution: Identify the labor needed for the crop

• Labor, including rate per category

Solution: Planning by crop and tracking results Solution: Identify the labor to be used per crop Solution: Identify the labor needed for the crop

• Anticipate type of sales
• Retail options
• Price per unit or pound
• Price per package size
• Wholesale pricing

Solution: Retail vs. Wholesale

• Anticipate type of sales

Solution: Retail vs. Wholesale

• Calculate profitability
• Anticipated totals sales
• Anticipated Cost of Goods
• Overhead allocation for crop
• Net Profit/(Loss)

Solution: Sales COGS Overhead Allocation

• Calculate profitability

Solution: Sales COGS Overhead Allocation

• Capture labor time accurately
• Design something that is meaningful for you.
• An example:

Solution: Time Sheets

• Sub‐total Labor

Solution: Sales COGS Overhead Allocation

This is the sum of all projected labor costs per crop

• Sub‐total Materials

Solution: Sales COGS Overhead Allocation

This is the sum of all projected materials per crop

• Big Picture

Solution: Summarize budgets for all crops

• Preparing your Budget
• Total Revenues
• Cost of Goods Sold
• Materials (categories have been summarized)
• Labor
• All other expenses
• Enter them into QuickBooks

Solution: Key numbers for your budget are calculated in this spreadsheet

• Tracking Actuals at the CROP LEVEL
• Make a copy of your Budget by Crop spreadsheet

and call it “Actuals by Crop”

• Very Important: capture actuals at the crop level
• By season end, your “Actuals by Crop” will be the

history to use for next year’s budget process

Solution: Sales COGS Overhead Allocation

• Updating QuickBooks
• Sales
• Use something like Square to precisely record sales as

they occur

• Program square for all the package
• ptions you have
• Don’t forget sales tax
• Cost of Goods Sold
• Materials and Labor
• All other expenses

Solution: Sales COGS Overhead Allocation

• Accuracy is important
• Consistency is critical
• Be meticulous
• Watch your expenses as they occur
• Don’t get behind in posting your financials

Solution: Garbage In – Garbage Out

• How important is planning?
• “Planning is one of the key, most important elements

to the success and survival of any business.”

Steve LeFever, Business Resource Services, Inc.

• Monitoring your financial position, on a regular basis,

gives you the data you need to better understand and manage your business.

• Looking at financial results after the fact is too late to

affect change today.

• Monitor where you are often during the season,

comparing the actuals to budget, and adjust as needed. Bottom Line: A calculated guess beats a SWAG*

*scientific wild ass guess

Thank You