At the end of the day, how do we reduce costs in the agricultural crop?
The agricultural harvest cost is one of the main concerns of the rural producer. After all, high expenses can compromise their competitive advantage in the market and cause their business to collapse. Therefore, many have sought to identify the sources of waste in production and evaluate ways to optimize processes. But how is that possible?
For the farmer to see the growth of their business, it is essential that they know how to measure the costs of their crop and apply methods and technologies that optimize its management. And that is what we are going to talk about in this post.
First, understand your costs per crop
To reduce costs, you must understand them first. And the first step in this direction is to understand the production processes from the purchase of the agricultural inputs to the sale of the products. Learn how to do that.
To calculate the costs, it is necessary to design the production processes from the preparation of the soil to the commercialization of the crop. The more detail present in this mapping, the better. Among the main elements that should be listed in this step are:
- agricultural inputs;
- tasks and services that demand costs;
- payment of workers;
- cost with machinery.
After this first phase, the farmer will have in their hands all the fundamental information to understand what will be necessary in terms of costs to achieve their goals. Therefore, it is important that tasks are organized logically and with accurate data. This will help prevent unforeseen events and repeat work.
In addition, process mapping will allow the farmer to understand the most critical tasks of production, directing their strategic decisions in relation to the current crop. After that, the manager can evaluate the costs of the specific elements of the crop.
Only the inputs used for the specific crop are considered in the calculation, not all the material that is in stock. For example, if 300 kg of fertilizer were purchased, but 270 kg were used, then only the latter value will enter into the calculation.
Let us say it is NPK 10-10-10, with a cost of R13.85/kg. The final price of 300 kg would be R4,153.79. However, only R3,737.58 would be counted for the 270 kg used in that harvest.
Although the 30 kg is included as the cost of the business as a whole, it will not be applied to that specific crop.
To evaluate the costs of equipment used in an agricultural crop, it is necessary to take into account several variables, such as:
- price of new equipment;
- number of machines used;
- hours worked per hectare;
- price of fuel;
- the useful life of the machine;
- maintenance costs.
All this information is considered to calculate costs of production, either the machines have been bought with a payment order in cash or on terms. In both cases, only a fraction of the total value is counted.
Here salaries, labour charges, benefits, overtime, and such are considered. It is necessary, however, to calculate the hours that employees have dedicated to production. Therefore, the elements mentioned should be proportional to the time used in the harvest.
With this information, the producer will be able to understand the costs related to their current production and thus take strategic measures to eliminate waste, as we will see below.
Eliminate crop waste
Waste in production can have several sources, such as:
- inputs and products in stock with past expiration dates, etc.;
- poorly planned flow schemes, routes, and transport increasing the products’ waiting time;
- poorly planned tasks and movement operators, resulting in errors;
- flawed or redundant processes that do not bring benefits to the product or the end consumer, only increasing costs and wasting resources;
- equipment problems, errors, and human failure.
As a result, some methods have emerged that aim to identify and eliminate these failures, in order to avoid the waste that increases the costs of the harvest. Let us learn about some of them.
The lean method was designed by Japanese engineer Eiji Toyoda. He developed the Toyota Production System, which consists of a series of practices that seek to increase efficiency and eliminate losses, with the consequent cost reduction.
When applied to agribusiness, the lean method aims to identify sources of waste and cut what does not add value to products. In this way, the production becomes leaner. The goal is always to maintain a continuous improvement of processes. And does one achieve that? Through performance indicators.
These values are numerical data that reveal important information about production, business, and results. Through these indexes, the farmer will be able to evaluate the performance of the harvest and identify where the failures or opportunities for improvement are.
The application of this methodology in the field becomes even more necessary due to the technological advancement and the complexity of the processes of the sector. Without a continuous evaluation or clear and accurate data, it is virtually impossible to understand the business and take strategic actions. That is why these indicators are so important. The main ones used in agriculture are:
- productivity index: quantity of sacks produced in relation to the size of the production area (kg/ha);
- percentage index of production quality, calculated by the number of quality sacks produced divided by the number of sacks produced multiplied by 100;
- percentage profit margin over production costs: based on the profit taken in the production of 1 sack divided by the production costs of the sack multiplied by 100.
To collect this data, it is important to have instruments capable of accurately and agilely collecting and analysing the data. It is at this time that precision agriculture comes into play, a key resource for eliminating waste and reducing costs.
Precision agriculture (PA) is an agricultural management methodology that uses accurate information collected from various equipment and techniques. These records are analysed and serve as the basis for decision making. It can be said that it is a form of management that takes into account each m² of the property, seeking data on the crop, soil, and climate to control, for example, the application of agricultural inputs in the correct quantity and locations.
This practice contributes greatly to the elimination of waste at all stages of production, from soil preparation to harvesting and disposal of the agricultural crop. All this is possible thanks mainly to investment in technology in the form of hardware and software components.
Yes, it is necessary to invest.
Invest in what is needed to optimise
By employing resources in technologies, the producer can monitor and optimise the processes that make up the production cycle. In addition, it will be possible to take into account the various factors that influence the agricultural crop when evaluating its performance. This investment can be made through the acquisition of machinery and management and analysis systems.
There are agricultural machines on the market that include high-precision technologies. These machines are able to reduce the waste of inputs by up to 98%.
An example is the Uniport 5030 NPK fertilizer, which has a reservoir with a 5,000 litre capacity and application range of up to 50 meters. With this equipment, a dosing belt with rotation control and gates with automatic opening and closing is responsible for dosage, reaching a maximum error rate of 2% per dosage. These features, therefore, make the machine ensure greater precision in dosage and uniformity in fertilizer application.
There is no doubt that technology has become one of the best ways to reduce costs in the agricultural harvest and to optimize production processes. It gives the producer the tools and data they need to understand their business and plan activities with greater operational efficiency.
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